Unions to lawmakers: Take away corporate tax expenditures to pay down deficit

Organized labor and other groups are pushing Congress to eliminate corporate tax breaks and use the extra revenue to pay down the deficit.

In a letter sent Wednesday to every member of Congress, scores of groups — including the AFL-CIO, AFSCME and Citizens for Tax Justice — said it would be wrong for policymakers to move to bring down rates for companies that are making money while discussing cutting public services. 

Washington officials on both sides of the aisle have called for a corporate tax overhaul, arguing that comparatively high U.S. tax rates need to come down to increase competitiveness for American businesses. 

But the new letter pushes back on those assertions, saying that public investments that improve the country’s workforce and infrastructure would do a better job at giving companies a leg-up globally.

“These public investments — such as education, health care, nutrition assistance, environmental protection and transportation — will face deeper cuts if we fail to rein in tax subsidies to profitable corporations,” the letter reads. 

Tax reform, and the use of new tax revenue to reduce deficits, has been a common discussion topic in Washington of late. 

Treasury Secretary Timothy Geithner and the top tax writers in both chambers — Rep. Dave Camp (R-Mich.), the chairman of the House Ways and Means Committee, and Sen. Max Baucus (D-Mont.), the Finance Committee chairman — are among those who favor a tax reform plan that would reduce rates while taking away some so-called tax expenditures. 

Geithner has stressed that a corporate reform framework his department is working on would be revenue-neutral — neither adding nor subtracting from the deficit. 

In general, the tax reform discussion appears to be in early stages, with potential hurdles such as whether to tackle the corporate code first or take a more comprehensive approach, as Camp has endorsed.

Those talks are also happening as Democrats are pushing the use of new tax dollars to help battle deficits, something GOP lawmakers have opposed.

But top Republicans like Sen. Jon Kyl (Ariz.) have appeared more open to taking away tax expenditures than raising tax rates or implementing a surtax on millionaires.

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