The 10 Most Corrupt Tax Loopholes

If Mitt Romney won't tell you which ones need to be closed, we will

The luxury sailing industry was able to buy its way into the mortgage break when Congress officially declared boats homes. But not just any boat. The rules require they have sleeping quarters, a kitchen, and toilet, leaving just 3 percent of U.S. boat owners to qualify.

"The mortgage deduction was never targeted for that," says Congressman Tim Walz (D-Minnesota). "It was meant to make home ownership more affordable for the middle class."

So Walz wrote the Ending Taxpayer Subsidies for Yachts Act, hoping to bar the uber-wealthy from sponging off the mortgage deduction. Once again Congressman Dave Camp refuses to let it come up for a vote.

Democratic U.S. Rep. Tim Walz (D-Minnesota) tried to pass legislation preventing the uber-rich from claiming the mortgage deduction on yachts. Dave Camp blocked that effort, too.
cursedthing/Creative Commons
Democratic U.S. Rep. Tim Walz (D-Minnesota) tried to pass legislation preventing the uber-rich from claiming the mortgage deduction on yachts. Dave Camp blocked that effort, too.
Thanks to the luxury sailing industry, taxpayers helped subsidize Microsoft CEO Steve Ballmer's $200 million yacht, Octopus.
Dennis Hamilton/Creative Commons; Wikimedia Commons
Thanks to the luxury sailing industry, taxpayers helped subsidize Microsoft CEO Steve Ballmer's $200 million yacht, Octopus.

That leaves everyday taxpayers to subsidize toys like Microsoft CEO Steve Ballmer's $200 million yacht, which comes equipped with an indoor pool, basketball court, and its own submarine.

"It's a loophole in the tax code that benefits a few people at the very top," says Walz, a sergeant major in the National Guard and former teacher. "I certainly feel if they want to grab their luxury liners, I'm glad they do. And I'm glad we have people making them. I'm just not certain we subsidize that."

5. Big Oil's Cadillac welfare.

Last month, Mitt Romney traveled to Iowa, where wind energy has become an economic force, responsible for 7,000 jobs and 20 percent of the state's electricity.

He announced that, as president, he would kill the $3.3 billion in tax incentives that now go to this nascent form of electricity. In Romney's eyes, the industry has had more than enough time to stand on its own two feet.

"He will allow the wind credit to expire, end the stimulus boondoggles, and create a level playing field on which all sources of energy can compete on their merits," Romney spokesman Shawn McCoy told the Des Moines Register.

It's a laughable position. After all, Romney has announced no similar crackdown on a much older and larger welfare queen: Big Oil.

The five largest U.S. oil companies collect a spectacular $20 billion a year in tax breaks. And they'd prefer that wind farms not compete for that lucrative welfare dollar. During this year's presidential race, the industry has paid Romney $3.4 million to ensure wind goes away.

Technically, the oil giveaway is supposed to defray the cost of searching for new sources. But even George W. Bush realized the industry didn't need subsidies back in 2005, when the price of a barrel was at $55. "We don't need incentives to oil and gas companies to explore," he said at the time. "There are plenty of incentives."

These days, the price of a barrel routinely hovers around $100. But the five biggest companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — still get their breaks, despite collective record profits of $137 billion last year.

"The oil industry is doing fine," says Johnson, the University of Texas tax expert. "They don't need or deserve a dime of subsidy. It's all money thrown away to make shareholders richer. The private market will provide any subsidies by increasing the price. It's time to get the government out of the business of special subsidies. It's like Cadillac welfare."

4. A break for shipping your job to China.

In April, 750 workers at a Kimberly-Clark paper mill in Everett, Washington, lost their jobs when the company shipped them to a lower-cost facility overseas.

Steelworkers in Stevens Point, Wisconsin, suffered the same fate. Their mill's owner, Joerns Heathcare, took away 150 jobs last month by moving operations to Mexico.

Another 170 people making auto sensors at a Sensata Technologies plant in Freeport, Illinois, will be out of work by year's end. Their jobs are being carted off to China.

In each case, American taxpayers will subsidize the evacuation.

It's not just cheap labor that pushes work overseas. The U.S. tax code allows companies to expense every last cost of sending your job abroad.

At a time of 8 percent unemployment, one would think Congress would rush to kill a loophole that actually encourages economic misery. One would be wrong.

This summer, Senate Democrats introduced the Bring Jobs Home Act, which would kill the loophole and offer a 20 percent tax credit to companies that bring work back to America.

Republicans filibustered the bill to death. Sen. Orrin Hatch (R-Utah) went so far as to call the measure "a joke," ensuring another nervous Christmas for the country's blue-collar workers.

3. The behaving like an asshole deduction.

In 1989, third mate Gregory Cousins was negotiating the 986-foot Exxon Valdez through Bligh's Reef in Alaska while Captain Joe Hazelwood slept off a bender below deck.

The vessel crashed, spilling upward of 25 million gallons of oil into Prince William Sound. The disaster could have been avoided if the ship's collision-avoidance radar was working. It had broken a year before, but Exxon chose not to fix it due to the cost of repair and operation.

Overnight, 1,300 miles of pristine shoreline turned to blacktop. Wildlife caked in oil looked like a Hollywood casting call for an Al Jolson biopic. The remote locale made clean-up difficult. Twenty-three years later, fish stocks have yet to return to their pre-spill levels.

A court would eventually level $5 billion punitive damages against Exxon — equal to a single year's profit at the time. The company appealed, chipping away at the sanction until the Supreme Court (natch!) slashed that figure to $500 million 2008.

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2 comments
j_m_jae
j_m_jae

To all you French hating  xenophobes! It's outrageous how uneducated and short-sighted people can be. _Joe_ is right. Read his comment for a bit of education. BTW, I am NOT french.

_Joe_
_Joe_

Does no one ever remember that the US would never have gained it's independence without the help of the French?  Or that nearly every special forces unit in every major army in the world is modeled after the French?  Or that throughout all of history, they've kept up a resistance movement during EVERY occupation?  Not many countries can say that.

 

Even one of America's most widely known symbols, The Statue of Liberty, was a gift from France.

 

Please consider this before disparaging the French armed forces.  Choosing not to grab guns and charge headlong into every war that comes along is NOT the same as fearing to do so.

 
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