Even though GM dumped some $30 Billion in debt during the Obama “rescue,” GM was allowed to continue to claim that debt as a loss to gain tax breaks on future profits.
Normally when a company goes through bankruptcy the liabilities fall into one of two categories. The first; debt is written off as a loss (a loss to those who are owed money, a clean slate for the company), and the second is structured debt. Structured is acknowledged (or retained) debt and is designed so the company can pay the debt back in smaller increments over a longer period of time.
The only debt that was structured during the GM bankruptcy was union debt. How convenient.
What a cleaver move; you claim a tax break on loses that don’t exist.
The amount of this tax break is calculated by some to be as much as $14 billion.
Other sources estimate this tax gift could be as much as $45 Billion and the tax write offs, on losses that don’t exist, could extend this tax holiday for GM up to some 20 years.
That’s quite a gift from the taxpayers to GM.
The Obama administration, masters at crony capitalism, was able to make this tax waiver legal by listing the GM bailout under TARP. In 2008 Treasury Secretary Henry Paulson set aside $17 Billion of TARP funds to lend to GM and Chrysler.
So does that mean the Bush should get credit for saving GM (since TARP was before Obama)? Heaven forbid!
Anyway, the ruling that makes TARP recipients tax exempt, so to speak, was signed into law in 2009, just in time.
No wonder the Obama camp didn’t rally in protest when it was announced earlier this year that AIG would not have to pay taxes on profits!
Elizabeth Warren was not happy about the AIG deal. But hey, her former boss gave his blessing so the story died right then.
Hmmm, maybe that’s why Elizabeth Warren lost her job as the top dog in the new Consumer Protection Bureau? Maybe she noticed the corruption the new bureau was to root out was deeply rooted in the White House.
But Ms. Warren never mentioned GM in her rant. Maybe cause she’s running for Senate? What a tangled web we see weaved before us.
And it doesn’t end there; the new GM gets this free ride at the State and Local level too.
In 2008 GM paid the City ofDetroit$8.8 Million in withholding taxes, but from 2009 until (?) GM gets to forgo those taxes because the ground which anything GM sits on is being classified as a “tax-free renaissance zone.”
In Milford Michigan, home of GM proving grounds, the city of Milford is going to forgo as much as $500,000 in much needed tax revenue because GM is on a “tax-free renaissance zone.”
This is over and above the normal tax break wheeling and dealing by states and municipalities to woo companies to locate in their towns.
Like Wentzville: where GM gets a 10 year property tax exemption.
And at Warren: where GM gets a $9.9 Million tax break
What’s interesting is Michigan grants $9.9 Million tax break for GM’s development of a technology and data center. It’s a $130 Million project that will create 25 new jobs paying $44 per hour. Calculating that out….Wow, a $9 Million tax break for a $2 Million annual payroll.
It seems these tax holidays for GM are being issued all over the country. Where is the media outrage over this? It is non-existent just like every dirty little secret of this administration.
Every small business owner would love to be able to claim debt (that doesn’t exist), not have to pay state and local taxes, and be able to continue for years going forward. Being able to retain all of your assets, have no debt, and pay no taxes, is a dream come true for any business owner. How could you not be successful?
Alas, this privilege is reserved for those companies that have been “saved” by Obama, or are partners in his crony capitalism.
Hey wait, that sounds a little like GE. No, can’t be because Jeffery Immelt is Obama’s “job Czar.”
Kind of seems a little two-faced don’t you think?
President Obama bragging about the saving of GM and how profitable they were becoming, when those profits are the result of stiffing the investors and issuing exorbitant tax breaks.
Is this tax break part of the “everyone paying their fair share” mantra, or the “tax breaks for the rich” injustice?
It’s disingenuous when President Obama is railing against tax subsidies for “big oil” and GM is receiving the same, if not a better, tax deal.
All hail GM!
It’s the bailout that just keeps on giving.