Tim Foster: ‘Tax extenders’ bill mixes good with bad
Large corporations have huge advantages over small businesses. Unfortunately, Congress is about to make things worse.
As the owner of a small business that converts gas-powered vehicles into electric ones, I know how hard it can be to succeed. I started my company at the worst time, on the cusp of the Great Recession. Sheer grit saw me through.
Most large corporations have the financial resources to weather hard times. They can keep their costs down because they operate on a vast scale. They can cut prices to gain market share and drive small operations out of business. They can squeeze cities and towns to get favorable tax subsidies in return for a promise of new jobs.
Corporations making record profits shouldn’t need tax breaks that are paid for on the backs of hard-working Americans and small businesses. But there is a big push in the U.S. Senate to pass a package of tax breaks that includes some giveaways – like tax breaks for owners of NASCAR racetracks or owners of thoroughbred racehorses. One of the worst and most expensive is a loophole that enables Wall Street banks and companies with financing divisions to dodge federal income taxes on profits they claim are earned offshore, often in tax havens.
General Electric, a notorious tax dodger, uses this loophole to avoid paying its fair share in federal income taxes. Over the past five years, GE made more than $27 billion in profits but it got $3 billion in tax refunds, according to the watchdog group Citizens for Tax Justice. Two dozen other profitable Fortune 500 companies, including Boeing Co., Verizon and Priceline.com, also got hundreds of millions or billions of dollars in tax refunds in that period.
In other words, some of our largest corporations paid less in federal income taxes than any small business in America. That puts small firms at a substantial disadvantage.
Many large companies are trying to lock in their privileged tax status by passing the so-called “tax extenders” bill pending in the U.S. Senate. They deployed more than 1,300 lobbyists over the past three years to convince members of Congress to pass these tax breaks, according to a recent report by Americans for Tax Fairness and Public Campaign. GE alone paid 48 lobbyists to twist arms on the loophole that enables the company to dodge taxes on its offshore income.
The tax extenders bill was passed by the Senate Finance Committee April 3. The committee, which includes Sen. Maria Cantwell, passed the bill without a recorded vote.
Thursday, the bill was blocked on a procedural vote, but supporters plan to bring it back later.
The bill isn’t all bad – it includes tax breaks that incentivize energy efficiency, help teachers buy school supplies and give small businesses a better chance to compete. The problem is that the current package of tax breaks throws the good in with the bad. Provisions that help American families and small businesses are held hostage by gross injustices like the GE loophole that enables some U.S. corporations to shift their profits offshore to avoid paying taxes at home.
Worse, Congress plans to tack the entire cost onto the budget deficit – $85 billion over two years – and much more if these tax breaks are renewed each year, as has been the case. To make up this loss, everyone else will pay higher taxes, or there will be less money for public investments in roads, schools, job training and health care.
Americans aren’t complainers. After my previous job at Microsoft disappeared, I became a long-haul trucker, hitting 48 states until my son pleaded to see his dad more often. So now I try to make a buck helping farsighted middle-class folks turn our economy away from dirty fuel.
I’m not looking for a handout from the government, and neither are most small-business owners. We just want a level playing field and a chance to succeed. If we all play by the same rules, I know hard work and determination will win out every time.
Tim Foster is owner of Patriotic Motors in Spokane and a member of the Main Street Alliance of Washington, a coalition of more than 2,500 small-business owners.