Eliminate Corporate Welfare and Stop Picking Winners and Losers

For special interests keeping an eye on the dozens of tax extenders slated to expire at the end of the year, scheming is well underway for securing their renewal. Congress typically debates and passes tax extenders (a mish-mash of subsidies, tax breaks, credits, incentives and other exemptions) in December, instead of letting them expire. Doing so sets off a lobbying frenzy for special interests determined to ensure their priorities are included in the package.

There are outrageous examples, such as more favorable depreciation rules for owners of racehorses and NASCAR tracks. But also standing in this corporate welfare line are the biggest multinational corporations in the world. Reluctantly, Koch Industries is no exception. How can this happen to a company who actively opposes all forms of corporate welfare?

Consider the Railroad Track Maintenance Tax Credit, which acts as an incentive for companies like ours to maintain and improve the railroads we use. There’s also the Combined Heat and Power Business Energy Investment Tax Credit and the ability for us to exclude certain clean coal power grants from our gross income.

These are just a few examples of tax provisions made available to companies like Koch Industries. While we currently utilize these provisions (doing otherwise would place us at a competitive disadvantage), we aggressively advocate for their elimination.

Some may argue that the examples above are well-intentioned, but it is absurd for politicians to micro-manage how any company should conduct its business beyond the normal limits of the law. It’s simply unnecessary and corrupting to a free and open economy. The problem is that policymakers have so aggressively rigged the system with cronyism that these policies have become difficult to avoid and impractical to reject. That’s why they must all be eliminated.

In a free and fair economy, the success or failure of any business should be determined by the value it creates through the products or services it offers. When the government picks winners and losers by subsidizing, mandating or incentivizing certain industries or products over others, the system becomes corrupted, competitiveness is dulled and markets are distorted, with the politically connected reaping the benefits. When these conditions exist, what consumers truly value is disrespected.

We see it in practice every day across all industries – companies pursuing what would otherwise be unprofitable business ventures thanks to politicians’ generosity. Here’s what Berkshire Hathaway CEO Warren Buffet said when speaking to an audience in Omaha, Nebraska in 2014: “I will do anything that is basically covered by the law to reduce Berkshire’s tax rate. For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”

When Congress extends and advocates for more tax subsidies and mandates, it obscures the path we should be pursuing – one toward a simpler and less burdensome tax code.

There are 30 temporary business tax provisions in the tax extender package which expire this year. Instead of renewing these provisions as in years past, Congress should allow them to expire and advance comprehensive business tax reform instead.

Going forward, lawmakers must put a renewed focus on treating all constituencies equally – individuals and businesses alike. Our nation can no longer afford politicians picking winners and losers. Consumers should make that decision for themselves.

Ellender is president of government and public affairs at Koch Companies Public Sector, LLC.

Morning Consult