Congress Asked to Stop GM From Writing Off Ignition Switch Victim Compensation Costs

Today I sent this letter to Senators Charles Grassley (R-IA) and Richard Blumenthal (D-CT):

We strongly urge you to re-introduce legislation similar to the Government Settlement Transparency Reform Act (S.1654) in the 113th Congress.

As you know, the death toll from General Motors’ failure to act on an ignition switch defect continues to climb, now at 87. Although GM's decision to create a fund to compensate victims and their families is a step in the right direction, we are troubled by GM’s ability to write off the cost as an expense for federal tax purposes.

Because of the government-directed bankruptcy and restructuring, GM is now shielded from much of its liability incurred beforehand. In order to ensure at least some semblance of accountability, Congress must make sure that GM’s future payouts for its recklessness are not simply the cost of doing business.

As the families of GM's victims have emphasized, no amount of money can bring back their loved ones, but as long as GM is able to write off the compensation costs, the deterrent to future negligence is undermined. How many more Americans must be killed or maimed until insulated, uncaring executives at GM face any real penalty?

This legislation would also make GM accountable for paying its fair share of taxes by eliminating one of its largest write-offs. Because the bankruptcy Court inexplicably allowed GM to carry forward some $45 billion in tax losses, the company has paid a relatively tiny amount of federal tax since emerging from bankruptcy. By closing the loophole that allows it to write off victim compensation costs, Congress can help ensure that GM pays at least something in taxes.

Finally, we have found compelling evidence that GM has been pursuing a public relations strategy of encouraging awards for its CEO Mary Barra from nonprofit groups that receive large cash donations from the company. As a GM shareholder, we have written the General Motors board asking that the company disclose all contributions to charitable and nonprofit organizations.

We have yet to receive a satisfactory response, raising the possibility that GM is taking deductions for charitable contributions that are, in effect, part of a campaign to rehabilitate Ms. Barra’s image. GM's lack of transparency in this regard epitomizes the secrecy and evasiveness that has characterized GM's response to the ignition switch scandal.

Having rescued GM just a few short years ago, American taxpayers deserve to see GM held accountable for its actions. GM should also pay its fair share of taxes. For these reasons, we strongly encourage you to re-introduce the Government Settlement Transparency Reform Act. 


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