Wall Street Journal: Write-Offs a Boon to Builders, Bankers, by Jesse Drucker:
The main business tax cuts proposed by President-elect Barack Obama are likely to be a windfall for two industries particularly tied to the current economic meltdown: Wall Street investment banks and home builders.
Under the proposal being crafted by the incoming Obama administration and congressional Democrats, companies would be able to use their so-called tax losses to offset taxable U.S. profits earned in the past five years.
Typically, companies can carry back such losses only two years. The Obama proposals likely would mean that companies with enormous losses from last year and this year could use the losses to help wipe out tax obligations from the previous five years and receive sizable tax-refund checks from the Treasury Department. For some firms, that would mean cash payments of billions of dollars.
That tax cut would be particularly helpful to industries that were flying high for the past several years, but now aren't expected to report much profit for the foreseeable future — such as Wall Street firms, home builders and construction companies. …
"I think it's ridiculous," said Dean Baker, an economist and co-director of the Center for Economic and Policy Research. "It's rewarding the people who messed up."
