May 21, 2012

GM Tax Break Threatens Rule of Law

In a May 18 op-ed at, the Committee for Justice’s Curt Levey discusses an egregious example of crony capitalism – the unprecedented and legally indefensible tax break the Obama Administration crafted for its virtual subsidiary, General Motors:
“While President Obama campaigns on ‘tax fairness’ – eliminating loopholes for the wealthiest one percent, the oil companies and other big corporations – his favorite corporate giant is enjoying an unprecedented, under-the-table multi-billion dollar tax break. [That’s] in addition to the more than $50 billion given to General Motors in the bailout … The result? In 2011 … GM paid a tax rate of negative 1.5% on its record profits – less than nothing. … Though the Treasury Department ‘had no legal or economic justification for [this tax break],’ according to [law and business professors], ... GM’s sweetheart tax deal has largely slipped under the radar screen, allowing Obama to … claim the auto bailout cost taxpayers far less than it actually has.”
Why is the Committee for Justice worried about tax breaks? Because our mission is promoting the rule of law, which requires that the Constitution and other laws 1) mean what they say – not what some judge or government official wants them to mean – and 2) apply equally to all, regardless of how much empathy a judge has for you or how politically connected you are.

Unfortunately, the special tax break granted to General Motors is all about political connections. The Obama Administration should not be bending provisions of the tax code beyond recognition to favor any company. But when the favored company is a virtual subsidiary of the Administration – a majority of its board appointed by the Treasury Department, its CEO hand-picked by the White House, and its strategy and public relations coordinated with the Administration – the special treatment is a dangerous affront to the rule of law.