The federal deficit for this year is $845 billion, says the Congressional Budget Office. Corporate tax breaks could plug more than 20 percent of that hole, a new report says.
The Government Accountability Office’s report shows that the breaks account for $180 billion in lost revenue per year, and have more than doubled from the $84 billion that was allowed in 1987, Reuters reports. Both amounts are expressed in 2011 dollars, the GAO report says.
Estimates suggest the total amount American businesses have stashed abroad is between $1.7 trillion and $2 trillion. (If that cash were brought home and taxed at 30 percent, the federal debt could be lowered 5 percent.)
One huge tax break corporations get is an accelerated depreciation of machinery and equipment, which amounted to a write-off of $76 billion in taxes for 2011.
There is a new effort to rework the American tax system, but it’s not clear how far it will get, Reuters says. The last major update to the tax code was in 1986. U.S. Rep. Dave Camp, R-Mich. and chairman of the House Ways and Means Committee, says any tax perk could potentially be cut.
Rep. Lloyd Doggett, D-Texas, is trying to raise penalties for hiding foreign investments and require more disclosure. Legislation he’s pushing would also make offshore cash taxable now, rather than when it’s brought back to the U.S. But Reuters calls that effort “dead on arrival.”