The bill began as a needed reform to alter our tax code in response to penalties imposed on U.S. manufacturers by the European Union. Eventually, however, it turned into a bill riddled with millions of dollars in outrageous tax breaks and a $10 billion tobacco buyout. To make matters worse, this legislation dropped Senate-passed provisions that would have held the tobacco industry accountable for targeting children in its advertising.
The corporate tax bill was initially intended to assist U.S. manufacturers. Because the World Trade Organization ruled two years ago that certain American tax provisions were unfair subsidies, the European Union (EU) has been penalizing American manufacturers by charging tariffs on goods made in the U.Sthat are exported to EU nations. This tariff has reached 12 percent, which puts American manufacturers at a competitive disadvantage.
While I strongly support the parts of this bill that would result in the elimination of these tariffs and otherwise help our manufacturers, some of those benefits were significantly weakened in the final version of the legislation.
For example, I authored a tax credit encouraging manufacturers to hire laid-off workers that was passed by the Senate but dropped in the final bill. Another credit I supported would have given a tax credit to employers who continue to pay their employees who are in the National Guard or Reserve the difference in salary they would otherwise lose when they are called to serve on active duty.
Among the unacceptable provisions in this bill was a $10.1 billion bailout for tobacco farmers. Further, this legislation does not allow federal regulation of tobacco products, including needed authority to hold the tobacco industry accountable for advertising aimed at children. It makes no sense that the Federal Drug Administration (FDA) requires Philip Morris to tell consumers the ingredients in its Kraft Macaroni and Cheese, but not the ingredients that are in its cigarettes.
It is for this reason that I supported legislation that would have given the FDA the authority to regulate the sale, marketing, and advertising of tobacco products. Unfortunately, the conference committee decided to take this authority out of the final bill. The proposal I backed would have allowed the FDA to restrict the promotion of tobacco products, including advertising that affects children or misleads consumers, to the extent permitted under the First Amendment. It also would have allowed the FDA to take action to ensure that tobacco products are not sold illegally to children.
Tobacco companies, however, aren't the only corporations benefiting from this legislation. This legislation gives billions of dollars in unjustified tax breaks to special interests. Here are just a few examples of how this legislation spends federal dollars on unjustified corporate tax credits: $44 million for corporations importing ceiling fans manufactured in China; $42 million for film production companies; $27 million to exempt non-resident aliens from income tax on winnings from horse and dog racing bets, and $24 million for makers of bows and arrows. In addition, the bill includes a generous tax break for coffee brewers, allowing corporations like Starbucks to define themselves as "manufacturers."
These are just a few examples of egregious special interest tax breaks that were included in this corporate tax bill.
During our time of war and high deficits, it is imperative that lawmakers ensure that tax dollars are spent as wisely as possible. It is fiscally responsible to provide tax relief to hard-working, middle and lower income families to help them make ends meet, and we recently did just that in another bill which was signed into law last month. But it is unfair to spend millions of dollars in tax breaks that benefit corporations importing Chinese ceiling fans as well as Starbucks.
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