GM to get tax break as part of stimulus bill
2/12/2009WASHINGTON - General Motors Corp. would receive a tax break as part of the stimulus bill announced yesterday. The automaker argued its government-led restructuring would unintentionally lead to at least $7 billion in tax liabilities.
General Motors, which received a $13.4 billion lifeline from the Bush administration last year, would have been required to pay additional income taxes from its government loans, potentially undermining its turnaround plan.
GM received $9.4 billion in federal loans and is expected to receive another $4 billion, while Chrysler LLC has received $4 billion in loans and hopes to get another $3 billion.
The companies must submit plans next week showing how they will restructure their companies and become profitable.
President Barack Obama, in an interview yesterday, said he was committed to helping the U.S. auto industry and more help could be available if the plans are realistic.
If not, Mr. Obama said, "then we're going to have to ask them to go back to the drawing board."
In the GM tax issue, lawmakers said several conditions in the Detroit company's loan agreement with the government could trigger an "ownership change" under the tax law.
That tax law was designed to prevent companies from merging to avoid a hefty tax bill.