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Washington (CNN) -- House Republicans, who fervently pound the podium against the deficit, didn't blink Friday at passing a whopping $287 billion business tax cut measure with no effort to pay for or offset that amount.
GOP lawmakers argued the bill helps the economy, but budget-watching organizations outside Congress proclaimed it an irresponsible move.
The 258-160 vote marked one of the largest unpaid-for measures passed by the House in years, but was also the latest sign that tax cuts are at the center of the Republican universe and the ballyhooed deficit fight is not on the same level as a priority.
originally posted by: charles1952
My understanding is that this only allows businesses to take their depreciation allowance sooner, it doesn't give them more of an allowance.
Isn't that what the Democrats have been asking for, pumping money into the economy?
Oh and there is no offset to this corporate welfare.
U.S. companies face the highest official corporate tax rate in the world. But there's a big difference between the rates set out by law and the cash that's actually collected.
Large, profitable U.S. corporations paid an average effective federal tax rate of 12.6% in 2010, the Government Accountability Office said Monday.
GAO: U.S. corporations pay average effective tax rate of 12.6%
• One hundred and eleven of the 288 companies (39 percent of them) paid zero or less in federal income taxes in at least one year from 2008 to 2012.
• The sectors with the lowest effective corporate tax rates over the five-year period were utilities (2.9 percent), industrial machinery (4.3 percent), telecommunications (9.8 percent), oil, gas and pipelines (14.4 percent), transportation (16.4 percent), aerospace and defense (16.7 percent) and financial (18.8 percent).
• The tax breaks claimed by these companies are highly concentrated in the hands of a few very large corporations. Just 25 companies claimed $174 billion in tax breaks over the five years between 2008 and 2012. That’s almost half the $364 billion in tax subsidies claimed by all of the 288 companies in our sample.
• Five companies — Wells Fargo, AT&T, IBM, General Electric, and Verizon — enjoyed over $77 billion in tax breaks during this five-year period.
The GAO's calculation for effective corporate tax rates is lower than a number of previous estimates. That's in part because the office excluded unprofitable firms, which pay little or no taxes, from its analysis.
Including those firms' losses would reduce the total net income from which the average tax rate is calculated, and would not "accurately represent the tax rate on the profitable corporations that actually pay the tax," the GAO said.
The amount of money collected has little to do with the tax rate. I'm sure you remember the Laffer curve which shows that after you get to a certain rate, total tax revenue starts falling. Economists could make a very good case that our tax revenue is low because we're charging too much.
U.S. corporate tax collection totaled 2.6% of GDP in 2011, according to the Organization for Economic Cooperation and Development. That was the eleventh lowest in a ranking of 27 wealthy nations.
originally posted by: links234
a reply to: MarlinGrace
According to conservatives every tax cut is a 'stimulus'. This particular tax cut, if allowed to expire, would reduce the deficit by $287 billion. When we're sitting at a deficit of just over half a trillion currently, it makes sense to lower that deficit further.
The nation can't cut its way to prosperity, there needs to be some additional revenue involved.
originally posted by: terriblyvexed
a reply to: LDragonFire
This doesn't sound unreasonable to me.
They're trying to entice "the rich", as you like to call them, to spend money.
That's how you stimulate an economy, but I'm sure taxing companies into oblivion will work eventually.
The move by Republicans to back $287 billion in tax cuts comes at a time when they are loudly questioning much smaller spending bills: the president's request for $3.7 billion to respond to children crossing the border, $11 billion to keep highway projects afloat for less than a year and the roughly $35 billion Senate measure to revamp the veteran's health care system. Combined, those measures are still less than a fifth of the tax cut bill.