Balanced Budget Hypocrisy

[Janice Shields <jshields@essential.org>]

                                   NEWS RELEASE
  
  For Release: Thursday,          Contacts: Ralph Nader & Janice Shields,
  January 11, 1996                                  
  
          BALANCED BUDGET HYPOCRISY: CORPORATIONS DEFER BILLIONS
                      OF DOLLARS IN TAX PAYMENTS
   
                TAXPAYERS PROVIDE INTEREST-FREE LOANS TO PROFITABLE 
                                  CORPORATIONS
  
  
  	Consumer Advocate Ralph Nader today called on the CEOs
  of 19 corporations that have postponed their tax payments by more than $1
  billion each by depreciating equipment and buildings faster than these
  assets wear out, to reject this tax giveaway.[1] The companies, which
  generated combined profits of almost $41 billion in 1994, have accumulated
  more than $50 billion in deferred tax payments by using accelerated
  depreciation to reduce their taxable income during the early years of the
  lives of their assets. CEOs of seven of these companies (marked with an
  *)recently signed a letter to President Clinton and Congress calling for a
  balanced budget, even though the seven companies have reduced their taxes
  by more than $27 billion by taking advantage of the accelerated
  depreciation tax break. (The 19 companies include: Ford Motor*, Exxon*,
  General Motors*, Philip Morris, Chrysler*, IBM*, DuPont, Protor & Gamble,
  Amoco*, Chevron*, Mobil, Anheuser-Busch, Atlantic Richfield, Weyerhaeuser,
  RJR Nabisco, Phillips Petroleum, International Paper, Georgia-Pacific and
  Coastal.)
   
       "It is paradoxical and unconscionable that wealthy
  corporations are taking advantage of billions of dollars in tax
  breaks at the same time that CEOs are asking the President and
  Congress to balance the budget by cutting programs for the poor and
  needy," said Ralph Nader.  According to the Congressional Joint
  Committee on Taxation's September 1995 Estimates of Federal Tax
  Expenditures for Fiscal Years 1996-2000, accelerated depreciation
  tax breaks will cost the U.S. Treasury $28.2 billion in 1996 alone
  and $129.2 billion over the next five years.  
  
       "When companies are permitted to reduce their tax bills by
  deferring payment of taxes, they are in essence receiving interest-
  free loans from U.S. taxpayers and are contributing to the budget
  deficit," said Mr. Nader.  "These 19 companies alone saved more
  than $4.2 billion in interest expenses (at the prime rate) in 1994 by taking 
  advantage of the accelerated depreciation tax break," he added.
  
       "Many companies use the accelerated depreciation tax break to
  defer payment of taxes indefinitely," said Janice Shields, a former
  accounting professor and coordinator of Mr. Nader's Corporate
  Welfare Project.  "For example, Exxon reported $8.758 billion in
  accumulated deferred taxes due to accelerated depreciation in 1992;
  that total climbed to $8.944 billion in 1994.  General Motors
  reported $4.321 billion in accumulated deferred taxes due to
  accelerated depreciation in 1992 and $4.450 billion in 1994," she
  added.
    
       The House of Representatives approved a change in the tax code
  as part of the Republicans' Contract With America (H.R. 1215),
  which would have allowed companies to take tax deductions in excess
  of the amount that the company paid for depreciable assets.  The
  Joint Committee on Taxation estimated that this provision would
  cost the U.S. Treasury a net $88.8 billion from 1995 to 2005.  The
  Senate rejected the excess depreciation proposal and the conference
  eliminated the provision.     
  
       [1] "Deferred taxes" are the amounts by which depreciation
  expenses deducted when calculating taxable income exceed
  depreciation expenses reported in a corporation's financial
  statements during the earlier years of the lives of equipment and
  buildings.                                                
  
               
  
  -----
  Janice Shields
  Coordinator, Corporate Welfare Project & TaxWatch
  Center for Study of Responsive Law
  P.O. Box 19367, Washington, DC  20036
  202-387-8030			|   Internet:	jshields@essential.org