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No more tax-break Christmas trees

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The author of this entry is responsible for this content, which is not edited by the Wilson County News or wilsoncountynews.com.
December 22, 2014 | 3,099 views | 38 comments

By Frank Clemente

Christmas came early this year to some of Washington’s biggest special-interest groups when Congress passed legislation that was laden like a decorated Christmas tree with some of the finest-looking and most expensive ornaments lobbyists can buy.

Known inside the beltway as the “tax extender” bill, it is more accurate to call it the Corporate Tax Breaks Renewal Act. It retroactively renewed for one year -- 2014 -- more than 50 tax breaks that expired at the end of 2013. The one-year cost is $42 billion, but over 10 years these tax breaks will cost more than $500 billion if they continue to be renewed as they have been year after year. Eight out of every 10 dollars of these tax breaks benefit corporations.

Some of these tax cuts are stocking stuffers for the wealthy -- like special tax breaks for owners of NASCAR racetracks or thoroughbred race horses -- costing tens of millions. Others are giant ornaments on the scale of the huge White House Christmas tree.

Take the $5.1 billion one-year cost of a loophole known as “active financing exception.” It enables Wall Street banks and other multinational corporations to avoid paying federal income taxes on financial income that can be claimed to have been generated offshore. Known as the “GE Loophole,” it helped General Electric pay nothing in federal income taxes from 2008 to 2012; instead the company got $3.1 billion in tax refunds on $27.5 billion in profits.

Another costly ornament is “bonus depreciation,” which allows companies to deduct the cost of new equipment well before it actually wears out. Numerous studies have shown it “is largely ineffective as a policy tool for economic stimulus.”

Many Members of Congress would not vote for these tax breaks if they had to consider them one at a time. But the bill also contained a few attractive and less costly decorations, making it a bit easier on the eyes. They include a tax break for schoolteachers who pay for supplies out of their own pockets, a deduction for commuters that use public transportation, and a tax break for “underwater” homeowners who due to the Great Recession lose money when they sell their homes at a lower price than they paid for it.

One of the more unsavory features of the $42 billion tax extender deal is that none of the tax breaks are paid for. A double standard is at work here.

Conservatives in Congress always demand that any new federal spending be paid for with offsetting budget cuts. For instance, they blocked spending $10 billion for unemployment benefits for the long-term unemployed earlier this year, refusing to approve the measure unless it was fully paid for. Essentially, unemployed Americans received a lump of coal in their stockings. Here’s a fairer approach: If Congress wants to protect certain corporate tax loopholes then pay for them by ending other corporate tax breaks.

Politicians don’t make such poor decisions by themselves -- there is a small army of lobbyists to help them make up their minds. Nearly 1,400 lobbyists, representing nearly 400 corporations and trade associations, pressed members of Congress to renew various tax extenders, according to a study by Americans for Tax Fairness and Public Campaign.

As the New Year approaches most Americans would be shocked to learn that the next Congress will be preparing another Christmas tree bill, although this one might be a lot worse. Corporations will not only demand that Congress renew these tax breaks next year; they will push to make some of them permanent. That nearly happened this past November, when House and Senate leaders proposed a $400 billion-plus tax extender bill. Fortunately, they backed down once President Obama threatened a veto.

These giveaways will all be folded into the bigger push for “corporate tax reform,” which for corporations means lowering tax rates by nearly 30 percent at a cost of $1.3 trillion over 10 years. Tax fairness advocates believe we need to go in the opposite direction -- corporate tax reform should close loopholes and raise a significant amount of new revenue so that big companies contribute their fair share. Recent polling shows the American public agrees.

Congress needs to make a New Year’s resolution: future tax legislation should not be like a Christmas tree with glitzy ornaments that are expensive gifts for corporations and their lobbyists. That’s not what Americans want -- and it’s not what they should get.

Clemente is executive director of Americans for Tax Fairness, a coalition of 425 national and state organizations.
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Your Opinions and Comments

Kicaster Creek  
January 5, 2015 11:05am
Happy days are here. I just found out a large percentage of the American population are in the top one percent wealth category of the world. Most of the remainder are in the top two percent. Praise the Lord and give me some... More ›

Black Ghost  
Doseido Colony  
January 4, 2015 12:20pm
It's interesting to note that the main beneficiaries of Common Core are the corporations who profit from the sale of mandated equipment, books, tests and monitoring of these programs. These vendor rights were purchased through... More ›

Black Ghost  
Doseido Colony  
January 3, 2015 12:23pm
So maybe the good doctor was wrong when he said that 'Jesus was a capitalist, get over it.' Have a nice weekend. :-)

Bob Pritts  
St Hedwig, TX  
January 3, 2015 11:53am
Black Ghost He didn't run them out of the temple because they were money changers. He threw them out because of the location in which they were doing business ... desicrating a 'house of prayer. I don't doubt that you... More ›

Black Ghost  
Doseido Colony  
January 3, 2015 11:18am
Hark, the sound of the rural prophets echo throughout the land. Some assume that us common folks cannot read the good book. Of course, it may just be the scarcity of original thought which reduces them to quoting. :-) I... More ›

Bob Pritts  
St Hedwig, TX  
January 3, 2015 10:00am
Black Ghost and Catfish It seems as though you envy old white men you call the 'elite' just because they may have had a little more monetary success that perhaps you or your friends did not reach. Remember ... "Watch... More ›

Black Ghost  
Doseido Colony  
January 3, 2015 5:09am
It's always nice to enjoy the success of a team effort. I never realized the the gang raping of shareholders could be so lucrative. :-) Were they all old white men of privilege? LOL

Kicaster Creek  
January 2, 2015 4:07pm
I can believe that after reading your condescending snobbish comments to Timmy Tee on the WCN article about ESD2. Not the attributes that you assigned to your associates but probably common among the elite. :-) Goodbye,... More ›

Bob Pritts  
St Hedwig, TX  
January 2, 2015 3:54pm
Black Ghost, But I did achieve the status of my associates.

Black Ghost  
Doseido Colony  
January 2, 2015 2:56pm
Some people are just jealous that they did not achieve the status of their associates. Don't be bitter because all types of people reap the benefits of the capitalistic systems. Ruthless people can also accumulate dollars.... More ›

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