THE American Jobs Creation Act of 2004, just passed by Congress and likely to be signed by President Bush, ought to be called the "American Corporate Pork Act of 2004."
Hardly any corporate special interests, it seems, walked away from this stunning boondoggle without a tax cut - after what's been described as an orgy of lobbying.
The beneficiaries include ceiling-fan importers; foreign gamblers; railroads; certain shopping-center developers; NASCAR track owners; Native Alaskan whalers; producers of methanol and movies; cruise-ship operators; the makers of ships, aircraft, drugs, arrows and fishing-tackle boxes; and on and on. General Electric alone is expected to receive $9 billion in tax cuts from this bill.
At a time of war, record federal budget deficits and relatively low corporate tax receipts, this bill's $137 billion worth of tax cuts over 10 years, to echo the words of GOP Sen. John McCain, is simply a disgrace. If Mr. Bush approves it, as he's indicated he will, voters ought to take full note of his priorities.
The bill's genesis was the need to rescind a $5 billion-a-year U.S. tax subsidy to about 1,800 American exporters that the World Trade Organization had declared illegal. Congress could have used the revenue from ending this subsidy to cut the deficit or partially offset the cost of the so-called middle-class tax cuts that it just extended. Instead, it came up with almost three times as much in new tax cuts benefiting hundreds of thousands of American corporations.
Congress cut the top tax rate for U.S. manufacturers from 35 percent to 32 percent at a cost of $77 billion, while redefining "manufacturing" so broadly that this applies to architects, coffee roasters and oil drillers. U.S. multinationals with big profits parked overseas will be able to temporarily repatriate those earnings at about one-seventh the normal tax rate; that will cost $43 billion and likely most benefit certain pharmaceutical and high-tech firms. Tobacco farmers received a $10 billion buyout, but the tobacco industry escaped regulation by the Food and Drug Administration.
On paper, none of this bill's tax breaks is supposed to cost the Treasury anything because it also closes certain tax loopholes and raises customs fees. But neutrality also is achieved with the usual budget shams - phased-in cuts, early expiration dates of cuts likely to be renewed, and happy assumptions of more revenue from increased tax enforcement. The Center on Budget and Policy Priorities predicts this bill likely will cost about $80 billion through 2014.
This comes at a time when corporate tax receipts as a share of the economy are at their second-lowest level since World War II. A recent study of 275 of the nation's largest corporations, by Citizens for Tax Justice, found that a third paid no taxes and many received tax rebates in at least one year from 2001 to 2003.
Even Treasury Secretary John W. Snow has been skeptical of this bill's economic benefits. What's clear is that it sets a shameful low in corporate pork.