Autumn is upon us. In addition to leaf color tours, pumpkins and cider, this fall has brought a political frenzy to Michigan as numerous members of the congressional delegation retire. Among the departing lawmakers is a real tax policy heavyweight, U.S. Rep. Dave Camp (R).
Camp soon will leave his position as chairman of the powerful U.S. House of Representatives Ways & Means Committee without having accomplished his chief goal of comprehensive tax reform. His languished swansong proposal to update the tax code, though flawed in many ways, offered some bold moves, like taxing banks and limiting executive pay.
In his remaining time, Camp should continue to push for such bold proposals. He also should focus on closing international tax loopholes that cost the U.S. an estimated $90 billion per year, and which allow some highly profitable companies pay no federal corporate income tax. With 150,000 Michigan families being hit by food stamp cuts, this is unacceptable.
Corporations avoid taxation in a number of ways, including using tax breaks that allow corporations to indefinitely put off — or “defer” — paying taxes on certain profits. One such scheme allows tax avoidance on some profits that appear to be made by foreign subsidiaries. Another huge loophole allows tax deferral on profits from interest made by foreign financial subsidiaries. Apple and GE are well known to make use of these supposedly temporary loopholes, which are bundled with 50 plus other tax breaks, referred to in Washington, D.C., as “extenders” because they are renewed every couple of years.
The package of corporate tax breaks is estimated to cost taxpayers more than $84 billion and up to nearly $700 billion over 10 years if they are continuously renewed. Even with that stunningly high price tag, the cost of these tax cuts won’t be held to the same standard as is applied to programs on which ordinary Americans depend. For example, House Republicans have refused to allow a vote on extending emergency unemployment benefits for the 3.6 million Americans who have been out of work for more than six months, unless the $25 billion-plus cost of the program is “paid for” with other cuts or tax increases.
Congressmembers on both sides of the aisle yesterday joined forces to pass the so-called “Jobs for America Act” (H.R. 4).
In the vote, 221 Republicans and 32 Democrats matched the absurd anti-regulatory rhetoric of the U.S. Chamber of Commerce and other Big Business groups with absurd anti-regulatory policy. The bill contains provisions designed to stifle, stall, shrink and stop safeguards the public relies on and includes the text of familiar deregulatory bills like the Regulatory Accountability Act and the REINS Act (which the House already has voted on). If enacted, H.R. 4 represents a green light allowing reckless corporations to do simply whatever they want with as little oversight as possible.
Big Business groups have been making hyperbolic claims about regulations killing jobs – and the inverse claim that gutting regulation will create jobs – for decades. The predictions never come true.
Consider the following examples from Public Citizen’s recent report:
- 1974: The Occupational Safety and Health Administration bans the carcinogen, vinyl chloride. The plastics industry claimed that the OSHA regulation would kill 2.2 million jobs. Those claims were proven completely false. A new way to manufacture vinyl chloride was developed within a year without any jobs lost.
- 1975: The National Highway Traffic Safety Administration increases the fuel efficiency standard. Industry reports warned that 1.5 million jobs would be lost. By 1985, automakers had met the higher standard without losing any jobs.
- 1990: The Environmental Protection Agency sets new pollution standards under the Clean Air Act. Business Groups responded with doomsday hysterics, claiming up to 2 million jobs would be lost. Those were proven entirely wrong. Instead, according to the Investor’s Business Daily, “Pollution has been falling across the board for decades, even while the nation’s population and economy have expanded.”
- 1995: EPA removes lead from gasoline. Monsanto claimed 43 million jobs would be killed. The removal of lead is now considered one of the biggest public health success stories while gas prices did not dramatically increase and no jobs were lost.
The Permanent Subcommittee on Investigations has weighed in on the progress the Internal Revenue Service (IRS) has made after last years’ “scandal,” and the majority is advocating bright line rules for political activity for nonprofits.
Committee members criticized the current facts and circumstances test and called for its replacement, lending their voice to the many nonprofits and citizens that have been calling for a bright-line definition of political activity applicable to all nonprofits. Such a rule would make it easier for nonprofits to engage in our democracy without fear of jeopardizing their nonprofit status.
“The facts and circumstances test used by the IRS was criticized as difficult to administer by every IRS official interviewed,” says the report. It goes on to say that the test “produced subjective and inconsistent decisions on applications.”
The minority staff filed a separate report, and did not discuss the facts and circumstances test or provide recommendations for the future. The full report is available here.
The IRS is currently engaged in a rulemaking that could provide the sort of easily administered definition the report – and Public Citizen’s Bright Lines Project – calls for. A new draft of the rules is expected early next year.
Emily Peterson-Cassin is the Bright Lines Project Coordinator for Public Citizen’s Congress Watch division
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