AFGE Supports Bill to Restore Pension Fairness for Feds

Categories: Budget

The American people subsidize corporations through corporate tax breaks every year. In 2013 alone, they shelled out $1,328 per household, or nearly $176 billion to companies, many of which make billions in profit a year. ExxonMobil, for example, had $43 billion in profits offshore in 2012, on which it paid no U.S. taxes. Its federal income tax rate of 15% between 2010 and 2012 was less than half of the official 35% corporate tax rate, a tax break of $6.2 billion subsidized by the American people.

One of the largest corporate tax breaks allows multinational corporations to defer paying taxes on profits hidden offshore while waiting for the next round of tax holiday in which they pay a much lower tax rate. When Congress passed the tax holiday in 2004, the profits earned abroad were taxed only at roughly 5%. These companies later cut nearly 21,000 jobs between 2004 and 2007.

No company should be allowed to game the tax system to avoid paying what they owe. Closing these corporate tax loopholes would allow the government to invest in the middle class which has been crushed by the recent financial crisis caused by Wall Street. Federal employees, for example, have endured unpaid furloughs, three years of pay freezes, and cuts to their pensions so that lawmakers could pay for corporate tax breaks year after year.

AFGE is encouraged that Rep. Donna Edwards of Maryland is trying to right the wrong and will next week introduce a bill that would restore pension fairness for federal employees. Her bill would repeal the cuts to the pensions of federal employees hired after 2012 by restoring their pension contribution plans from the current 3.1% or 4.4% of their pay to the original 0.8%. Her bill would be paid for by closing some outrageous corporate loopholes that have long prevented the federal government from investing in the middle class.

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