Questions, Subsidies, Deductions, and Profits

The Senate Finance Committee has some questions for Volkswagen. Chairman Orrin Hatch and Ranking Member Ron Wyden sent the German automaker a letter yesterday. They asked about the “defeat devices” VW used to help its diesel passenger  cars meet IRS requirements for the advanced lean-burn technology motor vehicle credit. “This activity raises questions of whether Volkswagen made false representations to the US government in its certification for federal tax subsidies” wrote Hatch and Wyden.

Is the wind power tax subsidy still necessary? GOP Senator James Lankford of Oklahoma would end  renewable energy tax credits such as wind power’s Production Tax Credit. He says, “The wind industry has made major strides over the past two decades, and they have proven their industry to be efficient and self-sustainable. There is no need for the taxpayer to continue to subsidize a wind start-up tax credit.”

BP could write off three quarters of its $20.8 billion Gulf oil spill settlement. The US Department of Justice announced a consent decree yesterday that the corporation can deduct $15.3 billion of its payment as an ordinary cost of doing business. Tax deductible natural resource damages payments, restoration, and reimbursement to government are tax-deductible, and make up most of the settlement. The proposed consent decree is now open for public comment for two months, after which the parties decide whether to seek court approval.

GOP presidential candidate Ben Carson has a plan for corporate profits held overseas. He’d let corporations bring more than $2 trillion in overseas profits back to the US tax-free for six months. But they’d have to invest 10 percent of those profits  in “enterprise zones.” After six months, he’d tax corporate income at a rate lower than the average around the world. It’s not clear what his plan would cost.

Congress might have a few more days to decide on the debt limit. The Bipartisan Policy Center says that the government would need a borrowing boost sometime between November 10 and 19, a bit later than Treasury’s estimate of November 5. But “Congress will need to act well before [this date] in order to avoid an inadvertent default because of the uncertainties in all estimates,” said BPC’s Steve Bell. BPC has tried to predict  when  the government will miss a bill payment—which could lead to default. November 5 is the date after which Treasury would run out of ways to free up funds.

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