Since the Affordable Care Act passed last week, some of the country’s largest companies have complained about a provision that preserves a federal subsidy they receive for providing retirees with prescription drug coverage, but prevents them from deducting the subsidy from their taxes. Republicans and right-wing media have latched on, claiming health care reform is going to hurt American businesses.
Today, Boeing Co. is the latest corporation to complain, announcing that it expects to take a $150 million tax hit because of the new law:
“Boeing will no longer be able to claim an income tax deduction related to prescription drug benefits provided to retirees and reimbursed under the Medicare Part D retiree drug subsidy,” the company stated in a release. “Although this tax increase does not take effect until 2013, accounting standards require that a deferred income tax asset be written down in the period legislation changing the tax law was enacted.”
An association representing 300 of the largest U.S. corporations is pushing for a repeal of the provision that ends the tax break on the government subsidy, something the Wonk Room’s Igor Volsky called “the worst kind” of taxpayer waste and “the most egregious form of corporate welfare.” These companies will still receive their subsidy, but they’ll no longer be able to take the tax deduction as well (so-called “double dipping“).
But Boeing’s complaint further rings hollow because the industry giant is among the largest U.S. companies that pay the least in corporate taxes. Conservatives complain about the high 35 percent U.S. corporate tax rate, but because of corporate welfare such as the prescription drug deduction, Boeing’s tax rate was just 3.2 percent averaged over the last 4 years and just 0.7 percent averaged from 2002 to 2007. And Boeing’s three-year effective tax rate from 2001-2003 was -18.8 percent.
But also, according to Boeing’s 2009 annual report, the company paid no federal income tax in 2009 and actually received $132 million back from the IRS. And in 2008, Boeing paid just $44 million in federal income taxes while netting $2.7 billion in earnings that year.
Therefore, it’s difficult to take Boeing’s whining seriously. After all, if they had any complaints, they could have aired them back in September when the Senate Finance Committee inserted the provision to end the tax break in the health care reform bill. And even then, the measure won approval from many business interests, with the chairman of Business Roundtable saying “it’s very closely aligned to [our] principles.”