thegreekdog wrote:I'll try not to get too tax technical here, but there is at least one unintended consequence of the bill that has recently been revealed.
When a company presents its financial statements for purposes of its financial reporting, it takes into account potential "tax assets" which are essentially tax benefits it can take in the future. These "tax assets" help the company better understand the company's potential tax liability (and therefore future post-tax earnings) in future years.
There is a federal subsidy for companies that provide post-retirement medical benefits. The federal government subsidizes 70% of the cost and the company pays the remaining 30%. The entire 100% is deductible. However, as a result of this bill, the cost is no longer deductible. So, now the companies that booked this tax benefit will no longer have the benefit and thus will be required to adjust their earnings.
So, a couple of things come to mind here:
(1) Congress is waxing "we didn't know" about this. I'm fairly certain that they were told this was a consequence of the bill.
(2) Congress is holding hearings because at least one company has said they are going to reevaluate post-retirement benefits, and obviously Congress does not like that.
(3) I believe Congress will amend that portion of the law and permit companies to take that deduction in future years, which raises the question as to whether the law will be revenue-neutral anymore (if it was in the first place). The answer is no, by the way.
... A list of companies that, just within the last week, have outlined how they expect to change their ways in line with what you're talking about.
Farm-equipment manufacturer
John Deere "said it expects its expenses to rise by around
$150 million on an after-tax basis, mainly in the second quarter, as a result of the legislation."
Verizon "told employees in an email Tuesday that Verizon's costs will go up in the near term, pinpointing a tax-subsidy reduction for retiree health benefits."
Heavy-equipment manufacturer
Caterpillar "said that its first-quarter earnings will be hit with a
$100 million after-tax charge under tax law changes attached to the new health care reform legislation."
AK Steele Holding Corp., "the third largest U.S. steelmaker by sales, said it will record a non-cash charge of about
$31 million resulting from the health-care overhaul signed into law by President Barack Obama. The charge will be recorded in the first quarter of 2010."
Valero Energy "will take a
$15 million to $20 million charge to second-quarter earnings for the same reason."
Medical-device maker
Medtronic "warned that new taxes on its products could force it to
lay off a thousand workers."
And now, let's add the biggest one to the list ...
AT&T. It says that it will take a
$1 billion charge against earnings in the first quarter because of Obamacare.
... That's "billion," folks, with a "b." This is because of changes to how Medicare subsidies are taxed. AT&T also says that it may cut benefits offered to current and retired workers. Retirees could lose their prescription drug coverage altogether.
... The rest is all Boortz:
Then, our masters aren't happy that some of these companies have come out of the gate so quickly with their predictions of negative economic consequences under ObamaCare. Remember, as The Community Organizer told us time after time .. ObamaCare would lower costs, create jobs, lower the deficit and keep asteroids from striking the earth until the year 8314.
So ... looks like it's time to flex the good old government muscles. And who better tto do that than our friend Henry Waxman from California? Henry Waxman has summoned the executives from some of these companies to Capitol Hill to defend these assessments. That's right. Waxman wants these evil companies to come to Washington and testify as to exactly why they complied with the law. Waxman is also demanding that these bring internal company documents on their healthcare finances. The hearing is set for April 21. Here is the letter Waxman sent to several executives, including AT&T: "After the president signed the health care reform bill into law, your company announced that provisions in the law could adversely affect your ability to provide health insurance ... The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern ... [these decisions] appear to conflict with independent analyses."
Independent analysis? Waxman means "political analysis."
This is the new America under a president who considers the private sector to be "the enemy." The purpose of Waxman's little dog and pony show is to intimidate corporate America. Don't embarrass Obama right after his wonderful victory with ObamaCare. Remember ... government, not the private sector, is paramount in our country right now. Businesses exist to support government, not the other way around....
... And these guys are giving me a hard time for pointng out that the Bamster smokes. Talk about distracted.
...
