Corporations get more breaks on Tax Day
Thanks to Congress and President Barack Obama, some lucky tax filers will get credits for remodeling their kitchens and dining rooms, others will get bigger charitable deductions for giving to local food drives, as will some who take advantage of Puerto Rico’s island locale. But they won’t be homeowners who put in new granite countertops, shoppers who picked up groceries to give to charity at Thanksgiving, or vacationers who spent a week in San Juan; those tax breaks are targeted to corporations, part of an estimated $32 billion package of special provisions for businesses that Congress passed last year before adjourning.
That $32 billion is a drop in the bucket. Over the years, corporate America has gotten ever more adept at shifting the tax burden from itself to income earners — married, single, wage earning or salaried. If corporations shouldered the same ratio of the tax burden relative to individuals that it did throughout the 1950s, they’d have paid an additional $560 billion to Uncle Sam in 2014. This great escape from federal taxation has been a decades-long achievement, but was accomplished in the same way as the recent effort to extend expiring breaks for specific industries: by using influence in Washington.
In the last three months of 2014, lobbyists for some 326 organizations listed “tax extenders” — the Washington term for the package of temporary tax breaks that, absent congressional action, sunset after one or two years — in their lobbying disclosure forms. Many others disclosed lobbying on individual provisions within the tax extenders bill rather than referencing the whole, but the 326 provide a nice cross section. The group contains 65 members of the Fixed Fortunes 200, the most politically active for-profit companies at the federal level. It includes well-known trade associations like the U.S. Chamber of Commerce, the National Association of Manufacturers and the American Petroleum Institute, three of the larger advocates for big businesses in Washington. It also encompasses more obscure groups like the Algae Biomass Organization (ABO), a body that counts, in addition to alternative energy startups, corporate titans Boeing, Duke Energy, Federal Express and General Atomics. Also linked to ABO is the American Wind Energy Association, on whose board sit executives from utilities American Electric Power and Xcel Energy, manufacturer General Electric and financial behemoth J.P. Morgan Chase & Co.
The biography of the board member from that last institution is telling: “Since 2003 John has been responsible for approximately $12.8 billion of renewable energy tax equity.” Tax equity is a bit different from regular equity, as a renewable energy industry white paper makes clear. Because a new company testing green technologies that may well save the planet from greenhouse gases can be years away from turning a profit, “Many developers … have little or no ability to use tax benefits themselves. Hence, they must find investment partners with enough income to benefit from tax credits.” One of the largest of these credits, according to Good Jobs First’s analysis of federal tax subsidies, known as the section 1603 credit, has cost the Treasury more than $23 billion in lost revenues since 2009, when the provision was enacted.
Among the beneficiaries of the tax break, according to Good Jobs First’s Subsidy Tracker, are companies like NextEra Energy (while its motto is “Doing well by doing good,” its Florida Power and Light subsidiary runs “clean nuclear power plants,” whose waste remains toxic for thousands years), Duke Energy and PPL Corp. — three utilities that still burn coal. All three companies — rather, their PACs, employees and their family members — contributed more than $600,000 to candidate and party committees in 2014, with two giving twice that amount. And they all lobbied on the tax extender bill, prolonging the credit.
That wasn’t the only giveaway in the bill. The National Restaurant Association, among others, lobbied for a tax break to remodel kitchens and dining areas, the National Grocers Association and companies like Safeway pushed for a tax credit for giving away food they would otherwise throw out and several companies, including soft drink giant Coca-Cola, lobbied for tax deductions for manufacturing in Puerto Rico.
Middle class taxpayers, by contrast, don’t have lobbyists or control of political action committees that can contribute hundreds of thousands of dollars to members of Congress. Which is why corporations have shed, over the years, trillions in tax liability. Or to put it in terms that the late Sen. Russell Long used in 1973 to explain the aversion most Americans have to taxes: Without Washington influence, we’re all the fellows behind the tree.