Over 30 million Americans will take to the roads this Memorial Day weekend, and it’s all but guaranteed that many of them will be unhappy about the price of gas.  But while it’s easy to get frustrated by high prices at the pump, it’s also important that motorists realize gas taxes are not to blame for those high prices, and that gas taxes are absolutely essential to the safety and efficiency of the infrastructure we use everyday.

As the Institute on Taxation and Economic Policy ( ITEP) explains in a pair of new policy briefs, federal and state gas taxes are the main sources of funding for the roads, bridges, and transit systems that keep our economy moving (and that make our summer vacations possible).  Roughly 90 percent of federal transportation revenues come from the federal gas tax, while state gas taxes are the single most important source of transportation revenue under the control of state lawmakers.

Moreover, the amount of money we’re spending on gas taxes is much lower than what we used to pay. Families today are spending a smaller share of their household budgets on gas taxes than they have in about three decades—and that share is continuing to decline.

Of course, a low gas tax has a cost.  The federal government is increasingly using borrowed money to pay for our roads and bridges, while states that lack the luxury of borrowing are taking money away from education and other priorities in order to fund basic road repairs.  Meanwhile, even with these infusions of cash, the condition of our transportation infrastructure is continuing to decline.

ITEP’s new policy briefs put this issue into perspective by explaining how gas taxes work, their importance as a transportation revenue source, the specific problems confronting gas taxes, and the types of gas tax reforms that are needed to overcome these problems.

Read More:

• The Federal Gas Tax: Long Overdue for Reform (2-page brief)
• State Gasoline Taxes: Built to Fail, But Fixable (2-page brief)
• Building a Better Gas Tax (ITEP’s 50-state report from December 2011)

Photo of man pumping gas via Teresia Creative Commons Attribution License 2.0

For Immediate Release: May 23, 2012

Minority Leader Pelosi’s “Middle Class” Tax Plan Benefits Millionaires, According to New Citizens for Tax Justice Estimate

Washington, DC – In seeking an immediate vote in the House of Representatives to extend tax cuts on incomes up to $1 million, House Minority Leader Nancy Pelosi is actually proposing a windfall for millionaires, according to a preliminary analysis from Citizens for Tax Justice. Pelosi’s proposal to extend the Bush income tax cuts for taxpayers’ first $1 million of income is a departure from President Obama’s proposal to extend the tax cuts for the first $250,000 that a married couple makes and the first $200,000 a single person makes.

“This town may never agree on who is middle-class, but surely we can agree it doesn’t include anyone who makes over a million dollars a year,” said Robert McIntyre, director of Citizens for Tax Justice.

■ Pelosi’s proposal would save 43 percent less revenue than Obama’s plan.
CTJ’s preliminary estimates show that Obama’s proposal to extend the Bush tax cuts for the first $250,000 or $200,000 of income a taxpayer makes would save between $60 billion and $70 billion in 2013 compared to the GOP proposal to extend all the tax cuts, depending on economic conditions. Leader Pelosi’s proposal to extend the Bush tax cuts for the first $1 million of income would save 43 percent less revenue than Obama’s proposal.

■ 50 percent of the additional tax cuts proposed by Pelosi would go to millionaires.
The additional tax cut that would result from Pelosi’s plan compared to Obama’s plan (the additional tax cut resulting from extending the Bush tax provisions for taxpayers’ first $1 million of income instead of “just” their first $250,000 or $200,000 of income) would not be targeted towards the “middle class.” In fact, 50 percent of this additional tax cut would go to taxpayers with adjusted gross income (AGI) in excess of $1 million.

This would result because under Pelosi’s proposal, a married couple making $3 million a year, for example, would continue to pay the lower tax rates (enacted under President Bush) on $1 million of their income. Under Obama’s proposal, a married couple making $3 million a year would continue to pay the lower tax rates on just $250,000 of their income.

Taxpayers with incomes exceeding $1 million would therefore receive substantially larger tax cuts under Pelosi’s proposal than they would under Obama’s proposal.

Also see our fact sheet about these figures.

Citizens for Tax Justice (CTJ), founded in 1979, is a 501 (c)(4) public interest research and advocacy organization focusing on federal, state and local tax policies and their impact upon our nation ( www.ctj.org).

Facebook® co-founder Eduardo Saverin is facing mounting public scorn for renouncing his US citizenship, presumably to save some tax money (which he says is not the case). There are even two US Senators after him! He left in September but the pile-on is happening this week because of Facebook’s Initial Public Offering (IPO) of its stock: Saverin’s share will be worth somewhere in the neighborhood of $4 billion.

Saving Capital Gains Taxes
If Eduardo Saverin were a US citizen and sold his stock, most of that income would be subject to special low rate capital gains taxes of 15 percent (or 20 percent in future years if the new rate goes into effect January 1 as scheduled). By renouncing his citizenship, Saverin avoids paying those current and future capital gains taxes (and he would never have to pay the full income tax rate that Facebook employees exercising their stock options will be paying), but he does have to pay an "exit tax" (see below). Saverin now lives in Singapore, which doesn’t have a capital gains tax. 

Lowering the “Exit Tax”
When wealthy Americans give up their citizenship, they must pay an “exit tax” which treats all of their assets as if they’d been sold for fair market value (the actual tax payment can be deferred until the assets are sold). The fair market value of publicly-traded stock is what it traded for that day; privately-held stock must be appraised.

A spokesman for Saverin said that he renounced his citizenship last September, well ahead of this week’s Facebook IPO. Therefore, the stock’s valuation for “exit tax” purposes was likely substantially below its expected $38 IPO value, allowing Saverin to reduce his exit tax cost.

Not Tax, But Financial Decision
According to a spokesman, Saverin is expatriating for financial, not tax reasons. He doesn’t mind paying tax, he says, he just dislikes the complicated rules. He claims that the US rules, like the recently enacted Foreign Account Tax Compliance Act ( FATCA), are preventing him from making some foreign investments he’d like to make.

Why It Feels Like Treason
Saverin emigrated to the US with his family at age 13 when his name turned up on a list of potential kidnap victims in his native Brazil where criminal gangs target the children of wealthy citizens and hold them for ransom. In the US, not only was Saverin safe from such violence, but he benefited enormously from government investment in education, the court system, and the Internet. Would he be a billionaire today if his family had relocated somewhere else?

Farhad Manjoo, a fellow immigrant, wrote a brilliant post (one of many, including this one) on the IT blog PandoDaily about what Eduardo Saverin owes America (nearly everything) including, quite possibly, his life. Taxes are the least of it.

In February, we noted that Facebook® will get huge federal and state income tax refunds and pay no tax for years to come because of an absurd tax break related to the stock options it granted to employees.

When employees exercise their stock options, they pay income tax on the difference between what they paid for the stock (its exercise price) and its fair market value (what it’s trading for). The employer, meanwhile, gets a tax deduction equal to the amount of that difference their employees report – even though the employer isn’t actually out any cash.

This week we have a vivid example of why this deduction makes no sense, and why Senator Carl Levin wants to see this loophole closed, too.

In February, Facebook estimated its tax deduction for the stock options it gave its employees to be $7.5 billion, based on the price of its soon-to-be publicly offered shares. But with its IPO price going up and up, the company has revised its estimated tax deduction. In documents filed with the SEC on May 15, Facebook now estimates the employee stock options that will be exercised in connection with the IPO will result in tax deductions for the company of $16 billion – more than twice their initial estimate!  This massive deduction will cost the federal and state governments about $6.4 billion in lost tax revenue.

The stock option loophole overall will cost the US treasury and taxpayers $25 billion over the next ten years. Surely there’s a better use of that money than making Mark Zuckerberg richer.

Photo of Facebook Logo via Dull Hunk Creative Commons Attribution License 2.0

House Ways and Means chair Paul Ryan’s budget proposal drew plaudits from some observers who didn’t notice its fundamental weakness: its utter failure to specify which tax “loopholes” it would close to pay for deficit reduction. As we’ve noted in the past, Ryan has a good reason not to disclose details on the tax side of his plan: they don’t add up. CTJ has shown that the Ryan plan’s promised top income tax rate of 25 percent would be insufficient to pay for federal spending at Reagan-era levels, let alone the current decade. 

Now, as details of Ryan’s plan emerge, it’s becoming clearer that its spending cuts are equally illusory, relying on alleged cost-saving measures that would likely cost more in the long term than they help right now. Case in point: Ryan’s plan to eviscerate the Census Bureau and eliminate its American Community Survey (ACS), an annual survey that provides a rapid-response supplement to the decennial Census.

As Businessweek notes, cuts to Census budgets in the past decade prevented Congress and the Obama administration from being able to quickly diagnose the scope of the financial sector’s collapse in 2007.  One expert observed, “The government saved $8 million, but how many trillions were lost as a result of not being able to see the crisis coming?”

Ironically, as the New York Times explains, the ACS itself was actually created as a sensible cost-cutting strategy, designed to provide more timely data than the decennial Census could.  Even the US Chamber of Commerce has vocally opposed further cuts to Census funding because it helps businesses large and small to inform their planning.  Which is why top conservative policy think tanks support the ACS, too.

An adequately funded Census Bureau is the best vehicle we have for finding a path to sustained economic growth for all of us; there is widespread agreement that without its data, we will be flying blind.

The CEOs of 18 large corporations have published an open letter to the Treasury Secretary seeking to extend tax breaks on investment income that overwhelmingly benefit the very wealthy. Barring Congressional intervention, these special breaks for capital gains and dividends will expire at the end of this year, along with all of the 2001 and 2003 Bush tax cuts.

In an era when fiscal austerity is a reality in America, what makes this request even more obscene is that of these 18 CEOs, four of them head corporations which have paid less than zero in federal income taxes in recent years, in spite of consistent profits.  Another two barely paid any, and another five have paid well below the statutory 35 percent corporate tax rate. In fact, among these CEOs is Lowell McAdam of Verizon, one of the most notorious tax dodging companies in the U.S.  

The 11 corporations among the 18 that have paid less than the legal federal income tax rate are:

Gale E. Klappa, Wisconsin Energy Corp. — Average Negative 13.2% tax rate 2008-11
David M. McClanahan, CenterPoint Energy — Average Negative 11.3 tax rate 2008-11
Lowell McAdam, Verizon Communications Inc. — Average Negative 3.8% tax rate 2008-11
James E. Rogers, Duke Energy Corp. — Average Negative 3.5% tax rate 2008-11
Benjamin G.S. Fowke III, Xcel Energy — Average 1.0% tax rate 2008-10
Gerard M. Anderson, DTE Energy Co. — Average 0.2% tax rate 2008-11
Gregory L. Ebel, Spectra Energy Corp. — Average 13.6% tax rate 2008-10
Thomas A. Fanning, Southern Co. — Average 17.4% tax rate 2008-10
Glen F. Post III, CenturyLink Inc. —Average 23.5% tax rate 2008-10
Thomas Farrell II, Dominion Resources Inc. — Average 24% tax rate 2008-10
D. Scott Davis, United Parcel Service — Average 24.1% tax rate 2008-10

To bolster their case, these CEO’s are parroting the common claim that ending special preferences for dividends and capital gains (both of which are predominantly held by the wealthy) will depress economic activity. History shows this is not the case.

The fact is, about 85 percent of the expiring tax breaks for capital gains and dividends go to the richest five percent of Americans; most people won’t even notice if they expire.

The fact is, two thirds of all dividends are not subject to any personal income tax because they go to tax exempt entities rather than individuals.

Why is it that when corporate CEOs speak out on tax issues, they are treated like objective financial experts, as if they had no agenda other than job growth? You only have to think for a moment to realize that CEOs, for starters, typically own substantial amounts of stock in the companies they head, so in asking for reduced taxes on investment income, these 18 CEOs are pushing for substantial personal tax cuts for themselves – on top of the huge tax breaks their companies already receive.  Futher, the corporate boards who hire and fire these CEOs are populated by the super rich who’d benefit from things like capital gains tax breaks, so they are also serving their bosses.

These 18 captains of industry are part of an ongoing and well financed effort to limit taxes on business and on the rich. Why? Because it serves their interest. Our media and lawmakers need to bear that in mind.

Remember the Tea Party? Well, freshman Kentucky Senator Rand Paul is living up to his reputation as the darling of the Taxed Enough Already movement that shook the 2010 elections. 

Rand Paul, son of Libertarian firebrand and GOP presidential candidate Ron Paul, is currently blocking the Senate’s ratification of an amendment to the US-Swiss tax treaty, apparently worried about the right of tax evaders to financial privacy. He says the language is too “sweeping” and might jeopardize US constitutional protections against unreasonable search and seizure. But as one former Treasury Department official said, Paul's move “smacks of protecting financial secrecy for those who may have committed criminal tax fraud in the US.”

The US and Swiss governments renegotiated their bilateral tax treaty as part of the 2009 settlement of the UBS case. That case charged the Swiss mega-bank UBS with facilitating tax evasion by US customers. Under the settlement agreement, UBS paid $780 million in criminal penalties and agreed to provide the IRS with names of 4,450 US account holders.

Before it could supply those names, however, UBS needed to be shielded from Swiss penalties for violating that country’s legendary bank-secrecy laws. The renegotiation of the US-Swiss tax treaty addressed that problem by providing, as most other recent tax treaties do, that a nation’s bank-secrecy laws cannot be a barrier to exchange of tax information.

Many tax haven countries were hiding behind their bank secrecy laws to deflect requests for account holder information, and the IRS and Justice Department have been investigating 11 Swiss financial institutions on criminal charges of facilitating tax evasion.

The Senate must ratify the treaty changes – which is normally a routine procedure.

By blocking the ratification, Senator Paul is holding up the exchange of information in the UBS case (and others) and hampering IRS efforts to crack down on tax evasion by Americans.

Tax evasion by individual taxpayers is estimated to deprive the US Treasury of as much as $70 billion per year (corporate offshore tax avoidance is estimated to cost the Treasury an additional $90 billion per year).

Given Senator Paul’s obvious concern about the deficit, he might have a hard time explaining to honest American taxpayers how he justifies protecting tax evaders with Swiss bank accounts as the deficit grows ever larger.

Photo of Rand Paul via Gage Skidmore Creative Commons Attribution License 2.0

Political leaders love to claim fealty to the idea of “loophole-closing” tax reform, but refuse to provide details on the specific tax breaks they would eliminate. As we’ve recently noted, House Budget Chair, Rep. Paul Ryan, is one of the worst offenders when it comes to punting on specific tax breaks he’d eliminate. President Obama has also avoided naming closeable loopholes in his outline for corporate tax reform. Yes, lawmakers are glad to pose convincingly as advocates of tax reform without assuming any of the political risks involved with real loophole-closing reforms.

Earlier this month, presidential candidate Mitt Romney took a welcome departure from this pattern, signaled by the headline, “Romney Specifies Deductions He'd Cut.”  The presumptive GOP nominee told a Florida audience that his plans for tax reform included eliminating the second home mortgage interest deduction for high earners.

This is a perfectly sensible reform, and is one that many tax reform advocates on both sides of the aisle (most recently, President Bush’s tax reform commission) have agreed on.  It also allows us to take Romney’s tax proposals a bit more seriously, since he has said he plans to cut income tax rates by 20 percent and pay for it with (as yet unspecified) loophole-closing reforms.

A few days later, however, Romney’s campaign backed away from this reform after Newt Gingrich accused him of surrenderring to "class warfare rhetoric of the Left." This and other pushback from within his own party led one Romney surrogate to explain it this way: the candidate “was just discussing ideas that came up on the campaign trail” with some friendly donors.

This strategic retreat may make sense politically (think of all the second homes in battleground states), but it also puts Romney’s tax plan squarely in talk-is-cheap territory—asking all the easy questions but answering none of the hard ones.

Photo of Mitt Romney via Dave Lawrence Creative Commons Attribution License 2.0

Representing a remarkable defeat for corporate tax dodgers, a spokesman for the so-called "Win America Campaign" confirmed this week that it has “temporarily suspended” its lobbying for a tax repatriation amnesty. The coalition of mostly high-tech companies pushed for months for a tax amnesty for repatriated offshore corporate profits. The campaign once seemed unstoppable because so many huge corporations, and veteran lobbyists with ties to lawmakers, were behind it. 

What supporters call a tax "repatriation holiday," or more accurately, a tax amnesty, allows US corporations a window during which they can bring back (repatriate) foreign profits to the US at a hugely discounted tax rate. The holiday’s proponents argue this would encourage multi-national corporations to bring offshore profits back to the US.

CTJ has often pointed out that the only real solution is to end the tax break that encourages U.S. corporations to shift their profits offshore in the first place — the rule allowing corporations to defer (delay indefinitely) U.S. taxes on foreign profits. Deferral encourages corporations to shift their profits to offshore tax havens, and a repatriation amnesty would only encourage more of the same abuse.

The Win America Campaign and its long list of deep pocketed corporate backers (including Apple and Cisco) spared no expense in pushing the repatriation amnesty, spending some $760,000 over the last year. This sum allowed the coalition to hire a breathtaking 160 lobbyists (including at least 60 former staffers for current members of Congress) to promote their favored policy in Washington.

So what prevented Win America from winning its tax amnesty? It was the steady march of objective economic studies put out by groups from across the political spectrum demonstrating how the holiday would send more jobs and profits offshore and result in huge revenue losses.

One of the toughest blows the repatriation amnesty took came from the well-respected Congressional Research Service’s (CRS) report showing what happened last time: the benefits from the repatriation holiday in 2004 went primarily to dividend payments for corporate shareholders rather than to job creation as promised. In fact, the CRS found that many of the biggest corporate beneficiaries of the 2004 holiday had since actually reduced their US workforce.

On top of this, the bipartisan and official scorekeeper in Congress, the Joint Committee on Taxation (JCT), found that a new repatriation holiday would cost $80 billion, which is a lot of money for a policy that would not create any jobs. Advocates for the tax holiday responded with studies of their own claiming the measure would actually raise revenue, but Citizens for Tax Justice (CTJ) immediately debunked the bogus assumptions underlying these reports. 

On top of the solid research there was the incredible and rare consensus among policy think tanks across the political spectrum to oppose the measure. The groups opposing a repatriation holiday included CTJ, Tax Policy Center, Tax Foundation, the Center on Budget and Policy Priorities and Heritage Foundation, to name a few.

The suspension of lobbying for the repatriation amnesty is a victory for ordinary taxpayers. And while the Win America Campaign isn’t dead – one lobbyist promised that "if there was an opportunity to move it, the band would get back together and it would rev up again" – its setback validates our work here at CTJ on corporate tax avoidance in all its forms. 

On Tax Day 2012, thousands of people throughout the country rallied in favor of progressive taxation and against the low (or sometimes zero rates) paid by the wealthiest Americans and corporations. These protests were the latest in the growing progressive tax movement dubbed “Tax Revolt 2.0” for its focus on tax fairness rather than tax cuts.  As one commentator declared, "Tax Day doesn't belong to the Tea Party anymore."

The popularity of these protests should be no surprise considering that 68 percent of Americans believe the current tax system benefits the rich and is unfair to ordinary workers. While efforts by grassroots groups have begun to change the conversation about tax fairness, these tax day 2012 protests reveal a reach and momentum that show no signs of receding.

You could hardly travel around the US on tax day this year without running into one of over 200 rallies including: Los Angeles, Fort Worth, Kansas City, Boston, Duluth, Grand Rapids, Bangor, Chicago, Pittsburgh, Green Bay, New York City, Ames, Toledo, Kalamazoo, Newark, Seattle, and many, many more.

While the broad theme of the nationwide protests was tax fairness, the targets differed. In Jersey City , NJ for instance, protestors rallied at their local Wells Fargo bank to call out the company for its role as an infamous tax dodger, while protestors in Tuscon, AZ held their rally at a local post office to highlight how the failure to tax wealth results in the loss of jobs and critical public institutions like the Postal Service.

To be sure, the anti-tax lobby is well established, but you gotta’ believe that activists as energetic and creative as these will win the day:

Photo of the "Tax Dodgers" via  D*Unit Creative Commons Attribution License 2.0

According to a CNN/ORC poll, one of many polls released around Tax Day 2012, a solid 68 percent of Americans said the current tax system benefits the rich and is unfair to ordinary workers. While this result is consistent with past poll results, a shocking number of lawmakers in Washington seem indifferent to the public’s hunger for more progressive taxes.

For example, one modest step toward tax fairness is the Buffet Rule, which would impose a minimum tax, equal to 30 percent of income, on millionaires in order to ensure that wealthy investors like Warren Buffett or Mitt Romney do not pay a lower tax rate than middle income Americans. Despite the fact that the Buffett Rule is favored by an overwhelming 72 percent of the American public, it was defeated in the US Senate on Monday and will likely not even come up for a vote in the House of Representatives.

Another tax day poll by Reuters/Ipsos found that 60 percent of Americans believe that tax revenues should play some part in deficit reduction efforts, while only 22 percent believe that spending cuts alone are the solution. This poll also reflects Washington’s huge disconnect with the American public as last year’s deficit reduction deal resulted in trillions of dollars of spending cuts and not a cent of additional revenue.

Even in the arena of corporate tax reform lawmakers find themselves at odds with public sentiment. In its tax day polling, Gallup found that 64 percent of Americans believe that corporations pay too little in taxes, meaning that the public would clearly favor revenue-positive corporate tax reform. And yet Republican and Democratic leaders, including the President, are proposing revenue-neutral corporate tax reform instead.

Washington’s conservative intransigence on tax issues is not going unnoticed by the public. Grassroots movements are spreading in protest of the unfairness of our tax system and pushing for progressive change. Lawmakers will find it increasingly difficult to ignore their constituents, especially as it becomes clear that other types of deficit reduction proposals (cuts in Social Security, Medicare, services for children) are far less popular than progressive tax increases.

When CTJ analyzed Herman Cain’s 9-9-9 tax plan last year, we concluded it would cut taxes for the richest one percent by $210,000 on average and raise taxes for the bottom three-fifths of Americans by $2,000, on average if in effect in 2011. This did not surprise us, since the 9-9-9 plan incorporates elements of a “flat tax” and a national sales tax (often misleadingly called a “Fair Tax”) which are both far more regressive than our current tax system. We also concluded that the 9-9-9 plan would collect $340 billion less than our existing tax system in 2011 alone. What does surprise us is that people are still talking about the former pizza CEO’s tax plan, which is the focus of a two-day “Patriot Summit” that Cain is hosting today in Washington.

Today, Cain’s Revolution on the Hill will  roll out “the 9-9-9 educational campaign that will sweep the country in the Summer of 2012.” 

Flat tax and national sales tax plans vary, but they all would leave investment income – most of which goes to the richest Americans – untaxed. The “flat tax,” which is promoted by Dick Armey’s FreedomWorks, does not consist of one flat tax rate but actually two tax rates when you include the zero percent rate for investment income.

The national sales tax, which is promoted by the organization FairTax.org, is a straight-forward consumption tax, and this is likely to have the greatest impact on lower-income families who have no choice but to put all of their income towards consumption. (The other national, broad-based consumption tax you hear a lot about is a value-added tax, or VAT).

Cain is not the only presidential candidate to propose these types of radical changes to our tax system. Texas Governor Rick Perry flirted with both the flat tax and a national sales tax. Both Perry and Newt Gingrich eventually settled on a “flat tax” that would, like other flat tax proposals, exempt investment income from tax.

Watch this space for a look at other flat or fair tax proposals that surface during this election year.

Presidential candidate Mitt Romney took some heat this winter for delaying release of his tax returns and then, in January, released only one year’s worth (and an estimate for 2011). Now the calls for more disclosure are heating up again since the Washington Post reported that Romney is using an obscure ethics rule loophole to limit the disclosure of his Bain Capital holdings. An earlier Los Angeles Times article reported that Romney’s financial disclosure did not list many of the funds and partnerships that showed up in his 2010 tax returns, eleven of which are based in low-tax foreign countries such as Bermuda, the Cayman Islands and Luxembourg.

While it’s Romney’s offshore holdings that are making news, the fact is any government official using offshore tax havens right now is allowed to keep that a secret.

But that’s about to change. On March 29, Senators Dick Durbin (D-IL) and Al Franken (D-MN) introduced a bill that would require members of Congress, candidates for federal office, and high-ranking federal government officials to identify which of their assets are located in tax havens when they file their required financial disclosures. The Financial Disclosure to Reduce Tax Haven Abuse Act of 2012 ( S. 2253) would amend the Ethics in Government Act of 1978.

Although there’s nothing illegal about having an offshore account, estimates are that abuses facilitated by these accounts cost the U.S. Treasury over $100 Billion per year in lost tax revenue. And while the Durbin-Franken bill won’t make it illegal, it would have the effect of limiting that sort of tax dodging among public officials – or weed out candidates unwilling to tolerate a little sunshine.

In his floor statement introducing the bill, Sen. Durbin stated “it might seem ridiculous that we don’t already know whether candidates and Members of Congress are using offshore tax havens.” Sen. Franken, in the press release, said “Americans deserve transparency from public officials.” We could not agree more.

Photo of Mitt Romney via Gage Skidmore Creative Commons Attribution License 2.0

On Wednesday, the House Ways and Means Committee approved a bill that House Majority Leader Eric Cantor (R-VA) introduced last week: the “Small Business Tax Cut Act.”  As it stands right now, a lot of truly small businesses would not actually qualify for the deduction it offers, for 20 percent of “small business” income.

Think of a mom-and-pop mail-order business or the local shoe repair shop where you see the owners working hard every day, but no other employees. Because the bill caps the deduction at 50 percent of the wages paid to non-owners, many family businesses won’t qualify because their only employees are family members who are owners.

While the legislation caps the amount of the deduction (at half of non-employee payroll), there is no limitation on the type or amount of income that business can have. So highly profitable operations like Oprah Winfrey’s production company or the Trump Tower Sales & Leasing office would both qualify for the deduction simply because they have fewer than 500 employees on payroll.

Who else would qualify? Professional sports teams (including teams owned by Mitt Romney’s friends) with their multi-million-dollar salaries to non-owner players. So would private equity firms, hedge funds, and other “small businesses” with income in the millions, or even billions, of dollars, along with most of the top law and lobbying firms inside the Beltway and elsewhere.

The bill is currently projected to cost $45.9 billion in its first year – but its benefits are not at all clear. So far it seems that in Rep. Cantor’s dictionary, “small business” is defined as “my rich friends.”

Large majorities of Americans, including small business owners, want profitable corporations to pay their fair share in taxes, but none of the major proposals in Washington would make that happen.  They will close some loopholes while creating others and, meantime, leave the amount of revenues U.S. companies contribute just about where it is now – at an historic low.

Why the disconnect between public opinion and political action? Could it be because 98 percent of the sitting members of Congress have accepted campaign donations from the country’s most aggressive, successful tax avoiding corporations?

Citizens for Tax Justice and U.S. PIRG’s new report Loopholes for Sale pursues the intersection of corporate campaign contributions to members of Congress and the absence of Congressional action to close corporate tax loopholes and raise additional revenue from corporate taxes.

Loopholes for Sale details how thirty major, profitable corporations (a.k.a. the Dirty Thirty) with a collective federal income tax bill of negative $10.6 billion have made Congressional campaign contributions totaling $41 million over four election cycles. This includes PAC contributions to 524 current members of Congress.

These 30 tax dodging companies specifically targeted the leadership of both political parties, and members of the tax writing committees in the House and Senate. Top recipients of their largesse since the 2006 campaign have been:

1- House Minority Whip Steny Hoyer (D-MD) - $379,850.00
2- Speaker of the House John Boehner (R-OH) - $336,5000.00
3- House Majority Leader Eric Cantor (R-VA) – $320,900.00
4- Senator Roy Blunt (R-MO)Former House Minority Whip 2003-08) – $220,500.00
5- Senate Minority Leader Mitch McConnell (R-KY) - $177,001.00

These companies – including GE, Boeing, Honeywell and FedEx—also gave disproportionately to members of the tax writing committees, including $3.1 million to current members of the House Ways and Means Committee and $1.9 million to members of the Senate Finance Committee.

The “pervasiveness of that money across party lines speaks volumes about why major proposals to close corporate loopholes have not even come up for a vote,” says US PIRG’s Dan Smith.

So if the public is so clearly supportive of closing corporate tax loopholes and making corporations pay more than they currently are, why aren’t our elected officials moving forward on corporate tax reform? This report, along with our earlier Representation with Taxation on corporate lobbying expenditures, exposes how part of the answer may be found by taking a hard look at the way some of America’s largest companies translate wealth into influence.