Corporate titans unleashed an army of lobbyists to seek an extension of a key tax break on offshore income, according to a report that liberal groups released Monday.
Almost 300 of those K Street officials lobbied specifically on a tax break known as the active financing exception, a preference that expired at the end of 2013 and allows financial services companies to defer paying taxes on profits made abroad.
General Electric, the study says, was among the most persistent company lobbying for the break – perhaps not surprising, given that GE has said its tax bill will rise significantly without the exception. Liberal groups say the tax breaks encourages companies to shift profits offshore.
Extending the active financing exception for two years would cost in the neighborhood of $10 billion. In all, reviving the full list of more than 50 tax breaks that expired at the end of 2013 would cost tens of billions of dollars.
Frank Clemente, Americans for Tax Fairness’s executive director, noted on a conference call that tax extenders packages have historically not been offset.
Clemente said that “double standard” was “all the more disturbing” given the struggle that congressional Democrats have faced in trying to extend long-term unemployment insurance, with Republicans demanding that the cost of those benefits be offset.
“Unless both parties change direction and decide to offset the costs of the tax extender package, it will add billions to the deficit and pressure Congress to further cut spending, thereby putting vital services at risk,” the report said.
Senators on the tax-writing Finance Committee had said they expected to consider an extenders package on Wednesday. But Finance Chairman Ron WydenRon WydenThe Hill’s Whip List: Where Dems stand on Trump’s Supreme Court nominee Overnight Regulation: Senate moves to strike Obama-era internet privacy rules Overnight Tech: Senate votes to eliminate Obama internet privacy rules | FCC chief wants to stay out of 'political debate' on fake news | Wikileaks reveals new CIA docs MORE (D-Ore.) and the panel’s top Republican, Sen. Orrin HatchOrrin HatchOvernight Finance: US preps cases linking North Korea to Fed heist | GOP chair says Dodd-Frank a 2017 priority | Chamber pushes lawmakers on Trump's trade pick | Labor nominee faces Senate US Chamber urges quick vote on USTR nominee Lighthizer Live coverage: Day three of Supreme Court nominee hearing MORE (Utah), have yet to announce a deal on the expired provisions, throwing the timing of a mark up in doubt.
A spokeswoman for Wyden said Monday the panel is still waiting for projections from the Joint Committee on Taxation, and that “discussions are ongoing.”
GE and other financial services powers have said that the active financing exception merely levels the playing field with their international competitors. In a statement, GE said the new report "distorts the facts and reflects a politically motivated agenda from its authors."
"The truth is that active financing applies the same rules to financial services that permanently apply to every other U.S. business sector," GE said. "Lawmakers on both sides of the aisle and respected third-party experts agree that these rules should be a permanent feature of the tax code."
As it stands, the tax code allows companies to defer paying taxes on a wide range of earnings from their foreign subsidiaries. But without the active financing exception, financial services transactions made by those subsidiaries would be subject to U.S. taxation.
In all, the new study says that 292 lobbyists representing 41 companies or trade associations lobbied specifically on the exception, to the tune of $643.6 million. GE itself employed almost 50 lobbyists on the issue, the study says.
The study also insists that most of the expired provisions are geared to help business, deriding some as corporate pork. But a few – like incentives for workers using mass transit and for teachers buying school supplies – are geared toward helping individuals.
This post was updated at 4:48 p.m. and at 10:19 p.m. to say that Public Campaign co-authored the report.