Our Most Corrupt Tax Breaks: 10 Loopholes to Close Right Now

http://www.sfweekly.com/2012-10-10/news/taxes-tax-breaks-1-percent-corporations-loopholes-government-congress-corruption-mitt-romney/

A year ago Citizens for Tax Justice, a Washington, D.C., nonprofit, studied the tax returns of 280 corporations. What it found was a Beltway version of a Mafia protection scheme.

From 2008 to 2010, at least 30 Fortune 500 companies — including PepsiCo, Verizon, Wells Fargo, and DuPont — paid more for lobbyists than they did in taxes. They collectively spent $476 million sucking up to Congress, buying protection for tax breaks, loopholes, and special subsidies.

It didn't matter that these same 30 firms brought home a staggering $164 billion in profit during that three-year period. They not only managed to avoid paying taxes; they actually received $10.6 billion in rebates.

Welcome to the U.S. tax code, where companies like General Electric and Boeing contribute less to the federal treasury than a retired machinist living in Florida.

Defenders of the system argue that most deductions don't go to large corporations. That's true. By pure dollars, the lion's share go for mortgage interest, employer-paid health insurance, retirement plans, and Medicare benefits.

The difference is these tend to benefit everyone. They're designed for the greater good, reinforcing the pillars of self-determination: home ownership, savings, and healthcare.

But there's another part of the tax code where 99 percent of America is barred from entry. It's where Congress sells loopholes and subsidies to those who can pay. They not only screw the rest of the country — which is forced to cover the tab — but turn the notion of a free market into a joke.

Even for companies within the same industry, the disparities are alarming. From 2008 to 2010, UPS paid a tax rate of 24 percent. Rival FedEx paid less than 1 percent.

Monsanto managed to pay 22 percent — well below the supposed corporate rate of 35 percent. But that's nothing compared to DuPont, which received a $72 million rebate despite profits of $2.1 billion.

This sleight-of-hand even extends to retail. While Nordstrom paid 37 percent in taxes, Macy's rate is just 12.

You don't need a Wharton MBA to see how damaging this is to the nation's financial health. Big companies are given incentive to load up on lobbyists, accountants, and lawyers, rather than use that money to improve products and services. And while small businesses may collectively be our largest and stablest employer, we've rigged the game against them, since they can't afford to buy legislators of their own.

"The tax code is a mess," says Rep. Chris Van Hollen (D-Md.). "I support tax reform, but not reform that's simply a Trojan horse for giving another round of windfall tax breaks to the very wealthy."

And that's the problem. President Obama and Democrats have railed for years against this brand of favoritism, only to cave in at the first whiff of resistance.

Republicans are worse, prattling on about free markets while protecting just about any market-distorting loophole if the money's right. Mitt Romney, the poster child for off-shore tax schemes during his time at Bain Capital, claims he has a plan to close loopholes. He just refuses to say how he'll do it.