on Taxation & Economic Policy, Citizens for Tax Justice, Public
Last month, while America was busy recovering from the 9-11 terrorist
attacks and worrying itself sick about the possibility of more,
the House quietly passed a so-called "economic stimulus"
package. The bill, if passed by the Senate, amounts, as Michael
Moore eloquently put it on "Politically Incorrect" tonight,
to nothing short of treason: While the federal budget runs deep
into the red, and Americans are increasingly asked to make "sacrifices"
for the war effort, big corporations (and big political donors)
like Disney, GE and General Motors will receive hand-outs totaling
in the billions - in the form of tax breaks and even rebates. In
other words, money the treasury has already spent.
But, "Hey," you ask. "Isn't that money going to be
invested back into the economy?"
Here's a hint:
Michael D. Eisner, Chairman CEO, Disney: Total compensation (2000):
$61,005,644. Stock options exercises from prior grants: $60,531,000.
Unexercised stock options from previous years: $266,765,100.
John F. Welch Jr., Chairman CEO, General Electric: Total compensation
(2000): $231,149,232. Stock option exercises from prior grants:
$57,112,560. Unexercised stock options from previous years: $341,518,062.
G.R. Wagoner Jr., CEO President, General Motors: Total compensation
(2000): $21,685,557. Unexercised stock options from previous years:
The following is the Executive Summary of a joint report released
on Nov. 8 2001 by the Institute on Taxation & Economic Policy,
Citizens for Tax Justice, and Public Campaign. It is the best analysis
of this insidious bill I have seen:
In the aftermath of the horrific terrorist attacks on the World
Trade Center and the Pentagon on September 11, 2001, the President
and congressional leaders quickly agreed on the outlines of a $50-75
billion, one-year economic stimulus plan to help those most hurt
by the disaster and the economic downturn. After a flurry of corporate
lobbying, however, that bipartisan agreement is in shambles.
On a close party-line vote, the House passed a $212 billion tax-cut
bill stuffed with tax breaks for profitable corporate campaign contributors,
including repeal of the corporate alternative minimum tax and huge
increases in tax write-offs for "depreciation." Senate
Republicans have endorsed a similar measure, as has President Bush.
Meanwhile, special interests continue to plead for even more tax
breaks, from reinstating the three-martini lunch by making business
meals 100 percent tax-deductible to granting special treatment for
Although the war on terrorism is new, lobbying for corporate tax
breaks is not. This study examines campaign contribution records
of top tax avoiding companies -- 41 corporations that enjoyed more
than $55 billion in tax breaks between 1996 and 1998, including
23 companies that received tax rebates in 1998. This short list
of profitable tax-avoiders -- essentially, the companies that are
the best at working the system to avoid paying taxes -- includes
many household names, companies such as General Electric, Microsoft,
and Walt Disney.
This study also includes five case studies showing how these individual
companies and sometimes whole industries have used campaign contributions
to help establish, widen, and protect particular tax loopholes.
Most Americans may not commonly know these tax loopholes -- no ordinary
taxpayer can claim tax credits for exports, or for manufacturing
goods in Puerto Rico. Case studies include in-depth looks at lobbying
by exporters for the Foreign Sales Corporations tax break, Microsofts
campaign to extend the break to software companies, and computer
and pharmaceutical companies lobbying to extend tax credits
permanently for research.
The picture that emerges is of a profitable corporate America using
campaign contributions cynically, to ensure that they pay far less
than their fair share in taxes. At a time when all of America is
being asked to sacrifice, corporate executives have their hands
out, filled with campaign contribution cash as they ask for special
breaks and to pay less in taxes.
Major findings of the study include:
Sixteen profitable corporations, which will receive $7.4 billion
in immediate alternative minimum tax rebates if the "stimulus"
bill passed by the House becomes law, are the source of $45.7 million
in campaign contributions to federal campaigns since 1991, including
more than half a million dollars to President George W. Bushs
The short list of top tax avoiders -- 41 large profitable companies
that got $55.2 billion in tax breaks between 1996 and 1998, including
23 companies that got tax rebates in 1998 -- contributed more than
$150 million to federal candidates and parties between 1991 and
2002. The majority of this cash -- 56 percent -- was given in the
form of "hard money" contributions -- contributions from
PACs associated with the companies and from business executives
and their families subject to federal limits but "bundled"
in large amounts from these companies. Forty-four percent was contributed
as soft money, unlimited contributions to political parties.
After the GOP took over Congress in 1994 -- and control of writing
tax laws -- top tax-avoiding companies sharply increased their contributions
to Republican candidates and parties. In the 1992 and 1994 election
cycles, the GOP received 54 percent of their contributions, and
the Democrats, 45 percent. By the 2000 election cycle, Republican
politicians and party committees got more than twice as much campaign
cash as Democrats did. Thus, campaign cash followed the power to
make laws the companies wanted -- not any ideological preference
Members of the Congressional tax-writing committees -- the House
Ways and Means and Senate Finance Committees -- collected $9.7 million
from 1991 through June 2001 from executives, their families, and
PACs associated with top tax-avoiding corporations. These lawmakers
were all crucial targets for maintaining, expanding, and securing
new tax breaks for the companies studied. The top recipients of
these contributions among current Senate Finance Committee Members
were Sen. Orrin Hatch (R-UT), who received $355,430, and Sen. John
B. Breaux (D-LA), who received $251,150. On the House Ways &
Means Committee, the top recipients were Rep. Charles B. Rangel
(D-NY), the ranking minority member, who received $308,600, Rep.
Nancy L. Johnson (R-CT), who received $244,200, and Rep. Bill Thomas
(R-CA), chairman of the committee, who received $233,000.
The "Big Five" accounting firms, which beefed up their
tax lobbying practices in the late 1990s, building a reputation
for securing tax loopholes for corporate clients from Congress and
the Treasury Department, are also major campaign contributors to
federal candidates and political parties. Together, Ernst &
Young, Pricewaterhouse-Coopers, Deloitte & Touche, Andersen
Worldwide, and KPMG Peat Marwick, gave $29 million to federal candidates
and party committees from 1989 through June 2001. These firms have
hired former aides from Congressional tax-writing committees and
the Treasury Department whose close ties and political fundraising
finesse help them get what their corporate clients want. For example,
Pricewaterhouse-Coopers hired Kenneth Kies, a former chief of staff
of the Joint Committee on Taxation, and a significant campaign donor,
at a reported $1 million salary. On Kies current "to
do" list -- lobbying for repeal of the corporate alternative
minimum tax (AMT) for his clients, General Motors and IBM.
Executive compensation totals provided by AFL-CIO Executive PayWatch.
This article originally appeared in TomPaine.com