J.P. Morgan in Talks for $1.4 Billion; Stimulus Gives $12 Billion to 250 Firms - 'Public borrowing to pay off private debt.'

From The Wall Street Journal:

J.P. Morgan Chase & Co. is nearing a deal that would allow it to benefit from a tax refund of as much as $1.4 billion, becoming the latest company to tap a little-noticed plank in an economic stimulus bill.

That law let companies apply losses from 2008 or '09 against taxes paid in the previous five years, instead of the previous two years.

Many other companies have benefited from the 2009 tax-refund law already. According to an analysis of securities filings by The Wall Street Journal, more than 250 companies have so far said they expect to get about $12 billion in federal tax refunds under the law.

Some critics have found the corporate-tax-refund technique wanting as a stimulus or job-creation move. Prior to Congress's passage of the $787 billion stimulus law in early 2009, the Congressional Budget Office looked at six possible stimulus approaches and ranked this one least effective, saying each corporate tax dollar refunded would generate at most 40 cents of boost to gross domestic product. The corporate-tax-refund approach wasn't included in the big stimulus bill early in the year, but was part of legislation in November that extended jobless benefits.

Douglas Shackelford, a tax professor at the University of North Carolina at Chapel Hill, said using federal tax receipts to shore up corporate balance sheets amounts to "public borrowing to pay off private debt.... It's not clear to me that's a good use of money at all."