Another Parting Gift from the Bushies

Treasury Secretary Henry Paulson has quietly given US banks a tax cut windfall of $140 billion:

The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

The ruling, which is arguably illegal, is focused on whether banks are allowed to buy other banks in order to claim their losses for tax purposes:

Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company's losses to offset their gains and avoid paying taxes.

Lawmakers decried the tax shelters as a scam and created a formula to strictly limit the use of those purchased losses for tax purposes.

But from the beginning, some conservative economists and Republican administration officials criticized the new law as unwieldy and unnecessary meddling by the government in the business world.

Yet another gift to the corporate world from the most corrupt and criminal administration in our nation's history. Let's hope President-Elect Obama orders his Treasury Secretary to reverse this ruling. Our national trasure has already been bled dry by tax-cheating corporations and the rich who control them. This kind of crap has to stop.

In related news, the Bushies are refusing to disclose which banks have sought financial aid. That's your government in action: more graft, less disclosure.