At issue is the retroactive repeal of the alternative minimum income tax on corporations. Not only would it repeal the tax, it would refund nearly all the money that major corporations — including automakers — have paid under that levy for the past 15 years. It’s part of the Bush administration’s economic stimulus bill in the wake of Sept. 11.
It is not a good idea. The auto companies do not deserve that money. It won’t do anything for the economy. To use Sept. 11 for that kind of corporate welfare is beneath contempt.
We’re not talking about pennies. DaimlerChrysler acknowledges it would receive about $600 million. Ford Motor Co. would get about $1 billion and General Motors would be somewhere in the middle.
Repealing the tax? Fine. It was a flaky tax to begin with. But refunding payments? No! Ford recognizes that. It wants repeal, but it is not pushing for an immediate refund of unused credits.
The alternative minimum tax was an answer to what is known as “creative accounting” in the business world. The levy was created so profitable companies could not reduce their tax bills to zero with deductions and loopholes. It was flaky, but it was law. How many other tax provisions are equally unsound? We certainly aren’t about to refund money to everyone who has been taxed unjustly. Why should we do it for big corporations?
What’s next? Will someone suggest that the big corporations be paid interest on the money they would get back? The entire refund scheme is the sort of thing that gives big business a bad name. It should be wiped out decisively.
A lesson for FordAs Ford Motor Co. strategists work overtime to prepare a turnaround plan, they can look across town at the Chrysler group for a lesson: Don’t be too optimistic.
Dieter Zetsche, Chrysler group CEO, pegged the group’s share of the U.S. market at 14 percent next year. But it slipped to 13.3 percent for the first nine months of this year. And competitors are pouring onto Chrysler’s prime turf, light trucks.
The good news is that cost cutting is ahead of schedule. So the Chrysler group says it will reach its turnaround goals for 2001. But it may have to revise its strategy for 2002, which could mean more layoffs and cost-cutting demands on suppliers as the U.S. economy falters.