It’s all about jobs, jobs, jobs, as Obama likes to say. Only they’re going overseas:
Amid all the goodies for ethanol producers, NASCAR racetracks and the like, the tax-cut compromise legislation approved by Congress this month also includes a little-noticed sop for Wall Street banks and major multinationals.
And it only costs U.S. taxpayers $9 billion.
Under the provision, financial services firms and manufacturers can defer U.S. taxes on overseas income from a type of financial transaction known as “active financing.” Boosters say the two-year exemption helps level the playing field with foreign competitors by ensuring that U.S. corporations aren’t taxed twice.
Major business groups and financial companies consider the exemption a key lobbying priority in Congress, which has regularly extended it on a temporary basis for more than a decade. Those lobbying in favor of the policy include dozens of the largest U.S. companies, from General Electric to J.P. Morgan Chase to Caterpillar, records show.
The Active Financing Working Group, a coalition of companies and trade associations focused on the issue, has paid $540,000 in lobbying fees to Elmendorf Strategies since last year, according to Senate disclosure forms.
The exemption ensures “that U.S.-based financial services [businesses] are able to continue to operate competitively and provide the funds needed for investment and economic growth,” the working group wrote in a letter to the Treasury Department.
But the provision has long been opposed by watchdog groups and labor unions as a needless tax break that encourages companies to create jobs overseas instead of within the United States.