The Corporate Tax Break Feeding Frenzy. (Interviews)
An Interview with Nancy Watzman
Nancy Watzman is research and investigative projects director for Public Campaign, a group "dedicated to sweeping reform that aims to dramatically reduce the role of special interest money in Americas elections and the influence of big contributors in American politics." Public Campaign has recently launched a web site, www.howdarethey.org, which highlights wartime profiteering. Watzman is the author of a November 2001 Public Campaign study, "Buy Now, Save Later: Campaign Contributions and Corporate Taxation.
Multinational Monitor: Why do corporations want to eliminate the Alternative Minimum Tax?
Nancy Watzman: The alternative minimum tax (AMT) repeal provision -- which is in the Housepassed stimulus bill -- is a blatant give-away to large corporations, and is something they've been lobbying for for years.
The House stimulus package not only includes a repeal of the AMT, it also includes a rebate of any AMT payment that a corporation has made since the law was enacted.
Our analysis shows that 16 companies which would get $7.4 billion in immediate tax rebates under the House plan contributed nearly $46 million to federal candidates and parties since 1991. Two thirds of that money went to Republican candidates and party committees. So these are bigtime campaign money players, and have been for a long time.
MM: What is the Alternative Minimum Tax?
Watzman: The AMT was put in place in the 1980s because so many corporations were taking advantage of tax breaks and loopholes that they were often whittling their tax bills down to zero, or even less. The AMT requires companies to calculate taxes using regular rates and existing tax breaks, and also with a lower -- alternative minimum -- rate but fewer loopholes. They are supposed to pay the higher of the two.
MM: What would the repeal and rebate mean in terms of benefits for specific companies?
Watzman: Citizens for Tax Justice identified 16 companies as gaining the most. They include household names and major campaign contributors like ChevronTexaco, General Electric and Enron.
ChevronTexaco, for example, is the source of nearly $7 million in campaign contributions, and would get $572 million in immediate rebates. General Electric gave $6.2 million and would get $671 million in rebates. And the list goes on. These are all major, profitable companies.
MM: How long have the companies been campaigning to eliminate the AMT?
Watzman: Pretty much since it was passed in 1986. The House Ways and Means Committee passed a repeal of the AMT back in 1995, but the repeal never became law. The corporate lobby did manage to weaken the law somewhat in 1997.
Repeal has been on the wish list for a long time. They are shoving it through now at a time of crisis because it is an unpopular thing that normally would be pretty tough to get through Congress.
MM: The Public Campaign report also looks at other tax breaks that groups of companies have been lobbying for. What do you find in those other areas?
Watzman: As I mentioned, the AMT was put in place because companies take so many deductions that they whittle their taxes down to zero. The way they do it is through a whole long list of exotic tax breaks that most people know nothing about.
We looked at some of these in the report. We found major lobbying for loopholes by companies in the form of campaign contributions.
One example is a tax loophole called foreign sales corporations, where companies can claim credits on profits from exports. A bunch of companies are lobbying to save that tax break even though it has been declared illegal by the World Trade Organization.
It is also a great example of how these things get expanded and changed to benefit corporations.
Back in 1997, Microsoft led a lobbying campaign to get the tax break extended to software companies. …