Last month, we noted that Facebook’s initial public offering could help it avoid corporate income taxes for years, via a misguided tax provision that allows the company to write off the increased value of stock options that it gives to employees when its employees exercise those options. According to the company’s filings, Facebook anticipates receiving a $500 million tax refund because of this provision.

However, two Democratic senators are trying to change the law so that companies can no longer use this particular deduction:

Sens. Carl Levin (D-Mich.) and Kent Conrad (D-N.D.) introduced a bill Wednesday that would close what they called a significant loophole in the country’s tax code, which allows companies to take a hefty deduction when employees cash in their stock options.

Facebook anticipates its deduction will be so large that it will wipe out the company’s tax obligations for all of 2011, according to the firm’s regulatory filing for its initial public offering. The company also expects to get as much as $500 million in refunds applied to the taxes it paid over the last two years.

As Levin has said, “Facebook may not pay any corporate income taxes on its profits for a generation. When profitable corporations can use the stock option tax deduction to pay zero corporate income taxes for years on end, average taxpayers are forced to pick up the tax burden. It isn’t right, and we can’t afford it.”

Indeed, the problem with this provision is that it gives companies a tax write off for doing, well, nothing. As Robert McIntyre explained at Citizens for Tax Justice, “in the case of stock options, there is a clear economic benefit to the employees (if the stock goes up in value), but a zero cost to the employer.”

Here’s an example of why this is problematic. Facebook CEO Mark Zuckerberg bought his stock options for six cents, but “when he exercises those options, they are expected to be worth $40.” Facebook will get to write off the difference between six cents and $40, thus lowering its tax bill, even though those “expenses” didn’t actually occur.

According to the Joint Committee on Taxation, Levin and Conrad’s change would raise about $20 billion over ten years.

Last year, 10 percent of customers moved their money out of their bank, a significant increase over the previous few years, with fees the number one reason people cited for their discontent. In the 90 days ending in February, a whopping 5.6 million people switched their banks.

At the nation’s biggest banks, those with more than $33 billion in assets, transfer rates are running above 10 percent, while transfer rates are below 1 percent for small banks and credit unions. In fact, one of the main beneficiaries of Americans moving their money has been the nation’s credit unions, as, according to the National Credit Union Administration, credit union membership is now at an all-time high:

Credit unions hit a record number of members last year, as a growing number of consumers grew fed up with the fees at the nation’s biggest banks and took their money elsewhere.

Credit unions added 1.3 million new customers in 2011, bringing total membership to a record 91.8 million by the end of the year, according to data collected by the National Credit Union Administration from the nation’s 7,094 federally-insured credit unions.

The New Bottom Line, a coalition of faith groups, has pledged to move $1 billion out of big banks this year.

Account closures at Bank of America, the nation’s second largest bank, jumped 20 percent in the fourth quarter of last year, potentially driven by the bank’s decision to try implementing a $5 monthly fee for its debt cards. So of course, the bank is preparing a new raft of fees on its accounts.

North Carolina Republican State Representative George Cleveland earned some criticism today for claiming during a hearing that there is no extreme poverty in his state. A progressive blog run by the North Carolina Justice Center caught the quote:

How utterly detatched from reality is the conservative crowd running the North Carolina General Assembly? For one good indicator, check out this quote from this morning’s House Select Committee to Dismantle Early Childhood Education — it’s from State Rep. George Cleveland:

“We have nobody in the state of North Carolina living in extreme poverty.”

That’s an abject falsehood, of course. Nearly eight percent of North Carolina’s population lives in deep poverty, which experts define as an income below half of the poverty line, far above the national average. The latest census showed that 17.5 percent of the state lives in poverty, the 13th highest rate in the country.

According to Mark Binker, a reporter for a local paper who was covering the hearings via Twitter, Cleveland attempted to clarify his remarks by explaining that poverty levels were “just a govt agency perpetuating a poverty class.”

The 728,842 North Carolinians who are classified as living in deep poverty might take issue with that assessment. Worse, Cleveland was participating in a hearing by the House Select Committee on Early Childhood Education Development, which had issued a report that outlined recommendations for pre-kindergarten education that would drastically reduce eligibility for the state’s Pre-K program. Studies have shown that young children like the ones who would be pushed out of the state’s pre-k program, are hit hardest by deep poverty.

This is not the first time that Cleveland has attracted some negative attention. In 2007, he told a reporter that a person can identify an undocumented immigrant “if a fella comes in with a pair of shaggy boots on, and jeans and a t-shirt, and he’s got a straw hat on.”

Several independent analyses have shows that the economic plans put forth by the GOP presidential candidates Mitt Romney and Rick Santorum would cause the deficit to explode. Just last month, Romney — who won the Arizona and Michigan primaries this week — unveiled a plan that would increase deficits by $10.7 trillion.

But Rep. Paul Ryan (R-WI), who chairs the House Budget Committee, told Bloomberg TV today that he finds the GOP candidates’ plans “very credible,” before he went on complain about the Obama administration’s budget for increasing deficits too much:

Very credible. They are talking about entitlement reform. They are putting specifics on the table on Medicare and Social Security reform. The president, knowing that these are the big drivers of our debt, is ducking it. He gave us a budget that increases spending about $1.5 trillion and has a tax increase of $1.9 trillion. So out of the $47 trillion he is planning over the next ten years, he only wants to deliver about $400 billion of deficit reduction– is a scintilla of deficit reduction. It is ignoring the program, punting, ducking the issue. It’s the fourth budget from the president. It is not serious. We need serious leadership, and both of these candidates have put very credible, specific, serious plans on the table.

Watch it:

Ryan then dismissed the Tax Policy Center analysis showing that Romney’s planned 20 percent reduction in tax rates and repeal of the Alternative Minimum Tax would increase the debt by $3 trillion, claiming that Romney has “base broadening” that will offset the cost. Romney has made the same claim, but has yet to provide any specifics about what sort of tax provisions he’ll eliminate. Simply put, his plan’s math doesn’t add up.

According to the Committee for a Responsible Federal Budget, Romney’s plan would increase debt to 96 percent of GDP by 2021, unless he actually follows through with his offsets, at which point it would go to 86 percent. Santorum’s plan, meanwhile, would bring it to 104 percent of GDP. The Committee’s “realistic baseline” for the debt projects it going to 85 percent of GDP by 2021. So all of the GOP candidate’s plans (except for Ron Paul’s) make the debt projection substantially worse.

Ryan, of course, has plenty of experience with budget-busting economic plans, so perhaps its not surprising that he finds the latest offerings from the GOP candidates so enticing.

Last month, a former trader for failed financial firm Lehman Brothers explained some of the many flaws inherent in his industry, telling New York Magazine, “There’s no other industry where you could get paid so much for doing so little.” Along the same lines, in the latest issue of Bloomberg-Businesweek, former stock broker Joshua Brown (who now writes the Reformed Broker blog) says that the business of Wall Street brokers, who are supposedly meant to serve clients, is one simply aimed at generating fees for the brokers themselves. “So I think it starts with a lie,” Brown said:

The basic premise of a broker pitching a client is “I’m going to be
 able to consistently generate 20 percent returns a year or I’m going to consistently beat the market.” They have no way to show any track record. They are managing hundreds of different accounts, each one is different. So I think it starts with a lie.

In his new book, Brown writes, “the Street’s perpetuation of half-truths and outright myths about investment products and services has been near fatal to the average portfolio.” As Research Magazine put it, “Brown unmasks the financial industry for all to see, revealing the less-than-honest sales tactics of boiler-room brokers and dressing down investment banks for running away with fees and riches while Mom and Pop retail investors are left holding the bag.”

There are, of course, several paths taken by former Wall Street employees looking to reform the industry. In addition to Brown’s tactics, Bloomberg today profiled the former Wall Streeters working with Occupy the SEC, who are “messing with detractors’ heads [via] the emergence of a media-savvy collection of legal, banking and activist members who come off as sane and authoritative.”