AIG Tax Exempt?

[Number Six]

"Last week, the American International Group reported a whopping $19.8 billion profit for its fourth quarter."

"But if you dug into the numbers, it quickly became clear that $17.7 billion of that profit was pure fantasy — a tax benefit, er, gift, from the United States government. The company made only $1.6 billion during the quarter from actual operations. Yet A.I.G. not only received a tax benefit, it is unlikely to pay a cent of taxes this year, nor by some estimates, for at least a decade."

http://dealbook.nytimes.com/2012/02/27/ ... tax&st=cse

If this doesn't send a clarion call to the tax authorities to make these tax deadbeats pay their fair share, I don't know what will.

[Quixote]

The article is clear about why AIG will probably pay no income tax. It has net operating loss (NOL) carryovers that reduce its gross income. The controversy is about Treasury deciding that AIG got to keep its NOL despite having been taken over in the bailout. Had anyone other than the government taken over AIG, the new owner would lose the NOL. That rule exists to discourage corporations from grabbing up other corporations just to make use of their NOLs. Treasury apparently reasoned that the rule need not apply to a government takeover.

[Number Six]

You know kids, it may be that AIG is not paying corporate income tax, not because they are "cheats" but because they got a sweetheart of a bailout deal from the government and the way that bailout deal is structured results in this type of weird anomoly.

Just a thought.

And you can be sure that there were lobbyists promoting this disgraceful tax policy. I was reading the current issue of "The New York Review of Books" where Jack Abramoff's book is reviewed.

This paragraph jumped out at me:

"This is the most benign, generous explanation of lobbying, but it does not render the practice innocent. In this model, the point of lobbyists is not so much to change votes as to change the legislative agenda. Perhaps you are a legislator interested both in reforming the nation’s drug laws and in cutting taxes on large corporations. If you focus your time on tax cuts for large corporations, you’ll get an enormous amount of money, aid, and attention from lobbyists. If you spend your time on drug policy, you’ll be ignored and your campaign will be underfunded. The disparity is even greater on smaller issues where there may not be another side to engage the debate: if a group of paper companies spends a couple of million dollars hiring lobbyists to persuade politicians of the merits of a change to an obscure provision of the tax code that will net the paper companies a couple of billion dollars, there is likely no one on the other side of that issue amassing materials to explain why this change isn’t a good idea."
http://www.nybooks.com/articles/archive ... all-money/

So, as usual, where are the advocates pushing back against egregious abuses of the tax code?

[maj0224]

I have read from an article that the U.S. Treasury Department have announced last September 10 that it has sold its majority share in the bailed-out insurance Goliath, American International Group Inc. (AIG). The sale made $2.7 billion in profit, and raised the taxpayer’s profits in the bailout endeavor to about $15.1 billion. I have read it here: AIG stock sale.