Early Christmas for corporations

A Times Editorial

President Bush had one last chance before the Nov. 2 election to back up his campaign talk of fiscal responsibility with action. He failed the test by signing into law a $136-billion giveaway to corporations that his own Treasury secretary called "a myriad of special interest tax provisions that benefit few taxpayers."

Unlike the four previous tax cuts he championed, Bush wasn’t proud of this one. He signed the bill quietly aboard Air Force One with no ceremony, and made only a passing reference to it in a campaign speech. His lukewarm claim that the law will create jobs was undermined by the corporate beneficiaries themselves, some saying the billions in extra profit will be put to other uses.

The big winners were businesses with a friend in Congress. Home Depot will get to import ceiling fans from China without paying import duties - a $44-million windfall made possible, apparently, by Sen. Zell Miller, Bush’s favorite Democrat whose constituents include the corporation’s headquarters in Atlanta. The bill was a bipartisan outrage, with House Speaker Dennis Hastert, a Republican, creating a tax loophole for a fishing tackle box maker in his district and Senate Minority Leader Tom Daschle, a Democrat, getting a $94-million tax credit for an elderly housing project in his home state of South Dakota.

Multinational pharmaceutical companies - such as Pfizer and Merck - did quite well, too. They will be allowed to bring overseas profits back to the United States at a 5.25 percent tax rate rather than the usual 35 percent. That could save Pfizer, alone, $4.6-billion. Talk about giving to those who need it least.

The bill started as a simple fix to an illegal export subsidy and turned into "a Christmas shopping expedition," according to tax-policy expert Robert Murphy. "This wasn’t well-designed tax policy at all," he said.

Among other problems, the law could make it more difficult to reduce the record $413-billion federal deficit, and it could shift more of the tax burden onto working Americans. Bush should have vetoed the bill. He didn’t, and that tells Americans what they need to know about his promise to halve the deficit if re-elected.

Bush hasn’t met a tax cut he doesn’t like, even if it threatens the nation’s financial future.

http://www.sptimes.com/2004/10/26/Opinion/Early_Christmas_for_c.shtml