"...liberals keep writing loopholes. ...green energy subsidies [can now] erase [Whirlpool's] tax bill."
Whirlpool's effective tax rate is 0% - ONE OF THE WEALTHIEST, GREEDIEST CORPORATIONS IN HISTORY PAYS NO TAXES AND DESTROYS THE LIFE AND LIVES OF A TOWN. This corp. steals whatever they possibly can from Benton Harbor. The people of surrounding Berrien county do nothing.
The behavior of this behemoth, deadly, and destructive corp. is completely sanctioned by county residents.
And one of the central players and heir to Whirlpool, Fred Upton, was just re-elected to congress.
Tax Reform Exhibit A
Our liberal friends often complain that U.S. businesses pay too little in taxes, despite the world's second highest corporate tax rate. What they don't say is that one reason is because liberals keep writing loopholes. Consider how Whirlpool, the giant home appliance maker, has parlayed green energy subsidies to erase its tax bill.
Whirlpool Corporation recorded $18 billion in global sales and $619 million of earnings in 2010 but won't pay anywhere near the U.S. statutory tax rate of 35% on those profits. Its effective tax rate will be 0%.
As Bloomberg first reported last week, Whirlpool has stockpiled more than $500 million in tax credits for making energy-saving "energy star" appliances—washers, dryers, refrigerators and so on. The firm gets a production tax credit of up to $200 per refrigerator, $75 per dishwasher, and $225 per washer and dryer. General Electric has also collected about $200 million of these credits.
Think of these energy efficiency tax carve-outs as a version of the earned income tax credit for corporate America. Except Whirlpool and GE aren't poor.
The deal gets sweeter. Those credits can be carried over from one year to the next for up to 20 years. Whirlpool is collecting so many credits that it may not have to pay a dime of corporate income tax for years. The lost revenue from GE and Whirlpool alone far exceeds the $78 million revenue "cost" over 10 years that Congress's Joint Committee on Taxation predicted for the credits.
These appliance credits are in addition to $300 million the feds gave to states as part of the 2009 stimulus to pay rebates to consumers for buying these same goods. So there's one subsidy to make the machines and another to buy them. The Department of Energy says these appliances save families money by reducing energy use by more than half. If that's true, why does the government have to bribe people to make these purchases?
Our point isn't to pick on Whirlpool, which employs 22,000 Americans and competes with tough foreign rivals like Korea's Samsung and LG. The company is maximizing returns to shareholders by cashing in on the loopholes that Congress writes.
Jill Saletta, Whirlpool's communications director, tells us that the energy tax credits "help support our continued focus on investing in high efficiency products going forward, which is good for our consumers, the economy, retention of U.S. jobs, and the environment." She adds that "remaining competitive in today's global marketplace is a top concern for Whirlpool Corporation. Taxes, administrative and other costs are higher in the U.S. than in some other countries."
That's for sure. But such favoritism makes the U.S. tax system even less competitive. Tax credits mean little or no liabilities for firms that win most-favored-tax status in Washington, but companies without the right lobbyists or friends in Congress pay a punitive 35% rate that even Europeans have long since abandoned.
Special favors like these also create a business constituency against tax reform that would benefit the overall economy. Whirlpool carries its $500 million of unused tax credits as an asset on its balance sheet, so cutting tax rates shrinks the book value of that asset. "This is why so many companies actually oppose lowering tax rates," says Scott Hodge, president of the Tax Foundation.
The White House claims to want to reduce corporate tax rates in a "revenue neutral way" by closing loopholes. Yet it's hard to take that commitment seriously when its new budget proposes to extend the green-credit windfall for another year. Whirlpool is one more case study in the case for corporate tax reform.