Christmas for corporate welfare: Column

The pre-Thanksgiving news was that fewer than one in five Americans trust Washington, D.C. Post-Thanksgiving, it wouldn’t be surprising to see this number sink even lower. Simply look at Congress’ upcoming “tax extenders” package, which lawmakers will vote on either this week or next.

It is a deliberate — and bipartisan — attempt to give special favors to special interests, courtesy of the American taxpayer.

The tax-extenders bill is a D.C. tradition that has been around since the late 1980s, when lawmakers combined a small number of temporary tax breaks. Yet Congress since has reauthorized the bill either annually or biennially, expanding it along the way. The current version contains over 50 tax breaks — over 80% of which benefit businesses.

But even though it’s closing in on its 30th birthday, Congress still pretends the tax-extenders bill is a temporary measure. That’s because it allows lawmakers to fool the Americans who foot the bill. Every tax break adds to the federal deficit, but by passing them in one- or two-year increments, Congress makes it seem as if the costs will quickly disappear. But lawmakers have no intention of actually letting the bill expire. They’re constantly adding to the taxpayer’s tab, while making it seem as if they aren’t.

And what a tab it is. The congressionally-chartered Joint Committee on Taxation analyzed the Senate’s two-year tax-extenders bill in July and concluded it would cost taxpayers just under $95.2 billion. Since Congress would pass similar bills in the years ahead, the total cost over the next decade will be more like $500 billion. It may be even higher if lawmakers add additional provisions to future iterations.

Special interests are already working to make sure lawmakers do just that. Data from Americans for Tax Fairness show that that nearly 400 trade associations and companies employed over 1,350 lobbyists who worked on tax extenders. It is now one of the most-lobbied issues in Washington, D.C., giving work to more than 10% of the city’s lobbyists.

The beneficiaries behind this bonanza stand to reap a tidy profit. A 2013 analysis by the Boston Globe found that some companies get benefits from the tax-extenders package that are worth as much as 8,200% more than the amount they spend on lobbying. Rarely will you see such blatant corporate welfare.

The Senate’s two-year extension contains a number of obvious examples. Take the deductions for “certain film and television productions and live theatrical productions.” This gives some Hollywood and Broadway bigwigs up to $20 million in tax breaks for a movie, show, or play — a boon of $428 million in 2016.

Others may affect your favorite sport. Thanks to Kentucky’s politicians, the owners of racehorses get a $167 million break over the next two years. The owners of “motorsport entertainment complexes” are looking at nearly a $100 million windfall.

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Even some of the “individual” provisions are thinly-veiled corporate welfare. Take the one that subsidizes bike-share users up to $20 a month. This was first introduced in 2014 by Sen. Charles Schumer, D-N.Y. It seems more than just a coincidence that New York City’s bike-share program was facing significant financial troubles at the time.

But these examples are miniscule in comparison to other provisions. Two of the three largest are the “production tax credit” for wind-power generators and the “research tax credit” for businesses. The former was meant to help the wind industry get off the ground — wind-power capacity has increased by nearly 6,200% since the credit was created. As for the research credit, the federal government stated in 2009 that it funds work that would have been done regardless. No matter: Their respective price tags for a two-year extension are $10.5 billion and $22.6 billion.

The evidence points to a simple conclusion: The tax-extenders package is a case study in corporate welfare that enriches the few at the expense of the many. If lawmakers truly want to give individuals and businesses a break on their taxes, they should instead look to full-scale tax reform.

Unlike special-interest tax code carve-outs, actual reform could lower rates for everyone — not just the biggest businesses with access to the most lobbyists. It could even be as bipartisan as the tax extenders it would replace. The goal of a tax code with lower, simpler rates is shared by politicians on both sides of the aisle, from President Obama to every Republican who wants to succeed him.

No wonder: It would strengthen American businesses and empower American taxpayers. And if politicians start putting their constituents’ interests over special interests, they may even start to restore voters’ fading belief that Washington, D.C., is worthy of our trust.

Tim Phillips is president of Americans for Prosperity.

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