Saturday, April 2, 2011

Taxpayers to lose as much as $84 billion on GM bailout

Here is what President Obama said last November.
"American taxpayers are now positioned to recover more than my administration invested in GM,”
A March 16, 2011 Congressional Oversight report disagrees to the tune of $25 billion.
“full repayment will not be possible unless the government is able to sell its remaining shares at a far higher price.”
That's $25 billion, but how are taxpayers losing the other $59 billion? When a company goes through bankruptcy, they normally lose tax write-offs for loses in previous years. Team Obama fixed that problem for GM. GM may not have to pay taxes for up to 20 years.
GM, which plans to begin promoting its relisting on the stock exchange to investors this week, wiped out billions of dollars in debt, laid off thousands of employees and jettisoned money-losing brands during its U.S.-funded reorganization last year.

Now it turns out, according to documents filed with federal regulators, the revamping left the car maker with another boost as it prepares to return to the stock market. It won't have to pay $45.4 billion in taxes on future profits.

The Obama administration changed the rules for GM and other TARP recipients.
"The Internal Revenue Service has decided that the government's involvement with these companies, both its acquisitions plus its disposals of their stock, means they should be exempt" from the rule, said Robert Willens, a New York tax consultant who advises investment banks and hedge funds.
A more detailed explanation can be found here.

1 comment:

GeronL said...

Yep. Cronyism to the max.