Every year at tax time, I’m reminded of my favorite corporate whipping post: General Motors.
The company went bankrupt in 2009 after — After! — receiving billions in bailout money. Then it proceeded to receive even more hard cash from U.S. taxpayers.
The bankrupt company saw its debts wiped away, along with many pesky contracts that it considered a hindrance to business.
Then, to top it all off, it created an “old” and “new” version of itself, leaving all the bad stuff (debts, warranty issues, etc.) with the old GM and presenting the new GM as a shining example of efficiency.
Of course, the new firm took with it all the cash and extra goodies, like the tax loss carry-forward of the old company.
Think of this as the gift that keeps on giving because…
… at the end of 2013, GM reported that it still has an excess of $32 billion dollars in deferred tax benefits, which means the company won’t pay taxes for a long time.
You won’t find this in company press releases about earnings. You have to look through their filings with the SEC to see the real numbers.
Never before had a bankrupt company reorganized and then been allowed to take tax losses with it into the future, so strictly speaking, it wasn’t legal. But hey, Congress was making it up as it went, so who cares?
This slaps me in the face every year as I prepare and file my own taxes. I send a chunk of money to Washington every year and for that I expect sound governance and fiscal responsibility with my funds.
I’m always disappointed.
Congress and the administration wield the tax code like a weapon, attacking organizations (Crossroads) and companies (Caterpillar) they don’t like, while bending the rules for companies and groups they want to support.
This goes all the way down to individual treatment… remember when Treasury Secretary Tim Geithner relied on TurboTax as a defense for not paying correct taxes? He suffered no consequence.
These examples are only the most recent. I am certain that if I dug back through headlines and stories from the mid-2000s, mid-1990s, or any decade, I would find others, so I’m sure that the favoritism and unequal treatment happens on both sides of the aisle in the Capitol, and occurs under every administration.
All of this illustrates one basic point: When it comes to dealing with the federal government, I don’t expect equal treatment under the law. Those with more clout in Washington, through personal connections or lobbying groups, get better treatment, as is clear from history.
So when I read articles, like the one by Robert Shiller in The New York Times, calling for even greater taxation of income to right some wrong or cure some ill, I immediately disagree.
How can I think putting more money into the system will make things better?
Before I send another dime to the federal government, I want my congressman, my president, my Treasury Secretary, and my Federal Reserve Open Market Committee to take their fiduciary responsibilities seriously.
I want them to operate as if the laws apply to everyone equally, and to provide a clear accounting of how their actions are in the best interest of all citizens, not just some citizens.
I might not have voted for all of those that represent me, and some (like members of the Fed) are not elected at all. But none of them take an oath of office that calls for working on behalf of only some citizens.
Once in office, they have a duty to uphold the law for everyone, and they appear to be failing miserably.
Don’t get me wrong, I pay my taxes in full every year, even if I do grumble a bit.
Not only do I think the IRS could pin me to a wall if someone at the agency decided to (whether I’ve done anything wrong or not), but I also recognize that it’s my responsibility.
Until we get major reforms of existing programs, and see a more even-handed approach in how laws are applied, I’ll keep supporting calls for a less intrusive, less powerful, and less expensive federal government.
We might not see much progress on this front, but it doesn’t stop me from trying, especially around April 15.
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Ahead of the Curve with Adam O’Dell
It shows one complete market cycle: a trough (or valley) on the left, a peak in the middle, and another trough on the right.