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Multinational corporations avoided fiscal cliff. Updated.

lizpolaris's picture

Whenever I see legislation hurried thru congress at the last minute - hurry, hurry, hurry just pass this bill OR ELSE!!!!1! - I wonder what it's really for.

Now we know - the groups facing a fiscal cliff were multinational corporations, not the US government.

The Family and Business Tax Cut Certainty Act of 2012, which passed through the Senate Finance Committee in August, was copied and pasted into the fiscal cliff legislation...Former Sens. John Breaux, D-La., and Trent Lott, R-Miss., a pair of rainmaker lobbyists, pleaded for extensions on behalf of a powerful lineup of clients.

General Electric and Citigroup, for instance, hired Breaux and Lott to extend a tax provision that allows multinational corporations to defer U.S. taxes by moving profits into offshore financial subsidiaries. This provision -- known as the "active financing exception" -- is the main tool GE uses to avoid nearly all U.S. corporate income tax.

A Republican Senate aide familiar with the cliff negotiations tells me the White House wanted permanent extensions of a whole slew of corporate tax credits. When Senate Republicans said no, "the White House insisted that the exact language" of the Baucus bill be included in the fiscal cliff deal. "They were absolutely insistent," another aide tells me.

So, thanks to Obama, it's Happy New Year for GE, Citigroup, and Goldman Sachs.

Update: A pithy summary from HuffPo.

The 11th-hour deal to avert the so-called fiscal cliff preserved billions of dollars in corporate tax giveaways even as it slashed take-home pay for millions of American workers.

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Comments

lizpolaris's picture
Submitted by lizpolaris on

It's just that he does it on behalf of banksters and multinational corporations, not US citizens. Which really is appalling when remembering that hurricane Sandy victims are literally starving and shivering in the cold right now. But hey, we can't have GE paying taxes to help them or hurry up and pass any other bills that might help victims of disaster. That would be wrong. And after all, what's the hurry on that?

okanogen's picture
Submitted by okanogen on

Exactly.

Sorry, I don't fall in love with politicians. I'm not that desperate.....

Submitted by lambert on

Yes, something worse than corporate giveaways could be buried in the text. Good point...

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

okanogen's picture
Submitted by okanogen on

You really have hit on the worst thing in this deal beyond everything else. When corporations are able to hide profits in offshore accounts for tax purposes, they can avoid investment in new equipment/processes to reduce their profit, or reduce worker's pay or hours to maximize profit.

This practice is actually a doubled negative effect on the economy. The first effect being the reduction in taxes (and the perceived need to "make them up" elsewhere-an update), the second being the reduced need to offset profits with actual investment in US staff payroll or equipment production costs.

Sorry, I don't fall in love with politicians. I'm not that desperate.....

okanogen's picture
Submitted by okanogen on

Related, what would be counter intuitive on corporate profit taxes is that rather than allow taxes to be offshored, for short term stimulus if corporate profits were taxed at a very high level, with those taxes waived based on reinvestment of profits over a 1-2-3 year period (for lean periods including a glide path forward). I believe more investment would occur in which would go directly into people's salaries, etc..

Sorry, I don't fall in love with politicians. I'm not that desperate.....

Submitted by MontanaMaven on

Almost seems traitorish to hide the money.

Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.
Groucho Marx