Economic Stimulus Legislation - Common Cause
Thursday, October 25, 2001
"As debate on economic stimulus legislation moves from the House to the Senate, a relatively small number of large soft money donors is poised for a significant windfall, according to a Common Cause analysis.
"Regular Americans are being told to go out and spend more to do their part to stimulate the economy," Common Cause President Scott Harshbarger said. "Big campaign donors, though, are being told that ‘the check’s in the mail.’
"It’s easy for proponents of some of these measures to dress them up as credible remedies to the economic downturn brought about by the terrorist attacks. But there’s nothing patriotic about profiteering in a time of national
crisis. We have to distinguish between items that genuinely stimulate the economy and items that are just special-interest perennials that rear their head year after year."
What follows is the Common Cause analysis of some of the items in the legislation the House narrowly passed onWednesday, and of the campaign donations of many of the legislation’s potential beneficiaries.
Demolishing The AMT
The corporate Alternative Minimum Tax (AMT) was enacted as part of the 1986 Reagan tax reform package in order to prevent profitable corporations from escaping all tax liability. Companies were required to compute the
taxes they owed under regular tax rules, and under AMT rules, which were stricter about certain tax deductions, such as depreciation. Companies had to use the calculation method that required them to pay the most in taxes.
Since it was enacted, major corporations have lobbied to gut or kill it the AMT. Over the years, these companies have succeeding in persuading Congress to weaken the law. Now that the House-passed bill eliminates the AMT entirely, these companies have taken a major first step towards AMT repeal.
Moreover, there are really two tax breaks here. The first is the repeal of the AMT tax. The second is making that repeal retroactive to 1986. That means that corporations now are immediately entitled to a refund on the alternative
minimum tax they’ve paid over the past 15 years. That refund will total about $25 billion. This victory, noted the Wall Street Journal, was the result of "quiet and effective lobbying by U.S. multinational companies."
Just 14 corporations alone would get $6.3 billion of that rebate, according to Citizens for Tax Justice. IBM alone gets $1.4 billion, followed by General Motors, receiving $833 million, and General Electric, entitled to $671 million.
Over the past 10 years, those 14 corporations gave nearly $15 million to the national party committees in huge soft money contributions. Supporters say that the AMT repeal and rebate will give an infusion of cash to struggling
manufacturing firms and rev up the economy, but critics charge that the tax break will do little or nothing to encourage new business investment."
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