If enacted, the bill would significantly ease the rules governing so-called Morris Trust transactions, which restrict how certain corporate deals can be structured to avoid taxes.
Wall Street -- led by firms including Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Bear Stearns Cos., and Merrill Lynch & Co. -- is hoping that making it easier to do tax-free transactions will spur more deals. [...]
The bill's prospects aren't clear yet, though its sponsor, Virginia Republican Rep. Eric Cantor, is well-positioned to push it. Rep. Cantor is the House's chief deputy majority whip and the only member of the Republican leadership on the Ways and Means Committee, which oversees tax legislation.
Wall Street has been a reliable source of support for Rep. Cantor. In his three terms in Congress, the securities and investment industries have been among his biggest campaign contributors, donating $282,350, according to the Center for Responsive Politics. "To tie contributions to legislation is just backward," Mr. [Rob] Collins [Rep. Cantor's chief of staff] said.
Rep. Cantor's wife, Diana, is a former vice president at Goldman, one of the lead banks pushing for the legislative action.
The proposed legislation would change the rules to help corporations avoid the 35% corporate income tax in merger transactions. The Joint Committee on Taxation hasn't yet said how much Mr. Cantor's bill could cost the government in lost revenue.
Disney and Alltel have already used the existing loopholes to avoid the 35% corporate tax. Cantor's big innovation is to eliminate the requirements that Disney and Alltel had to meet, thus ensuring that no tax is ever paid and the US Treasury is depleted more rapidly.
Personally, I believe in the death penalty, but I would reserve it especially for crimes of dispassion like these.