Under the government’s bailout of the auto industry, GM and Chrysler have just a few weeks to submit a “viability plan” to the federal governement, showing that they’ll be able to restructure and achieve a positive net present value. Of course, it’s all about accounting — there’s little they can do in this short a time in temrs of restructuring decrepit operations.
Just one problem. The plan could create a huge tax burden, to the tune of $7 billion, which obviously the company can ill-afford to pay.
This won’t surprise you at all:
WSJ: Congressional leaders said they are open to cooperating with GM on the issue. The Michigan congressional delegation, including Sen. Debbie Stabenow and Rep. John Dingell, is expected to be a key advocate for the Detroit auto maker on the issue.
Chrysler is private, and likely won’t face the tax issues associated with publicly traded stock.
GM has made an effort to reach out to officials at the Treasury Department and Congress, according to people familiar with the effort. One way the auto maker could get relief from the taxes is to have a provision on the issue included in the economic-stimulus package being considered by Congress.
Will they get it? Well unless the government wants the first bailout to be a total waste, of course they will.