This rotten state of affairs goes back to August last year, reports the Washington Examiner. That’s when some of your best-known — and no doubt best paid — former senators swung into action in behalf of special interests. There was bipartisanship on this effort led by former Republican Sen. Trent Lott of Mississippi and former Democrat Sen. John Breaux of Louisiana.
These two former members of the “world’s most exclusive club,” i.e., the U.S. Senate, pleaded for extension of existing tax breaks for “a powerful lineup of clients,” the Examiner reported. They succeeded. They won the case for continuation of a tax provision allowing such multinational companies to defer U.S. taxes by shifting profits into their offshore subsidiaries — “the main tool GE uses to avoid nearly all U.S. corporate income tax,” the newspaper said.
Lott and Breaux likewise were hired by liquor giant Diageo to gain extensions subsidizing rum-making in Puerto Rico and the Virgin Islands. The Chicago Tribune reported that under this special interest arrangement, our government collects a rum tax and returns most of it to Puerto Rico and the Virgin Islands to support public programs.
Not to be outdone, Capitol Tax Partners, lobbyists that formerly were in the Treasury Department during the Bill Clinton administration, got paid more than $1.68 million in the third quarter last year to win “extension and expansion of the production tax credit for wind energy” for companies like GE and the American Wind Energy Association, according to the Examiner. CTP won the Motion Picture Association an extension of tax credits on film and TV productions shot in the U.S., to the tune of about $266 million this year.
The fiscal cliff bill also features the “NASCAR tax break” of an estimated $46 million this year to allow motor racing tracks to depreciate assets faster than other businesses. The Chicago Tribune cites an analysis by the Joint Committee on Taxation in Congress that puts the total cost of the special tax breaks at more than $63 billion this year. No doubt, that’s a minimal figure.
However, during and after the cliff negotiations, there was no hint to the public that these things were in the compromise — because it was so easy to quietly insert them into the bill per approval by the Senate Finance Committee last August, 19-5. The burning question has to be: Why did these tax breaks get included in the compromise worked out between Democrat and Republican leaders?
“The White House insisted,” according to Don Stewart, spokesman for Senate Republican leader Mitch McConnell, the Tribune reported. The White House did not comment.
It’s outrageous — and routine — in Washington politics.