Ron Wyden is the Chairman of the US Senate Finance Committee, which overwhelmingly approved the Tax Extenders, nearly all of which are Income Inequality Expanding Tax Loopholes. Chuck Schumer is his First Lieutenant on this key US Senate Finance Committee.
Wyden is such a strong, very vocal critic of the NSA, CIA and other US Intelligence Agencies for their lack of transparency.
I think the US Senate Finance Committee might be just as bad in its lack of financial transparency.
As one of many illustrations, let's take the 50% first-year bonus tax depreciation which overwhelmingly benefits the largest US Corporations.
In the Tax Extenders to be soon voted on, this first-year 50% bonus tax depreciation is only for eligible capital expenditures for calendar 2014.
The argument that Wyden and Schumer make is that this is a huge US job creator.... that a US Company will make an eligible capital expenditure in 2014 if they know they are entitled to a 50% tax write-off for the cost of this investment made in 2014.
But it is now December 15, 2014, and thus 23/24ths of these capital investments of large US Corporations have already occurred in 2014 with no 50% first-year bonus tax depreciation having been enacted. Thus, Wyden's and Schumer's proposed Tax Extender here is to tax incentivize something that has already occurred. Yeah, their Tax Extender here is to make this very lucrative tax write-off RETROACTIVE to eligible capital expenditures already made from Jan 1, 2014 to Dec 15, 2014.....I'm not kidding.
Talking about throwing US taxpayer money away.
But there's much more to the financial lunacy here.
What Wyden and Schumer are very visibly selling is that the cost of this 50% first-year tax write-off is only $1.9 Bil, as scored by the CBO.
So why is it that the Business Roundtable, headed by ATT CEO Mr. Stephenson, is pushing more than anything this 50% first-year tax write-off?
Well, they know the economic benefit to them of this 50% first-year tax write-off is monumentally more than $1.9 bil.
To illustrate the point, let's say 2014 total US eligible capital expenditures were $600 bil. The first-year bonus tax depreciation in 2014 would be $300 bil. The reduction in 2014 US Federal Income Tax would be 35% x a bit less than $300 bil, or a bit less than $105 bil..... yeah, that's 55 times the $1.9 bil cost that Wyden and Schumer are touting. But they have been completely silent by saying absolutely nothing about this first-year a bit less than $105 bil US taxpayer cost under this assumption. And a bit less than $105 bil US taxpayer cost on something that relates to 23/24ths of the 2014 capital expenditures that have already been made in 2014. ATT alone has made capital expenditures of a massive $16.8 bil in the first nine months of 2014. Can you see why CEO Mr. Stephenson is fighting so hard for the 50% first-year tax depreciation to be applied RETROACTIVELY to include eligible capital expenditures ATT made in the first nine months of 2014? And Verizon has made capital expenditures of $12.6 bil in the first nine months of 2014.
But there's even more to this 50% first-year tax write-off story. Why are ATT's CEO Mr. Stephenson and the rest of the Business Roundtable putting so much pressure on US Senators to pass this specific Tax Extender?
By spending this money on these capital expenditures, in fact it doesn't create US jobs in the aggregate. Why, because a substantial portion of these capital expenditures are being made to make these large US Corps more efficient.....in other words, to replace decent-paying US jobs with more efficient machines.
To illustrate this point, let me just focus on one industry and the two largest beneficiaries in this industry of this 50% and earlier 100% first-year tax depreciation..... no other than ATT and its major competitor Verizon, both of which had mostly US Operations.
So how many US jobs did ATT create while they were getting this massive 50% and earlier 100% first-year tax write-offs?
ATT's 10-Ks filed with the SEC tell you that story.
On Jan 31, 2009, ATT had 301,000 employees. On Jan 31, 2014, it had 243,000 employees. Yeah, that's a 58,000 drop in ATT's number of employees or down 19% in the most recent five years when it received extremely lucrative 50% or earlier 100% first-year tax depreciation.
And so what were ATT's total capital expenditures in these same five years where they were getting just massive first-year write-offs for tax depreciation and shedding 58,000 employees? Well, they were a massive $96.6 bil.
What about Verizon?
Well, Verizon had 223,900 employees on Dec 31, 2008. It had 176,800 employees on December 31, 2013. Yeah, that's a decline of 47,100 employees or down 21% in the most recent five years reported during which it was getting very lucrative 50% and earlier 100% first-year tax write-offs.
And so what were Verizon's total capital expenditures in these same five
years where they were getting just massive first-year write-offs for tax
depreciation and shedding 47,100 employees? Well, they were a massive
$82.4 bil.
Pure and simple, what you have with this RETROACTIVE 50% first-year tax write-off is just massive Income Inequality Expansion. And nearly all US Senate Democrats plan to vote for this?
And nearly all of the other 54 Tax Loophole Extenders, and all of the large dollar US Taxpayer cost ones, are also huge Income Inequality Expanders. The most egregious of these is the Subpart F Exception For Active Financing Income, a $5.1 bil one-year Tax Loophole being granted to large US Multinational Corps, primarily Financial Institutions. The primary advocate of this pure US taxpayer giveaway has been New York's Chuck Schumer, who is the go-to-guy for anything large US Financial Institutions want.
Also, the US Senate Finance Committee led by Wyden and Schumer is clearly showing its lack of financial transparency by refusing to require the CBO to give each of these 55 Tax Extenders an Income Inequality number score.
Income Inequality is by far the most important issue to US Citizens and the US Senate refuses to let US citizens know how the impartial, well-qualified CBO would Income Inequality Score key proposed legislation?
Truth be told, a Republican like Ohio Governor John Kasich, by his actions, has been much more of an Income Inequality Narrower than perhaps more than half of the US Senate Democrats, by their actions..... just saying.
Consistent with what all of the Democratic US Senate Leadership did, I think that Hillary Clinton, if she were still in the US Senate, would have also voted for both of these massive Income Inequality Expanders..... the 2015 US Federal Government Spending Bill and the Tax Extenders. That's why the country needs some Democratic and Independent US Presidential Candidates who will fight for Income Inequality Narrowing.
