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The Corporation Led by a Member of Obama’s “Fiscal Responsibility” Commission
On November 17, the conservative Tax Foundation is presenting its “Distinguished Service Award” to Republican House Speaker John Boehner and Honeywell CEO David Cote, who was appointed by President Obama to serve on the National Commission on Fiscal Responsibility and Reform (often called the “Bowles-Simpson Commission”).
It’s unsurprising that Speaker Boehner’s obstruction of any deficit deal involving revenue has earned him an award from the (Anti-) Tax Foundation. The case of Cote is more interesting. As a member of the fiscal commission, he voted in favor of a broad plan that would rely on spending cuts to achieve two-thirds of its deficit reduction goal and revenue increases to achieve just one-third of that goal, a plan that was panned by CTJ and others. The deal also included “tax reform” that clearly would not raise taxes on corporations overall.
In April, Cote spoke at a public event about the budget deficit where he was asked twice about a press release issued by CTJ that morning explaining that Honeywell did not pay any corporate income taxes in 2009 or 2010 and paid very low taxes over the past several years despite its profits. Within a matter of hours, Honeywell sent a letter to CTJ essentially saying that the company correctly reported large profits to its shareholders for the last two years but used available tax loopholes to report losses to the IRS.
CTJ’s director, Bob McIntyre, wrote a letter back to Honeywell that concludes:
“So I think we agree on the following: The reason why Honeywell, despite reporting substantial pretax U.S. profits to its shareholders, paid no federal income tax in 2009 or 2010 (or more precisely, paid less than zero) is that it took advantage of legal tax breaks to wipe out its federal income tax liability. We may disagree, however, about whether these tax breaks should exist.”