Steven Jonas, MD, MPH is a Professor of Preventive Medicine at Stony Brook University (NY) and author/co-author/editor/co-editor of over 30 books. In addition to being a columnist for BuzzFlash@Truthout he is the Managing Editor of and a Contributing Author to The Political Junkies for Progressive Democracy.
Fiscal Cliff Deal Sneaks In Wall Street Gifts, NASCAR Perk
Posted: 01/02/2013 8:38 pm EST | Updated: 01/03/2013 10:17 am EST (Huff Post)
The 11th-hour deal to avert the so-called fiscal cliff preserved billions of dollars in corporate tax giveaways even as it slashed take-home pay for millions of American workers.
Tucked inside the last-minute fiscal cliff package were more than a dozen tax loopholes, many of which will benefit Wall Street financial firms and some of the nation's biggest corporations. These breaks will cost billions of dollars in the coming year, underscoring the lobbying power of corporate interests.
The deal was less kind to the middle class. Congress permitted a cut in the payroll tax to expire, meaning that the tax burden for the average worker will increase about $1,000 in 2013.
"This shows that the lobbyists are able to get what they want even when everyone else is starving," said Phineas Baxandall, senior analyst for tax and budget policy at the U.S. Public Interest Research Group. "It also shows they are best able to get what they want when no one else is paying attention."
The corporate loopholes were part of a package of so-called tax extenders tacked onto the main bill. The extenders package, first approved by the Senate in early August, mixes popular benefits, like a deduction for teachers who buy classroom supplies, with corporate-friendly carve-outs, such as the "active financing" exception that permits businesses earning interest on overseas lending to defer U.S. taxes on that income indefinitely. There is even a tax break for construction of new racetracks.
The tax extenders were passed for only one year, and they still need to clear another potential hurdle: upcoming negotiations over mandated spending cuts and the debt ceiling. President Barack Obama and congressional leaders have indicated they'd like to see a "grand bargain" on taxes, which would feature lower overall rates but close a slew of loopholes.
The financial services industry, whose leaders had earlier joined a group of other corporate executives pushing for a "fair" solution to the fiscal crisis, is one of the primary beneficiaries of special-interest tax breaks. The active-financing exception, for example, permits banks like Morgan Stanley to avoid the 35 percent U.S. corporate tax rate on interest income from money lent overseas. A handful of other U.S.-based multinational companies with financing arms, such as Ford Motor Co. and General Electric, also use that exemption to lower their tax bills. The two-year cost to taxpayers is an estimated $11.2 billion, according to the congressional Joint Committee on Taxation.
Tax Justice Digest ( http://ctj.org )
New CTJ Report: Revenue Impacts of the Fiscal Cliff Deal ( http://ctj.org/ctjreports/ 2013/01/revenue_impacts_of_ the_fiscal_cliff_deal.php )
While the White House and members of Congress have described the fiscal cliff deal as raising $620 billion in revenue, the Joint Committee on Taxation (JCT), the official revenue estimator for Congress, has projected that it will actually reduce revenue by $3.9 trillion over a decade. The widely-used $620 billion figure is calculated by comparing the bill's provisions making permanent most of the Bush-era tax cuts to a proposal for making permanent all the Bush-era tax cuts. As this report explains, the revenue "savings" is likely to be offset by the business tax cuts that are also included in the bill and which are now likely to be extended over and over throughout the decade and beyond...
New CTJ Report: Poorest Three-Fifths of Americans Get Just 18% of the Tax Cuts in the Fiscal Cliff Deal
The fiscal cliff deal approved by the Senate and House on New Year's Day cuts taxes substantially compared to the tax policies that would be in effect if Congress had allowed all temporary tax cuts to expire. The deal cuts taxes even for the richest Americans but directs only a fraction of the overall tax cuts to low- and middle-income Americans...
A Tax Cut By Any Other Name
The term "Bush tax cuts," which dominated fiscal debates for far too long, is now history. But the legacy of these tax cuts endures in our crippling deficit and our growing economic inequality. And now, thanks to President Obama and the 112th Congress, they will continue to distort our tax system into the foreseeable future. When the Senate passed legislation based on the deal, we ran the numbers and published our results on New Year's Day...