Republican Senators Defend Corporate Jet Tax Loophole

By Alex Seitz-Wald/Think Progress

President Obama’s call during a press conference yesterday to end a tax breaks for private jet owners has been met with derision and confusion by many the right, with most Republicans lawmakersdismissing it out of hand as just another tax hike. “Republicans weren’t having it,” the Wall Street Journal reported.

On MSNBC this afternoon, Sen. Mike Crapo (R-ID) dismissed ending the tax break as just “code for much broader, large tax increases,” saying that the jet tax break is “not the issue we’re debating here.” Watch it:

Sen. Marco Rubo (R-FL) meanwhile, told the National Review that Obama was suggesting corporate jet owners earn too much money. “[D]on’t go around telling people that the reason you are not doing well is because some rich guy is in a corporate jet or some oil company ismaking too much money,” he said. Senate Minority Leader Mitch McConnell’s (R-KY) spokesperson defended the tax break without really addressing the issue on its merits, quipping to reporters, “Interesting that he keeps pointing to corporate planes and oil/gas.”

Conservative media outlets took up the same line, dismissing Obama’s call as an empty “metaphor” and the “latest class warfare catchphrase.” The Wall Street Journal wrote a gleefully condescending blog post yesterday called, “Note To Obama: $250,000-a-Year Earners Can’t Afford Jets,” in which it sought to educate Obama about taxes. The only problem? The author assumed Obama was referring to the Bush cuts — he was not and the esteemed paper was forced to run a correction at the bottom of the story

But not only are Rubio, Crapo and the rest defending a tax loophole for the most fortunate Americans, they’re completely misunderstanding it. As hard as it to believe, the private jet tax break is no “metaphor” or “code” for people making too much money — it is an actual loophole in the tax code that applies to private jets and not commercial ones. The provision, created in 1987, allows corporate jets to be depreciated over a five-year period rather than the seven-year period required for commercial ones. It has been defended and supported by Republicans since.

The more sophisticated conservative defense of special tax breaks private corporate jets, advanced by the Hertiage Foundation, among others, is that it was created by the stimulus package. As ThinkProgress’ Matt Yglesias explained, this myth too is bunk.

While closing the loophole wouldn’t raise enough money to solve the deficit problem by any means, it points to the absurdity of much of the spending in the tax code and would surely be a step in the right direction. The conservative response to ending it, meanwhile, speaks to the priorities of their tax cut “theology” — fewer taxes for the wealthy above all else.

Bachmann Calls For Huge Corporate Tax Cut Alongside Tax Increase For The Working Poor

By Pat Garofalo

Several of the 2012 GOP presidential hopefuls have laid out economic platforms that would include huge cuts in the corporate tax rate. Former Massachusetts Gov. Mitt Romney (R) called for lowering the corporate tax ratefrom 35 percent to 25 percent, while former Minnesota Gov. Tim Pawlenty (R) went a step further, calling for a cut to 15 percent.

In an interview published today by the Wall Street Journal, Rep. Michele Bachmann (R-MN) — who is toying with a presidential run herself — decided to one-up both Romney and Pawlenty, calling for a reduction in the corporate tax rate to 9 percent. Adding insult to injury, Bachmann wants to pair that huge tax cut with giant tax reductions for the rich, as well as a tax increase on the working poor:

“In my perfect world,” she explains, “we’d take the 35% corporate tax rate down to nine so that we’re the most competitive in the industrialized world. Zero out capital gains. Zero out the alternative minimum tax. Zero out the death tax.” [...]

Her main goal is to get tax rates down with a broad-based income tax that everyone pays and that “gets rid of all the deductions.” A system in which 47% of Americans don’t pay any tax is ruinous for a democracy, she says, “because there is no tie to the government benefits that people demand. I think everyone should have to pay something.”

Let’s take these one at a time. First, cutting the corporate tax rate to 9 percent — a reduction about two and a half times larger than that called for in the radical House Republican budget — would cost more than $2 trillion over ten years. (The Tax Policy Center estimated that a 10 point reduction in the corporate tax rate would cost about $915 billion.)

Second, zeroing out the capital gains tax and the estate tax would overwhelmingly benefit the wealthy, as about 68 percent of capital gains taxes are paid by the richest one percent of the country, and fewer than the richest one quarter of one percent pay the estate tax.

Finally, Bachmann implies that she would raise taxes on those Americans who earn too little to have any income tax liability. (It’s simply not true that they pay nothing, as Bachmann seems to believe, since those who have no income tax liability still pay payroll taxes and any state and local taxes.)

The reason so much of the income tax liability has become concentrated at the top of the income scale is because over the last few decades income inequality has skyrocketed. The richest one percent of the country currently earn nearly one quarter of the income, and therefore pay the lion’s share of the income tax. Bachmann would raise taxes on those who have seen their incomes stagnate or even drop over the last ten years, even as she cuts taxes on the ultra-wealthy.

Boeing Paid No Corporate Taxes For Three Years, Still Wants A Tax Cut

By Pat Garofalo

Yesterday, Citizens for Tax Justice released a report showing that, over the last three years, 12 of the country’s biggest corporations made $171 bullion in pretax profits while paying a negative tax rate. So the U.S. taxpayer has been subsidizing these giant corporations, even as their profits soared.

One of the companies on the list was mega-manufacturer Boeing, whose vice president of tax, James Zrust, was on Capitol Hill today, testifying on corporate tax reform before the House Ways and Means Committee. Even though Boeing hasn’t paid a dime in federal taxes over the last three years, Zrust still asked for a cut in the corporate tax rate:

Everyone here today is well aware that the combined US statutory tax rate is almost 15 percentage points higher than the average combined rate of other OECD member countries. It is our view that significantly reducing the corporate tax rate will improve U.S. competitiveness. We believe lowering the corporate rate would dramatically reduce tax policy pressure and rhetoric by ensuring that U.S. companies are competitive, and importantly, would not tip the scale in favor of foreign production.

Boeing is far from alone in paying nothing into the federal coffers in recent years. General Electric, for example, made $7.7 billion in pretax profits over the last three years, and collected $4.7 billion in tax benefits. And even when corporations are paying something, it’s far below the statutory 35 percent tax rate. Last year, Google used tax havens to lower its tax rate all the way to 2.4 percent.

Zrust did say tax expenditures — the credits and deductions clogging up the tax code — would have to be “on the table” if the corporate tax rate were to be reduced. And corporate tax reform is something that both parties in Washington have expressed an interest in getting done. But they’re been focused on reform that is either revenue-neutral or even costs the government money (thus increasing the deficit).

CTJ’s numbers show, though, that revenue-positive corporate tax reform is possible and, given the deficits the country faces in the medium- to long-term, desirable to avoid pushing more of the burden of deficit reduction onto the middle class. “Our elected officials have a duty to the American public to make reducing or eliminating the vast array of corporate tax subsidies the centerpiece of any deficit-reduction strategy,” said Bob McIntyre, director of Citizens for Tax Justice.

UPDATE

Watch video of Rep. Pete Stark (D-CA) reacting with surprise to Boeing wanting a lower tax rate:

Rep. Webster Threatens To Kick Out Town Hall Constituent For Asking About Raising Corporate Taxes

By Scott Keyes

The town hall backlash that began last month over the Republican plan to end Medicare and extend tax breaks for the wealthy is showing no signs of abating.

Rep. Dan Webster (R-FL) encountered many angry constituents Tuesday night during a town hall meeting outside Orlando. Attendees repeatedly admonished Webster for his support of the Ryan budget and pleaded with him to do more to ensure corporations pay their fair share in taxes.

One such constituent was Falcon Taylor. She asked why he was ruling out any tax increases, noting that previous Republican presidents had balanced budgets by raising taxes along with lowering spending. Webster responded that the problem was future generations would end up footing the bill. Taylor instead encouraged Webster to help close the nation’s budget deficit by raising taxes on corporations, many of whom are currently paying little to nothing in corporate income taxes. Moving in towards Taylor’s seat, Webster threatened to have her removed from the town hall, telling her “you’re making a choice of whether you want to stay or not.” Two other constituents then walked out in protest:

TAYLOR: What I want to know is, we’ve been able to balance our budget before by raising taxes and lowering spending and we know this because Eisenhower did it, Ford did it, Reagan did it, Bush the first did it, they were all Republicans. I want to know who’s going to pay, who’s going to pay for this? Because I don’t think we should take away Social Security [sic] just because we’re under 55 and public education, we need public education. [Inaudible] That’s wrong.

WEBSTER: The problem is this. Who’s going to pay? Your children and your grandchildren. That’s who’s going to pay. If we continue on this, yes, can we fund a lot of things going up this line? Sure can. But just know, most of it’s borrowed money.

TAYLOR: You need to raise taxes on the corporations! [Inaudible] And stop the wars! Just stop all the warring.

WEBSTER: Just a minute. I can hear, everybody in here can hear. So you’re making a choice of whether you want to stay or not.

TAYLOR: Answer the question!

[Audience cheers] [Two men walk out in protest]

Watch it:

This is not Webster’s first encounter with voter revolt over he and his Republican colleagues’ priorities in Congress. Last month, Webster was one of the firstcongressmen to encounter a wave of anger following the Republican-led House’s approval of the Ryan plan to end Medicare and extend tax breaks for the wealthy. (The scene at his April town hall was described as “bedlam.”)

ThinkProgress spoke with Taylor following the town hall to get her reaction. She was saddened by his “typical Republican response” that encouraged spending cuts alone with no tax increases. Taylor went on to express her disappointment that she was threatened with removal for pushing the idea of increasing taxes on corporations:

UPDATEIf you record video of your representative’s town hall that you think we would be interested in, please let us know.

Michigan Approves Bill That Cuts Corporate Taxes By $1.7 Billion, Raises Taxes On Low-Income Families

By Pat Garofalo

Conservatives in several states, as we’ve been documenting, have moved in recent months to reduce their state corporate taxes at the same time that they’ve proposed raising taxes on low-income families and cutting services upon which their most vulnerable citizens depend. Last week, Gov. Rick Scott (R-FL) lost his fight to eliminate Florida’s corporate income tax, in the highest-profile defeat the corporate tax-cutters have suffered yet.

However, Gov. Rick Snyder (R-MI) has been far more successful in getting his tax package through. Yesterday, in fact, the Michigan legislature approved Snyder’s plan, with some slight modifications, by narrow margins in both the state House and state Senate:

For months, Governor Rick Snyder has been trying desperately to enact massive business tax cuts paid for with new taxes on pension income and the elimination of the Earned Income Tax Credit (EITC). Unfortunately, a modified version of Snyder’s plan passed both houses of the state legislature yesterday and is now on its way to the Governor’s desk, where it will soon be signed into law…In the end, the most notable change to occur in the Senate was the reintroduction of the EITC, set at a level equal to 6 percent of the federal credit. Given that Michigan’s current EITC is equal to 20 percent of the federal credit, this change will still result in a steep tax hike on low-income families.

This amounts to an 86 percent cut in the state’s corporate income tax, exempting nearly 100,000 businesses from paying any corporate income tax at all, combined with a two-thirds reduction in the state’s Earned Income Tax Credit (which goes to benefit low-income families). (Snyder originally wanted to eliminate the state’s EITC entirely.) As state Sen. Rebekah Warren (D) said, the plan represents a “significant tax shift”from business to those “who are the least among us.”

Adding insult to injury, there’s little guarantee that Snyder’s corporate tax cut will lead to job creation. Snyder himself confessed that “I can’t guarantee results.” State Sen. Jack Brandenburg (R) added that “there’s no guarantee that the tax cuts for businesses will generate a lot more jobs.” “The results are likely to be very disappointing,” said Timothy Bartik, senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan.

Whirlpool Paid No Taxes Over The Past Three Years, Got A $64 Million Tax Refund In 2010

By Zaid Jilani

As ThinkProgress has been reporting, Main Street America’s services, investments, and jobs are under attackwhile many of the nation’s wealthiest individuals and corporations are getting away with paying little to nothing in federal income taxes. Today, BusinessWeek reports that Whirpool, the world’s largest appliance maker, has been a major tax dodger. The company had negative income tax rates over the past three years, and reported a $64 million income tax benefit last year. It expects similar results this year:

Sales at the appliance maker rose 7 percent to $18.4 billion last year after dropping during the housing slump of the previous two years. In the year-earlier quarter, the company attributed a rise in revenue to increased productivity.

Whirlpool had negative effective income tax rates in 2010, 2009 and 2008. Last year, the company reported an income tax benefit of $64 million and an effective tax rate of negative 10.9 percent, according to company filings. The company expects a similar tax benefit in 2011, corporate controller Larry Venturelli told analysts today.

Whirlpool is celebrating its 100th anniversary this year. Its first-quarter profits are up 3 percent as compared to last year and the company “raised its prices by between 8% and 10% [last] month to offset higher raw material costs.”

Exxon Makes $30.5 Billion, So GOP Votes Unanimously To Give Them Tax Breaks

By Brad Johnson

Exxon Mobil is by far the most profitable company in the new Fortune 500 list, riding “high oil prices to a staggering $30 billion in income” in 2010. Exxon made over $10 billion more than fellow oil giant Chevron, the third most profitable company (AT&T edged out Chevron for the number two spot). ConocoPhillips’ $11.4 billion in profits put it in the 16th spot, giving the three oil giants a combined $60.9 billion in profits in 2010.

Today, the Republicans in the House of Representatives celebrated this massive redistribution of wealth from American families to oil executives. With the support of 7 oil-patch Democrats, 234 Republicans voted to block a bill to eliminate a $1.8 billion annual subsidy that treats oil drilling as “domestic manufacturing”:

House Republicans rejected an effort by Democrats Thursday to use a procedural maneuver to force a vote on a bill to repeal a key oil industry tax break.

As they did in March, House Republicans voted unanimously to defend these wasteful, unaffordable and unfair oil subsidies, even though several members told their constituents they want to end them.

More Republican Congressmen Face Town Hall Backlash Over Tax Breaks For Wealthy And Medicare Privatization

By Scott Keyes

Earlier this week, Rep. Paul Ryan (R-WI) held town halls across his district to defend his budget’s plan to end Medicare and extend tax cuts for the wealthy. During a stop in Milton, WI Ryan’s constituents made their feelings apparent, booing down the seven-term congressman when he defended tax breaks for the rich, as ThinkProgress first reported. Yesterday, Rep. Lou Barletta (R-PA) received the same hostile reception from his constituents for voting to end Medicare.

This town hall backlash is now spreading to other districts across the country. As Huffington Post reports, freshmen Reps. Robert Dold (R-IL) and Charlie Bass (R-NH) got an earful from their constituents for voting in favor of the Republican budget this month. During a Buffalo Grove, IL town hall, Dold caught a lot of flack for supporting corporate tax breaks and voting to end Medicare:

But Dold couldn’t even get to the end of the presentation before audience members began peppering him with questions about the Ryan budget, named after House Budget Committee Chairman Paul Ryan, a Republican from Wisconsin. It began with audience members telling Dold they don’t believe chopping 10 percentage points off the highest corporate tax rate will create jobs. A handful of people in the audience identified themselves as business owners and accountants who said their effective corporate income tax rate is already lower than the lowest rates proposed in the Ryan plan. They pointed to companies such as GE that pay almost no taxes despite billions in profits as evidence. [...]

Some in the audience then told Dold they don’t like the idea in the Ryan budget plan of Medicare becoming a voucher program that makes senior citizens buy private health insurance about 10 years from now.Audience members said buying private insurance is a shell game where no one really knows what costs a company will cover or to what degree.

Bass faced a similar response in Hillsborough, NH when his constituents repeatedly questioned why the congressman voted in favor of Ryan’s budget:

Rep. Charlie Bass knew he was in for a rough night. The first question out of the gate during his Wednesday town hall in Hillsborough, NH was about his vote for Paul Ryan’s budget. And the second. And the third and the fourth, fifth and sixth questions. “I enjoyed the discourse,” he said, almost hopefully, afterward. “It’s important to speak with people who disagree with me. Of course there was going to be backlash.”

Congressmen will continue meeting with their constituents during the congressional recess this week and next. If the beginning of this week is any indication, GOP congressmen who voted to extend tax breaks for the wealthy and end Medicare will likely continue to face a backlash from their constituents.