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A recently released report prepared by liberal think tank Citizens for Tax Justice (CFTJ) has attracted the attention of the MSM. Entitled “Corporate Taxpayers and Corporate Tax Dodgers 2008 – 2010”, the report points fingers at corporations that paid the lowest effective tax rates over those three years.
The leading “tax dodger” according to the report was Washington D.C. based Pepco Holdings, a relatively small power company serving D.C. and Maryland. CFTJ says Pepco’s effective tax rate over the three year period was -57.6%, which sounds bad, but the actual amount comes to about $500 million over three years, which is roughly the amount of money the Obama administration flushed down the toilet in the Solyndra scandal. At least Pepco is still in business.
Number two on the list is a little company called General Electric and their case is a little more disturbing. GE’s effective tax rate of -45.3% over the three year period amounts to almost $5 billion in taxpayer dollars flowing into the company’s coffers. Now $5 billion isn’t what it used to be, but – to paraphrase Everett Dirksen’s famous quote – billions do add up eventually.
But, here’s the thing I found most interesting. CFTJ carefully explains where tax breaks and subsidies come from. Among the mechanisms noted are “Industry-specific tax breaks”. Here’s their summary from page 13 of the report:
Industry-specific tax breaks. The federal tax code also provides tax subsidies to companies that engage in certain activities. For example: research (very broadly defined); drilling for oil and gas; providing alternatives to oil and gas; making video games; ethanol production; moving operations offshore; not moving operations offshore; maintaining railroad tracks; building NASCAR race tracks; making movies; and a wide variety of activities that special interests have persuaded Congress need to be subsidized through the tax code.
Did you catch it? They mention industries “providing alternatives to oil and gas.” What could that mean? Might it refer to the hundreds of billions in tax breaks and subsidies that the wind and solar power industries need to stay alive? Could we be talking about the fact that the average wind farm counts on tax breaks and subsidies for about 30% of its revenue, far more than any other form of energy?
While I don’t agree with everything in CFTJ’s report (because it focuses on only one portion of complex economic issues) it is useful in calling out some of the companies that benefit from crony capitalism. So how about calling out the worst of all of the crony-capitalist deals by name? Let there be no confusion: it’s so-called “green power industry” – predominately in the form of wind and solar companies – that are the worst of today’s tax dodgers. Why not just say that? Unless there’s some ideological reason that prevents CFTJ from making that clear of course…