Actually I don't see why this isn't the rule for everyone. Companies have good years and bad years. They should be able to use losses from bad years to offset their tax liability on profits from good years. This isn't really a tax break. They are just being taxed on their net profits.
The government should have never intervened in the auto industry, but this isn't one of the things they did wrong.
Under normal conditions, I'd agree. However, when a company undergoes bankrupcy, the stockholders take it in the shorts, as do creditors. (In GM's case, bondholders as well). Why should they be able to carry forward tax credits when they don't carry forward debt? This is especially galling of the companies that got TARP funding.
Everyone gets screwed but the unions. Nice.
“This isn’t really a tax break. They are just being taxed on their net profits.”
Yes it is. The “tax breaks” are for “losses” in previous years - years before the corporation was reorganized through the bankruptcy court. The “losses” not taken were “not taken” by the pre-reorganized corporation, which is in so many legal and financial terms considered “dead”, as its assets and debts have all been restructured. Many of those debts will already, and more legitimately, be taken as tax reducing losses, by the bondholders and investors that lost out in the reorganization. The new corporation has no right to the old corporation’s tax credits for “losses”, so much has already been forgiven in one way or another. That was always the rule, until the IRS made a 2009 ruling exempting the companies that benefited from TARP bailouts. Why them? THAT makes no sense.