Sometimes, the inability of Congress to get things done is a blessing in disguise -- like, for example, failing to renew a bevy of tax breaks that overwhelmingly benefit big corporations and wealthy individuals.
Renewing this package of 55 tax breaks -- known as tax extenders -- would cost as much as $700 billion over 10 years. That's money that should be used to fix roads, build bridges, research medical cures and otherwise support the middle class.
There are two main reasons why Congress should let the tax extenders package stay dead. The first is, we simply can't afford to let tens of billions of dollars in otherwise taxable revenue go uncollected each year. Just one year of this tax revenue would fund the creation of three quarters of a million public sector jobs, including teachers, first responders, highway crews and librarians. Creating these jobs would pay dividends for the employees, their families and the communities that tax breaks for big corporations simply don't.
And that takes me to the second reason for keeping the tax extenders package dead and buried. By far, the main beneficiaries of these tax write-offs are mega corporations and wealthy individuals -- folks who do just fine without any financial assistance from the government.
Most everyone has heard of General Electric. They "bring good things to life," or so their commercials used to say. Nowadays, the only thing GE is interested in bringing to life is the tax loophole that enables the company to avoid paying its fair share in federal income taxes. The so-called active financing tax loophole, one of the 55 tax breaks that expired at the end of 2013, enables GE and other large corporations to make it appear that profits earned in the U.S. were generated in offshore tax havens like the Cayman Islands.
The GE tax loophole alone costs taxpayers about $63 billion over 10 years. GE has been a chronic tax dodger for years, paying only about two percent of its profits in U.S. federal income taxes during the decade between 2002 and 2011. You can bet your bottom dollar -- fully taxed, I might add -- that GE and other multinational firms are lobbying Congress very aggressively to get that tax break reinstated.
In fact, the Americans for Tax Fairness has just issued an eye-opening report documenting the intensive lobbying effort to pass the tax extender package and the GE loophole. The report shows that more than 1,300 corporate lobbyists have been pressing Congress on tax extenders. General Electric by itself pays 48 lobbyists to try to protect the GE loophole.
Now, some of these tax breaks might make sense to continue for another year or longer. For example, there are individual provisions allowing deductions for teachers' out-of-pocket expenses, state and local sales taxes, qualified tuition expenses, mass-transit commuter benefits, and mortgage insurance premiums.
Working class men and women use these deductions to lower their taxable income and lessen the amount of money they owe Uncle Sam at the end of the year.
But by lumping together all of these tax breaks, both the good and the bad, Congress forgoes any serious discussion about the merits of each tax provision. Lawmakers also shield themselves from any political fallout from helping multi-billion dollar corporations shelter more of their profits from the IRS.
Congress should tear apart the tax extender package and bring each tax break up for a vote. If the majority of lawmakers think it's more important to let GE dodge billions in federal taxes than create jobs for the millions of unemployed Americans, they should have to vote for it and defend that vote to their constituents. I'm sure the out-of-work mother of three who is in danger of having her lights turned off would love to hear that explanation.
J. David Cox Sr. is national president of the American Federation of Government Employees, which represents more than 670,000 federal and D.C. government employees nationwide.