IRS Turns TARP Into the Theft that Keeps on Thieving

From Steve Stanek, a research fellow for budget and tax issues at The Heartland Institute:

How ironic that President Obama and other leading Democrats oppose extending tax cuts for “the wealthy” even as the United States government announces tens of billions of dollars of tax breaks for the wealthiest of all: itself.

News comes today of a decision by the Internal Revenue Service to grant $45 billion of tax breaks to General Motors, which happens to be majority owned by the United States government by virtue of the government’s taxpayer bailouts. Other companies that received billions of taxpayer bailout dollars also will receive favorable tax treatment, raising the final tax break total.

One must ask: Why do these government leaders believe it would be bad for the government to extend tax cuts for individuals yet good for the government to extend tax cuts to businesses it owns?

The answer comes from the Wall Street Journal’s article on this obscenity against taxpayers and assault on free enterprise and fair competition: “The government’s rationale, said people familiar with the situation, is that the profit-shielding tax credit makes the bailed-out companies more attractive to investors.”

Of course. Later this month General Motors will be selling shares of stock, and the company wants a high price. So does the government, which owns more than 60 percent of General Motors and hopes to recoup some of its “investment” by selling its shares at a high price. Same goes for the other bailed-out companies that also will be allowed to shed future tax liabilities.

Neither GM nor Ford officials would respond to requests for comment. Ford, of course, is an American automaker that took no taxpayer bailout money. Ford also did not follow GM into bankruptcy, which means Ford is meeting its financial obligations. GM has walked away from billions of dollars of financial obligations. And for this GM is rewarded by the IRS.

Ordinarily companies that undergo major restructuring have restrictions placed on their tax benefits. But the IRS has ruled companies that received bailout money under the Troubled Asset Relief Program will not face those restrictions.

GM received $60 billion in taxpayer largesse. Now it gets to walk away from $45 billion in tax liabilities. So we are piling a bailout on top of the earlier bailout.

TARP: the theft that keeps on thieving.