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2013-01-19

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February 18, 2013 - 9:06pm

Bleeding Blue: The devil inside (our politics)

BY JOE PAONE

As Democrats push for higher taxes and Republicans fight to cut spending, both parties stress the need for deficit reduction. The parties' opposing approaches aren’t the only thing standing in the way of real reform, however. There’s another enemy to balanced budgets: lobbyists. Specifically, lobbyists that have been hired to push for corporate tax breaks that account for $150 billion in foregone revenue each year.

Starbucks, for example, was able to get included in a tax break for manufacturing, claiming that roasting and blending coffee in the United States is considered a "domestic production activity." Such practices have also allowed large corporations avoid the 35 percent corporate tax rate, like General Electric,which only paid a 2-percent effective tax rate over the last decade. Taxing multi-billion dollar, conglomerates like GE, fairly could go a long way in solving Washington's fiscal problems.

Based on Washington rhetoric alone, this problem should be easy to solve. Republicans and Democrats have both spoken out against tax loopholes, pork barrel spending and the overly complex tax code. Yet lobbyists seem to have these sensible politicians by the neck. After all, these lobbyists are hired by the same companies that fund candidates' elections, and the lobbyists themselves are often former congressmen enjoying high-paid consulting work in return for years of loyalty. This cozy relationship between politicians and private industry is detrimental to sensible policy making. These legal practices create blatant conflicts between the people politicians are elected to serve and those they’re getting paid to serve.

Companies that can afford to hire Washington lobbyists aren't the ones that need tax relief. Small businesses use tax cuts to hire more workers and middle-class Americans can invest in their children's futures, while multinationals see them simply in terms of profits. Congress must stop including these privileged groups in their policy making if it is to create a solid deficit reduction plan.

Joe Paone can be reached at jpaone@umich.edu.


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