By Kevin D. Williamson
Sunday, April 04, 2021
Here is a tragicomedy in three parts:
1. Politicians
enact tax credit that benefits Corporation X.
2. Corporation
X accepts tax credit.
3. Politicians
are scandalized by Corporation X’s tax filings.
The New York Times is inviting its
readers to be shocked and appalled by the fact that dozens of big companies
have paid no federal business-income tax over the past three years in spite of
taking in lots of money. At the top of its naughty list is Duke Energy, which
made just under $8 billion over the past three years and had an effective
corporate income-tax rate of . . . negative 15.5 percent. One big reason for
that is green-energy subsidies of the kind proposed by the very same
progressives who complain about the tax bills of companies such as Duke. Duke
benefited from “bonus depreciation” arrangements that reward green-energy
investments. As Duke points out in the Times report, that
doesn’t actually eliminate Duke’s tax liability, but only defers it, leaving
Duke with some $9 billion on its tax tab that will have to be paid at some
point in the future.
Other energy companies with multi-billion-dollar incomes
paid no tax in recent years for similar reasons, mostly green subsidies. Others
relied on provisions of the CARES Act that allowed businesses (many of them
beaten down by the coronavirus lockdowns) to apply losses from 2020 to their
tax filings from previous years, erasing taxable income. Contrary to what you
hear from such specimens as Senator Elizabeth Warren (D., Mass.), these are not
“loopholes” being exploited — taking taxable income off the table to subsidize
corporations during the recent economic turmoil was precisely the point of the
CARES Act’s tax provisions. You may not like that as a policy, but it is a
policy, not an accident that some clever tax lawyer figured out how to utilize.
The same is true of the green-energy tax subsidies — if you didn’t think they
were going to be used to lower the tax bills of energy companies, what in hell
did you think they were for?
And here comes the next act in this sorry performance.
Even while they complain about corporations and the
wealthy, Joe Biden and congressional Democrats are planning a sweet handout for
Elon Musk, net worth $164 billion as of this writing. Sure, Musk has seen some
hard times lately: He was, briefly, the wealthiest man in the world, and now he
has fallen all the way down to No. 7. But Musk’s situation does not exactly tug
the heart strings, and neither does the situation of shareholders in Musk’s
electric-automobile company, Tesla, who have had a wild but profitable ride.
But Biden & Co. are planning a big push to help
electric-vehicle manufacturers, including the expansion of $7,500-per-vehicle
tax subsidies for consumers who choose electric cars. That probably won’t help
Tesla or GM directly: Under the current arrangement, the credits are phased out
after 200,000 vehicles are sold, a milestone Tesla and GM have long since
passed, while raising the limit to 600,000 vehicles, as Democrats are
contemplating, would still exclude Tesla, which delivered half a million cars
in 2020 alone. It is possible that the congressional sausage-making will
produce a tax credit that directly subsidizes Tesla buyers, but even if it
doesn’t, the infrastructure plan is full of goodies for Tesla and other favored
automakers, including billions in grants to build charging stations and
billions more in subsidies for battery research and manufacturing. Senate
majority leader Chuck Schumer (D., N.Y.) has proposed $4,500 trade-in subsidies
for consumers who swap their petroleum-powered cars for U.S.-made electric
ones, which could give Tesla a leg up over competitors such as Nissan.
Here’s a safe bet: If the Biden “infrastructure” bill
puts tax-credit money on the table to subsidize businesses that engage in
battery research and development, Tesla is going to be one of the companies
that benefits. And — this should be easy enough that even Joe Biden can follow
along — federal tax-credit programs designed to reduce the tax burdens of
American corporations probably will . . . reduce the tax burdens of American
corporations.
And there’s a 103 percent chance that Democrats will vote
for these tax subsidies this year and then complain about them next year.
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