Christmas season is here, with Georgians expected to top their estimated $5.5 billion in holiday spending from last year. But while families prepare to crowd around their Christmas trees to see what Saint Nick has in store, corporate lobbyists are already circling Washington for a goodie season of their own.
The goodies are called “tax extenders,” one of the worst examples of corporate welfare in America today. Comprised of more than 50 separate temporary tax credits, the currently proposed two-year extension will cost taxpayers $95 billion over the next decade.
These credits are “temporary” in name only. Many of these one- or two-year extensions have been renewed continuously since the 1980s. If that doesn’t make sense, it shouldn’t.
Congress uses these extenders - rather than making them permanent - for two reasons. First, it helps hide the true cost of their policies. When each credit is only extended for a year or two, the Congressional Budget Office - the government’s accountant - only counts those bite-sized pieces. Thus, even though Congress has full intentions of renewing them every year, they don’t look as bad on the federal budget.
The second reason is even more cynical: By having to take action every year or two, Congress has more opportunities to raise campaign cash. If the favors were permanent, lobbyists wouldn’t need to continue asking for them and corporations that benefit wouldn’t need to keep writing checks.
The facts speak for themselves: A 2014 analysis found nearly 400 companies and trade associations employed more than 1,350 lobbyists to lobby specifically on this set of tax breaks.
Start with the small - and ridiculous. One perk allows racehorse owners to depreciate their prize animals over three years rather than the usual seven. Cost to taxpayers: $95 million in 2016. Another $95 million over the next decade goes to “motorsports entertainment complexes” by way of a special deduction. Puerto Rico and the Virgin Islands also get a tax rebate for every gallon of rum produced by local distillers. That’ll cost American taxpayers $308 million next year.
In other words, while you’re working hard and paying your taxes, Congress is giving those dollars away to millionaires who have the right connections.
The most expensive is the tax credit for research and development. It will cost $22.6 billion over the next decade, with roughly 95 percent flowing to the largest 5 percent of companies. And for what? A 2009 report by the Government Accountability Office found a “substantial portion” funds research businesses “would have done anyway.” So why are Georgia taxpayers forced to subsidize it?
This is nonsense. Rather than continue this crony annual tradition, Congress should replace the extenders with lower, simpler corporate and personal income rates. This is the surest way to boost American businesses’ international competitiveness and put more money in hardworking Georgians’ pockets.
A recent Rasmussen poll found that 70 percent of American voters “think government and big business often work together in ways that hurt” the rest of us. Ending tax extenders in favor of lower overall rates would be a positive first step in fixing that perception.
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