Saturday, October 23, 2004

Senate OKs $137 Billion in Corporate, Special Interest Tax Breaks

Summary Report
... your tax dollars at work.  And no I am not making this up.  plk
Senate OKs $137 Billion in Corporate, Special Interest Tax Breaks

tax breaks, bill, Sens, beneficiaries, provision, industry, tobacco, sponsors, support, subsidies.

WASHINGTON - The Senate on Monday approved $137 billion in tax breaks for corporations and special interests over 10 years, including a $10 billion buyout for tobacco farmers.

The giveaways were needed to win votes for otherwise unpopular legislation intended primarily to end a trade fight over illegal U.S. subsidies to export industries.

The House of Representatives passed the bill on Oct. 7 by 280-141.

President Bush is expected to sign the bill before Election Day.

Supporters hailed its passage as critical to creating jobs while opponents called the measure a massive corporate giveaway.

It includes tax breaks for Alaskan whalers, natural gas companies, the timber industry, Hollywood filmmakers and cruise-ship companies.

To win support from tobacco-state lawmakers, tax writers included a $10 billion industry-financed buyout for tobacco farmers.

That provision drew heated bipartisan criticism from Sens.

Edward Kennedy, D-Mass., and Mike DeWine, R-Ohio, who'd sought to make the buyout contingent upon Federal Drug Administration regulation of tobacco products.

"This bill allows big tobacco companies to market cigarettes to your children," Kennedy said.

The legislation's basic purpose is to end increasingly high tariffs imposed on 1,600 American products.

The European Union had complained that certain export subsidies constituted unfair trade practices.

The World Trade Organization agreed and imposed tariffs, which started at 5 percent and are now up to 12 percent.

In response, the bill would repeal $49.2 billion in export subsidies, a move unpopular with the subsidies' beneficiaries.

To build support for the bill, its sponsors lowered the tax rate for domestic manufacturers from 35 percent to 32 percent, at a cost to the Treasury of $76.5 billion over 10 years.

To spread the benefits more widely, tax writers expanded the definition of manufacturing to include construction companies, engineering and architectural firms, film and music companies, and the oil and gas industry.

NASCAR track owners won a break worth $101 million for grandstand expenses.

George Voinovich, R-Ohio, said the bill would help his constituents, who've been hit hard by the manufacturing slump.

"This bill goes a long way to helping us," he said.

The tax breaks drew criticism from fiscal conservatives.

John McCain, R-Ariz., called the measure the "worst example of the influence of the special interests I have ever seen."

Despite the $137 billion in tax breaks, the bill officially won't add to the record federal deficit.

It includes various revenue-raising provisions such as customs fee extensions and closes alleged tax "loopholes" worth $81.7 billion over 10 years that together will pay for the bill, making it "revenue neutral."

"We're closing loopholes on tax scams to shelter (multinational companies') money offshore," said Sen.

To encourage Hollywood moguls to make fewer films in inexpensive foreign locales, lawmakers included a $336 million tax break over five years to allow studios to expense up to $15 million in the first year of production of small and independent films made in the United States.

Lisa Murkowski, R-Alaska, and Bob Graham, D-Fla., the measure would give cruise-ship companies a $28 million tax break by allowing them to delay filing certain expenses.

Murkowski, who's in a tight race to return to the Senate, also won a provision to permit the deduction of charitable contributions that support native Alaskan whaling.

Archery-gear makers, fishing tackle-box makers and foreign gamblers all would benefit, too.

The cost to taxpayers is $11 million, according to the budget watchdog group Taxpayers for Common Sense.

Summarized by Copernic Summarizer


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