US tax bill benefits corporations more than families
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Surprisingly, US Congress’s US$680 billion holiday-season tax deal will bring some cheer to working families and not just to big corporations this year.
Refundable tax credits putting extra cash in the hands of hard-pressed workers and parents were included in a huge year-end gift-wrapped package of tax breaks — the type of bill that usually only offers big rewards to corporate fat cats.
Advocates demanded — and won — that any corporate tax cut package had to also make permanent the improvements to these effective poverty-fighting programs. That means a single mom working minimum wage with two kids at home will have US$1,725 more in her pocket, for example.
Another victory was the renewal of the American Opportunity Tax Credit. It provides a tax credit of up to US$2,500 per year for expenses incurred while attending college such as tuition, fees and course materials. This will give a helping hand to millions of families struggling with the costs of higher education.
Altogether, the final tax package makes a US$250 billion investment in America’s working families.
Of course, corporations still got more: more than US$400 billion in undeserved tax favors. Among them are two loopholes that make it easier for multinational firms to stash profits offshore in tax havens. The Active Financing Exception was permanently enshrined in law while the CFC Look-Through Rule was extended for five years.
Together, the two tax breaks will cost the American people around US$85 billion in lost revenue over the next decade. Alternatively, if we didn’t plow US$75 billion of that money back into overstuffed corporate treasuries we could guarantee preschool for every low-and moderate-income four-year-old in America for 10 years.
Another gratuitous gift called Bonus Depreciation — originally intended as a recession fighter, and not even good at that — will go on for another six years, losing US$28 billion in corporate tax revenue.
Closing loopholes
Congress should not be making any corporate tax loopholes permanent or even temporarily extending them. It should be closing them.
Over the past half-decade of budget austerity, American families have withstood US$2.7 trillion in spending cuts in everything from senior nutrition to college financial aid to affordable housing. America’s corporations haven’t contributed a nickel in extra tax revenue.
Moreover, while corporations enjoy record profits, workers continue to struggle in a slow economy. Working families need a hand. Corporations don’t need handouts.
I’m not sugar coating our challenges with a lot of holiday cheer.
Progressives won some, but lost a lot, in this big fight.
We have a long way to go towards the day when corporations routinely pay their fair share of taxes and families and communities get the public services they deserve. It may sound like a Christmas miracle today, but we can get there.
Clemente is executive director at Americans for Tax Fairness. A version of this article previously appeared in The Huffington Post. Copyright: American Forum. Shanghai Daily condensed the article.
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