Top 10 Outrages of the Corporate Tax Bill

Larry
Pass muster? The pigs in congress and their purchasers are as usual feeding at the pork barrel.
All the thieves, corporate swindlers, and bag men are not in jail. Many populate the halls of congress.

Larry
And I am beginning to believe that "We the people" are a pretty stupid or simple minded lot.

Senate Passes Corporate Tax Bill
Bush Plans to Sign $143 Billion in Cuts

By Jonathan Weisman
Washington Post Staff Writer
Tuesday, October 12, 2004; Page A01
The Senate gave final approval yesterday to the most significant corporate tax legislation in nearly 20 years, sending President Bush a 650-page measure that reduces taxes for domestic manufacturers, builders and even Hollywood studios and doles out scores of tax breaks for interests ranging from tackle box makers to Native Alaskan whaling captains.

The 69 to 17 vote, taken in a rare holiday session, belied the acrimony underlying the measure, which includes $143 billion in tax breaks over 10 years, offset by loophole closures and other revenue raisers. The House passed it Thursday night by a similarly comfortable margin, 280 to 141, and White House aides say Bush will sign it into law, despite strong criticism leveled last week by Treasury Secretary John W. Snow.

Public health groups were infuriated that a $10 billion buyout for tobacco farmers was included without a provision to grant the Food and Drug Administration authority to regulate cigarettes. Charitable organizations protested a revenue-raising measure that would greatly reduce the value of automobiles donated to charities.

But threatened filibusters over the tobacco provision and the bill's failure to include a tax break for employers of National Guard members and reservists fizzled yesterday. Sen. Mary Landrieu (D-La.) agreed to a final vote after Senate leaders attached her $2.5 billion Guard-and-reserve tax break to a different bill. Sen. Mike DeWine (R-Ohio) dropped his threat over the tobacco provision when he was promised a separate vote on an FDA regulation bill.

The Senate vote cleared the way for Congress to adjourn for the campaign season. After the tax bill passed, the Senate quickly approved measures to fund homeland security and military construction for the fiscal year that began Oct. 1. Congress will return after the election to pass most of the bills that will fund the government this fiscal year. If House and Senate negotiators can work out compromise legislation to reform the nation's intelligence programs, then lawmakers may be called back briefly to ratify the deal shortly before the Nov. 2 election.

Senate Majority Leader Bill Frist (R-Tenn.) said he expects to know within two days whether Congress will finish work on the intelligence bill in time for enactment before the election.

Adjournment had been held up for days by legislative brushfires that erupted over the corporate tax bill. Proponents hailed it as a job creation measure that would simplify the nation's Byzantine tax laws for multinational corporations, address long-festering grievances and clamp down on loopholes, such as one that allows companies to escape taxation by reincorporating at a post office box in an offshore tax haven.

"This bill is basically about manufacturing jobs," said Senate Finance Committee Chairman Charles E. Grassley (R-Iowa). "Let the record be clear, this bill is fair. This bill is balanced."

But critics -- including budget watchdogs and liberal activists -- decried what they saw as a cornucopia of special-interest tax cuts that would complicate the tax code, favor companies doing business overseas and ultimately worsen the budget deficit. Sen. John McCain (R-Ariz.) pronounced it "disgraceful" and "a classic example of the special interests prevailing over the people's interest."

Ron Field, vice president of public policy for Volunteers of America, a national volunteer social service program, said: "Congress is turning its back on the very service organizations it claims to support through faith-based and community initiatives, while providing billions of dollars in new tax breaks to wealthy corporations."

The tax legislation culminates a two-year effort to repeal an export subsidy ruled illegal by the World Trade Organization. That ruling allowed the European Union to impose sanctions last spring that tack 12 percent onto the cost of a variety of U.S. exports. But wary of raising taxes on the nation's ailing manufacturers, Congress hoped to replace that $5 billion-a-year subsidy with tax cuts to ease the pain.

The centerpiece tax cut -- worth $76.5 billion over 10 years -- provides tax deductions that would effectively lower the corporate income tax rate from 35 percent to 32 percent for U.S. "producers," defined broadly to include traditional manufacturers, Hollywood studios, architectural and engineering firms, home builders, and oil and gas drillers, among others.

Also included are $42.6 billion worth of tax cuts for overseas profits, including a 10-year $3.3 billion temporary tax holiday allowing companies with vast stores of offshore revenue to bring it home under a discount tax rate of 5.25 percent.

Sen. John Ensign (R-Nev.), one of that provision's champions, predicted it would result in a $300 billion cash infusion into the U.S. economy. But in a letter to Grassley last week, Snow protested that the tax holiday favors foreign operations over domestic businesses and "would not produce any substantial economic benefits."

Beyond those centerpieces are hundreds of smaller measures that benefit restaurant owners and Hollywood producers; makers of bows, arrows and sonar fish finders; NASCAR track owners; and importers of Chinese ceiling fans. Sen. Herb Kohl (D-Wis.), an owner of the Milwaukee Bucks basketball team, voted "present" yesterday in deference to a provision favoring sports franchise owners.

Under the bill, foreign gamblers would no longer have to report dog-track and horse-track winnings for taxation. Farmers would receive new tax breaks on ethanol and distressed livestock sold during droughts. Native Alaskan whaling captains could deduct some expenses as charitable contributions. Small oil and gas drillers, already buoyed by record fuel prices, would receive new tax breaks for marginal wells. Railroads would garner a special credit for maintaining their tracks.

General Electric alone could reap tax breaks measured in billions from two provisions: One, costing $7.9 billion over 10 years, that would allow companies with large overseas manufacturing and financial services operations to mingle subsidiary profits for tax purposes, and another that would reduce taxation by $995 million over 10 years on income from shipping and the leasing of aircraft.

A $5 billion measure to temporarily allow residents of states without income taxes to deduct their sales taxes from their federal income tax bill helped win votes in Texas and Florida.

"On issue after issue, page after page, [the bill] puts the interest of the big corporations above the public interests, above the hopes and dreams and everyday needs of the American middle class," said Sen. Edward M. Kennedy (D-Mass.).

Grassley accused such critics of grandstanding yesterday, since he said virtually every senator had approached him for a pet tax break.

"Nearly every member raised narrow interest provisions," he said. "So if there's some fault, we all share it. We all do it."

Grassley emphasized the bill's loophole closures, the most stringent measures approved by Congress since the corporate scandals of 2001 and 2002.

The legislation also includes a controversial measure, sought by the Bush administration, that would allow private debt collectors to begin collecting overdue federal taxes and pocket as much as 25 percent of the debt. The measure is expected to bring in nearly $1.4 billion over 10 years, while granting collection agencies $339 million over that time.

Meanwhile, the Senate also sent to the president a $33 billion measure to fund the Department of Homeland Security in 2005, and a $10 billion bill to pay for the construction of military bases and housing.

Attached to the annual military construction bill is $11.5 billion to aid businesses, farms, individuals and government installations damaged by the recent Florida hurricanes, and $2.9 billion for farmers and ranchers hurt by droughts and other weather-related problems in 2003 and 2004.

The bill also includes authority for government loan guarantees of as much as $18 billion for a new Trans-Alaska natural gas pipeline.

Staff writer Dan Morgan contributed to this report.

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