maybe merlin pulled it out of his hat...,
| Main |
like a hummer with teeth...,
windfall tax subsidies for the biggest financial corporations:
Dean Baker finds an answer to how big a tax break this scam might amount to. The WaPo describes it thusly:
Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company's losses to offset their gains and avoid paying taxes.
The Post article cites various experts who put the cost of this change in the tax code as between $105 and $140 billion. It would have been useful if the Post had placed this figure in some context. Presumably it refers to the tax savings in the near future on takeovers, based on losses already incurred by banks. If the revenue loses are realized over the next three years, then it will be equal to between 2.6 percent and 3.5 percent of projected revenue over this period.
That's pretty significant. Personally, I was thinking that the upside of the current financial mess would be new financial institutions with sounder business practices. This kind of massive subsidy for the largest firms pretty much rules out market entry - if the cost wasn't already too high in a field dominated by TBTF institutions. So much for the creative side of destruction.
Maybe it's time to google "convoy banking system".
:: posted by buermann @ 2008-11-10 18:22:33 CST |