Eliminate Federal Breaks for Favored Big Companies
By Jason Huffman
West Virginia State Director
Americans for Prosperity
Between the “good ol’ boy” system that held our state back for a century and the political attack on the coal industry, West Virginians know better than most the harm that comes when government is allowed to pick winners and losers.
While we’ve made some progress on that score in our state, the culture of corruption that sustains itself by doling out favors to the well-connected at the expense of the average working person is alive and well in Washington.
Some in Congress are considering reinstating two particularly egregious forms of corporate welfare: the Export-Import Bank and special corporate tax breaks known as extenders (because they extend the life of temporary provisions of the tax code).
The Ex-Im Bank, whose charter is set to expire Sept. 30, acts as a government run-lender to subsidize the purchase of U.S. exports. The bank makes loans that commercial lenders wouldn’t at rates commercial lenders wouldn’t to companies in places like China, Russia, Mexico and Saudi Arabia. If a deal works out, the company wins. If it doesn’t, taxpayers lose. Does that sound legit? It gets worse.
When operating at its peak, the vast majority of the bank’s loans went to only 10 well-connected companies. At one point, aerospace giant Boeing accounted for 70 percent of all Ex-Im loan guarantees. In 2014, it was even the fourth largest benefactor of Ex-Im’s “small business” funding.
Kimberly A. Reed, a fellow West Virginian from Buckhannon, is now president of Ex-Im and chair of its board of directors. That a fellow Mountaineer is now in charge, however, should not divert us from the fact that Ex-Im is just another way for well-connected businesses to game the system.
Ex-Im was a bad idea under previous administrations of both parties and remains a bad idea under President Donald Trump.
Lawmakers should say “no, thanks” when they vote this month on extending Ex-Im’s charter for the next decade. They should also stand fast against reviving tax extenders that expired in 2017.
For those who can afford to pay a lobbyist to encourage Congress to create carve-outs and loopholes that benefit their bottom lines, extenders are a sweet deal. They get the break, the rest of us pay the bill. The average person can’t afford this luxury. Over time, this has led to a system that is rigged against us and a tax code that is riddled with handouts to politicians’ friends.
Supporters of tax extenders try to justify them by claiming they incentivize certain economic activities. That’s just a fancy way of saying the government picks winners and losers. Even worse, some of these extenders would be applied retroactively, for companies’ 2018 taxes. This makes no sense at all. No law can incentivize someone to do something they’ve already done.
Lawmakers took a bold step to level the playing field by passing the Tax Cuts and Jobs Act in 2017. This historic tax reform cut taxes for individuals in every income group and made American businesses competitive again by lowering our corporate tax rate, while eliminating some of these backroom carve-outs.
Now some lawmakers are trying to revive these tax breaks, including sweetheart deals for racehorse owners, motorsports complexes and Hollywood filmmakers. Every dollar they don’t pay is one you or your children will have to.
Rather than putting extenders back into the tax code, Congress should be taking steps to eliminate those that are still there.
It is high time that lawmakers understand that being “pro-business” isn’t about playing favorites with giant companies by selling out taxpayers — it’s about creating a level playing field where we can all succeed on our own merits.