Corporate Welfare Wagons
By Bill Moore
Posted: 12 May 2010
"Congratulations. You're about to buy a fancy new Nissan Leaf or Chevy Volt . . . for someone else," writes Holman Jenkins his Wall Street Journal article entitled "Welfare Wagons -- The electric cars are powered by taxpayer credits."
Now, since I don't subscribe to Rupert Murdoch's Journal, I am not able to read the rest of Jenkin's article, but I can pretty much imagine what it is going to say from its opening paragraphs. We poor, beleaguer taxpayers are about to help a bunch of wealthy, treehugging lefties buy a tiny fleet of expensive and impractical electric cars that won't make GM, especially, any money; won't make any serious dent in our dependency on imported petroleum, because so few will be sold; and will likely increase CO2 emissions, not reduce it.
Jenkins writes, "This is news masochists will want to grind their faces into after sending a big check last month to the IRS." I did, in fact, send a very big check to the feds and my state last month, because I opted to start using some of that 401k and IRA funds we'd been saving for "retirement" and since I'm over 59.5 years of age, I am entitled to do so. But nationally, the amount of taxes paid by Americans across the board was, in fact, the lowest since the Truman Administration in 1950, reports analysis by USA Today. So much for those Tea Party protests about high taxes.
On the issue of tax credits, however, I am a bit confused by Jenkins' reasoning. If I understand how the $7,500 tax credit works, the federal government isn't giving anyone any money when they buy a Volt or LEAF. The taxpayer is simply being allowed to deduct this much from his federal tax bill. Say, I owe the federal government $15,000 in taxes, most of which has been withheld throughout the year (assuming a gross family income of say $100,000 minus a host of standard deductions and/or itemized deductions). When I file my 1040 tax form in April 2011, after buying the first Volt to roll off the line and into my local Chevy dealership in December of this year, I will be requesting the federal government refund $7,500 of my money, not Mr. Jenkin's money or some angry, Glenn Beck-manipulated Tea Partier, or some poor widow down the block. It's MY money I will be getting back!
Now if Mr. Jenkins objects to that, then he should also be objecting to the major American corporations who, through slick tax accounting, not only don't pay any taxes, but actually have figured out how to get the IRS to refund them OUR money. [See Shocking: Offshore tax havens of the US corporate elite on Raw Story.com.] Incidentally, one of these corporate welfare wagons happens to be Rupert Murdoch's News Corp., which owns the Wall Street Journal. So, much for objective journalism.
Now, I suppose the argument might be made, though it would be a very thin one, that by my not letting Uncle Sam keep my $7,500, I am depriving the government of much needed funding, forcing other taxpayers to make up the difference. Of course, Mr. Jenkins doesn't mention that of the 100 largest public companies, 83 of them have offshore subsidiaries through which they funnel revenue to avoid paying what the Treasury Department estimates is at least $100 billion annually in lost tax receipts, according the Government Accounting Office. And some of these corporate welfare wagons are not only well-known names like Pepsi, Exxon, Dell, Kraft Foods, Boeing and Merck, but also bank bailout recipients: Bank of America, which received $45 billion; Citigroup, $45 billion; American Express, $3.4 billion; and Goldman Sachs, $10 billion, according to the Taxpayers for Common Sense watchdog group. [See Bailed-Out Firms Have Tax Havens, GAO Finds].
On the question of whether or not the federal government (as well as states like California, Georgia and Oregon) should be incentivizing taxpayers to buy Volts or LEAFs, on top of the loans and grants GM, Nissan, Telsa, Fisker and other have been handed, the government has been doing this for nearly two hundred years, going back to federal funding of the Erie Canal starting in 1818. That project cost an initial $7 million and earned revenues from tolls of $121 million between 1824 and 1882.
America's transportation system is largely government subsidized from the streets on which Mr. Jenkins drives to the airports out of which he flies. Yet, he somehow objects to American taxpayers helping jumpstart the transportation system of tomorrow. Apparently, he'd prefer the fuel efficient cars, trucks and buses Americans will be driving in the 21st century to all come from China.
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