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Buying Favors from Congress

Written by

John Hunter

in

It is no surprise that paying politicians lot of money gets you favors: Politicians Change rules for Big Donors – Lobbyists Keep Tax Off Billion Dollar Private Equities Deals (2007) – Congress Eases Bank Laws to Aid Big Donors (1999) – More Government Waste – Monopolies and Oligopolies do not a Free Market Make

Investments Can Yield More on K Street, Study Indicates by Dan Eggen

The study by researchers at the University of Kansas underscores the central reason that lobbying has become a $3 billion-a-year industry in Washington: It pays.
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The paper by three Kansas professors examined the impact of a one-time tax break approved by Congress in 2004 that allowed multinational corporations to “repatriate” profits earned overseas, effectively reducing their tax rate on the money from 35 percent to 5.25 percent. More than 800 companies took advantage of the legislation, saving an estimated $100 billion in the process, according to the study.

The largest recipients of tax breaks were concentrated in the pharmaceutical and technology fields, including Pfizer, Merck, Hewlett Packard, Johnson & Johnson and IBM. Pfizer alone repatriated $37 billion, representing 70 percent of its revenue in 2004
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Mazza added that the results are “troubling” because they show how large companies can distort tax policy to benefit their bottom line.

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2 responses to “Buying Favors from Congress”

  1. Charlie Munger Answers Shareholder Questions 2009 at Curious Cat Investing and Economics Blog

    Munger said the financial companies spent $500 million on political contributions and lobbying efforts over the last decade. They have a “vested interest” in protecting the system as it exists because of the high levels of pay they were earning, he said. The five biggest U.S. securities firms, only two of which still exist as independent companies, paid their employees about $39 billion in bonuses in 2007…

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  2. Continuing to Nurture the Too-Big-To-Fail Eco-system at Curious Cat Investing and Economics Blog

    […] The bought and paid for executive and legislative branches that created, supported and continue to nurture the too-big-to-fail eco-system may have made the choice – ruin the economy for a decade (or who knows how long) or bail out […]

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