WASHINGTON – Frank Clemente, Executive Director of Americans for Tax Fairness (ATF), criticized Congress for failing to extend unemployment insurance for 1.3 million long-term unemployed Americans – including 20,000 veterans – who will lose coverage three days after Christmas, while it left in place huge tax loopholes that benefit the richest 2 percent and big corporations. A total of 4.9 million long-term unemployed Americans will lose benefits in 2014 if Congress fails to act on this crisis in January.
“Politicians who defend tax loopholes for corporations and the wealthy but refuse to extend unemployment benefits for average American families are playing Santa Claus to their campaign contributors and Scrooge to many of their constituents this holiday season,” said Clemente. “They need to reverse course. It doesn’t take a warm heart, just a cool head and a willingness to listen to the American public on this issue.”
Closing just the three tax loopholes below would raise four times more revenue than the $25 billion it would cost to extend expiring unemployment benefits for millions of Americans next year. A recent poll by Hart Research Associates shows that the American public strongly supports such measures.
• Corporate Tax Subsidies for Shipping Jobs Offshore: Big multinationals can immediately deduct from their taxes the costs of moving operations and jobs overseas—everything from crating the equipment to operating the offshore factory to the interest on the loan that finances shipping U.S. jobs offshore. However, companies don’t have to pay U.S. taxes on the profits earned from those offshore operations if they keep those profits outside the United States. Closing this loophole would raise $60 billion, according to Congress’s Joint Committee on Taxation (JCT) (p. 808, XI.A.). Recent polling shows that Americans favor closing this loophole by 62% to 36%. [Q20ab]
• “Carried Interest” Loophole: Wall Street money managers dodge billions in taxes by claiming their yearly compensation is a capital gain—taxed at a preferential rate of only 23.8 percent—rather than a salary, which is taxed almost twice as much at 39.6 percent. Closing this loophole would raise $17.4 billion, according to the Congressional Budget Office (p. 128). Recent polling shows that the public supports such a measure by 68% to 28%. [Q20ab]
• Tax Subsidies for Excessive CEO Pay: Corporations are only allowed to deduct from their taxes the first $1 million of an executive’s compensation, but stock options (the right to purchase shares, often at a steep discount) aren’t counted under the cap. In addition, companies deduct more in options costs than their own books say the options are worth. Facebook used this loophole to get a $16 billion tax deduction when it went public in 2012, according to the company’s corporate filings. Closing this loophole would raise $25 billion, according to Congress’s Joint Committee on Taxation. Recent polling shows that Americans support closing this loophole by 51% to 45%. [Q20ab]
“Congress faces some simple choices,” said Clemente. “End tax breaks for companies that ship jobs offshore, or deny hard-working Americans unemployment benefits in a tough economy. Make hedge fund billionaires pay at least as high a tax rate as their secretaries, or end a financial lifeline for 1.3 million unemployed Americans this Christmas.”
An interactive map showing the number of people in each state that will lose their unemployment benefits on Dec. 28 can be found at this link.
Americans for Tax Fairness is a diverse coalition of more than 325 national and state organizations that collectively represent tens of millions of members. The organization was formed on the belief that the country needs comprehensive, progressive tax reform that results in greater revenue to meet our growing needs. ATF is playing a central role in Washington and in the states on federal tax-reform issues.
For press inquiries, contact:
Harry Gural, Communications Director