Posts tagged with 'taxes'
Tens of thousands of people continue their peaceful occupation of the Wisconsin state capital to protest a bill that would abolish most collective bargaining rights for public employees. As the protests entered their eighth day, GRITtv with Laura Flanders was broadcasting from Madison, Wisconsin in collaboration with The Uptake.
Flanders interviewed Nation journalist and seventh-generation Wisconsinite John Nichols. Nichols and fellow guest Matthew Rothschild of The Progressive noted that the bill isn’t just an attack on collective bargaining rights. The bill would force public sector unions to hold recertification votes every year, which would put their very existence on the line annually. “The unions realize that this is a threat to their very existence,” Rothschild explained. (more…)
Sunday marked the 100th anniversary of the birth of B-movie actor-turned-conservative president, Ronald Wilson Reagan. On the eve of the centennial, economist Yves Smith talked Reaganomics on the Real News Network. Smith argues that Reagan’s real legacy is the deregulation of the U.S. economy that set the stage for the economic meltdown of the late 2000s:
But [with] financial services, you have companies that have state guarantees. That’s the bottom line with the banking system. Ever since the 1930s, we in advanced economies have made the decision we’re not going to let the banking system fail. So if you don’t regulate banks, you have set up the situation that we have now, which is that you have socialized losses and privatized gains. And what have we seen come out of that? Financial crises. When we had a heavily regulated financial system, we had nearly 40 years of hardly any financial crises. When we started deregulating the banks, you saw increasing in frequency and increasing in significance financial crises directly resulting from that.
Spot of Tea?
Ordinary Britons are rallying to the defense of the welfare state. Faced with the deepest public spending cuts in living memory, citizens are taking to the streets to force deadbeat companies to pay their taxes, Johann Hari reports in The Nation. Their federal government has pledged to slash £7 billion in public spending. Cuts to subsidized housing alone will force 200,000 people out of their homes.
A group of friends in a local pub were galvanized by the news that Vodafone, one of the UK’s leading mobile phone companies, owed an astonishing £6 billion in back taxes. Calling themselves UK Uncut, the friends staged a protest outside Vodafone headquarters in London. The meme went viral. In the following days, several Vodafone stores were temporarily paralyzed by peaceful sit-ins.
Hari argues that the success of UK Uncut can teach American progressives a lot about how to build a grassroots counterpart to the Tea Party.
Persistent vegetative states
Big or small, liberal or conservative, state governments are screwed. That’s the upshot of Paul Starr’s latest essay in The American Prospect. Unemployment remains at recession levels and there is little political will to raise taxes. States can’t deficit spend like the feds do. So, the only option is public service cuts, which means firing teachers, doctors, firefighters, and other public workers.
Starr argues that the economic stimulus was a good start, but one that didn’t go far enough. As part of the stimulus, the federal government picked up a larger share of the states’ Medicaid costs. This was a good thing, in Starr’s view, because the extra federal dollars saved jobs while providing health care for the poor. Starr argues that state budget woes during recessions are so predictable, and the consequences so dire, that the Medicaid subsidy should kick in automatically whenever unemployment rises past a predetermined threshold.
Anti-union bill dead in CO
A bill to end collective bargaining for public employees in Colorado died in committee this week, according to Joseph Boven of the Colorado Independent. The bill would have abolished an executive order signed by former Gov. Bill Ritter, which gave state employees the right to organize. If the bill had been enacted, this kind of organizing would become illegal. This bill, sponsored by Sen. Shawn Mitchell (R-Broomfield), was just one of many attempts by Republicans to scapegoat public sector unions for what Mitchell calls the “financial Armageddon” facing state governments.
Smurfs rob Moms
“Smurfing” is money laundering slang for recruiting a lot of low-level accomplices to move money in untraceably small increments. But the word may soon have a new derogatory connotation.
Kevin Drum of Mother Jones reports that a kids’ video game, Smurfs’ Village, is depleting parents’ bank accounts, one wagon of Smurfberries at a time. Capcom’s game offers kids the chance to build the village from scratch. Along the way, they can pay real money for in-game resources. One mother was shocked to receive a $1,400 bill from Apple because her daughter bought innumerable imaginary props, such as $19 “buckets of snowflakes,” and a $100 “wagon of Smufberries.” The purchases require a password, but critics say it’s too easy for clever kids to circumvent the security. As Drum says, if adults want to waste their real dollars on virtual Farmville paraphernalia, that’s fine, but such a racket has no place in kids’ games.
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by Lindsay Beyerstein, Media Consortium blogger
Senate Republicans scuttled a bipartisan $1.2 trillion dollar spending omnibus bill last week. Now, Majority Leader Harry Reid (D-NV) is scrambling to pass a temporary funding bill to keep the federal government’s lights on.
The GOP abruptly pulled the plug on the omnibus, a massive piece of legislation that Republicans and Democrats had collaborated on for months. Why? Because the Republicans want to start over in the next session of Congress when they will control the House and pick up seats in the Senate. They intend to rewrite the spending bill with much less Democratic input. In other words, bipartisanship proves once again to be a racket.
War on the welfare state
At Truthout, economist Dean Baker offers some predictions on what Republicans have in mind for the 112th Congress. The Bush tax cut extensions that passed with great fanfare are supposed to be 2-year extensions. However, Baker asks why we should expect that the GOP will allow the tax cuts to expire? (more…)
by Lindsay Beyerstein, Media Consortium blogger
Election Day is finally here, and control of the House and the Senate hangs in the balance. The differences between parties could not be more stark. Republicans have promised to repeal health care reform and slash government spending for social programs, all while preserving tax cuts for the wealthiest Americans. Some of the more radical ideas bandied about this election season—by conservative candidates with a decent shot at winning—include privatizing social security and eliminating the Department of Education.
Anti-tax ballot measures
Josh Holland of AlterNet runs down the most economically important ballot initiatives facing the electorate today. Some of these measures could cripple states for decades to come.
For example, Coloradans are voting on a spate of radical anti-tax amendments including Amendment 60, which would eliminate all property tax increases passed since 1992 and halve property taxes over the next decade. If Initiative 1053 passes in Washington State, any future hikes in taxes or fees would have to be approved by a 2/3rds majority of legislators or by voters. In tough times, the promise of preempting tax increases may seem attractive, but those entranced by the 2/3rds rule should look to California as a cautionary tale. The state is structurally in the red because legislators can pass spending bills by simple majority but they need a 2/3rds majority to raise taxes. (more…)
By Zach Carter, Media Consortium Blogger
On Feb. 1, President Barack Obama unveiled his 2011 budget proposal. While conservative pundits reacted with predictable, yet preposterous, wailing about the federal budget deficit, the short-term U.S. budget outlook is just fine. If anything, Obama’s budget doesn’t dedicate nearly enough funding to create jobs.
As John Nichols notes for The Nation, Obama budgets just $100 billion for jobs in fiscal 2011. The amount is nowhere near enough to make a significant dent in the epic unemployment rate. The government’s fiscal 2011 calendar begins in October of this year, and by that time, the stimulus package Obama pushed through in February of 2009 will have been exhausted, leaving the labor market without serious support from the federal government. (more…)
by Zach Carter, TMC MediaWire Blogger
Earlier this month, President Barack Obama rolled out a new plan to limit the use of offshore tax havens and crack down on corporate abuse of the tax system. These tax havens siphon over $100 billion a year from the government, and have allowed many U.S. banks to duck paying taxes despite receiving massive, taxpayer-funded bailouts. The president’s plan is far from perfect, but comes as a welcome acknowledgment of the unfairness embedded in the current tax code.
Corporate taxes are precisely the type of issue that mainstream media outlets prefer to avoid. Even though the government’s tolerance of corporate tax evasion is a major scandal, it takes time to explain the issue’s intricacies, and it’s easier to resort to pundit-jousting than to provide a detailed report on how companies are cooking the books.
Most discussions of corporate taxes are quickly distorted by focusing on the overall income tax rate for the wealthiest corporations. This rate is 35% in the U.S., which is relatively high when compared to other developed nations with complex economies. But corporate lobbyists have successfully pushed thousands of complex loopholes into the U.S. tax code, making the actual, paid tax rate much lower. In a battle between pundits, a talking head screaming “Thirty-five per cent!” tends to be more persuasive than an academic talking about offshore deferred compensation.
This sheer density of the tax code creates a destructive feedback loop for policymakers. “If the loopholes are very complicated, then the only people who know enough to argue over them will be the lobbyists dedicated to their preservation,” Ezra Klein writes for The American Prospect.
As a result of this information imbalance, lobbyists can convince Congress to gouge ordinary citizens, even when those lobbyists are representing companies dependent on taxpayer largess for their very existence. Financial firms are particularly fond of establishing small sub-corporations in the Caribbean to shield their income from the U.S. Treasury. By registering their headquarters in these tiny nations, companies pay tiny fees to their “home” country and shirk being taxed in the U.S.
Citigroup has received over $45 billion in direct capital injections from taxpayers and billions more in federal insurance, but as Jim Hightower notes, the banking behemoth has a total of 427 sub-corporations scattered around the globe, and they serve no purpose other than avoiding taxes.
It’s not as if these companies have actually moved their employees or their trading houses or their factories to these remote locales. Their existence outside the United States entirely a fiction of paperwork crafted by clever corporate lobbyists. About 400,000 companies are headquartered in the British Virgin Islands, and none actually do any business there.
“All 400,000 companies are located in one gray, two-storey building in the town of Tortola,” Hightower notes.
Similar situations exist in dozens of other tax-haven nations. The Cayman Islands have over 12,000 companies “housed” in a single building. As David Cay Johnston explains in The Nation, the Caymans bar these pseudo-firms from engaging in any business beyond hiding profits.
Corporate tax-dodging has real consequences. “Honest taxpayers have to make up for the revenues lost through this offshore cheating in three ways: we pay more in taxes, we get fewer government services and we incur rising government debt,” Johnston writes.
The practice also helps artificially inflate corporate profits—and fake profit-taking was one of the chief drivers of the current financial crisis. In an illuminating interview with GritTV’s Laura Flanders, former banking regulator William Black explains how top-level executives at major financial institutions used accounting gimmicks to score record bonuses at the expense of the greater economy.
“It was an epidemic of fraud lead by the CEOs, and they were using accounting to commit that fraud,” Black says.
Subprime loans have much higher interest rates than ordinary prime loans. This means subprime loans are actually worth more to banks, provided the borrower can actually pay the loan. An executive with an eye to his own paycheck might urge his company to gobble up massive quantities of subprime loans, according to Black, enabling the bank to book record profits for the few months or years that borrowers could actually keep up with their mortgage payments. Giant profits generate gigantic bonuses for the executives, so even when the company is destroyed by all this subprime binging, the executive walks away rich.
Executives also aligned the pay incentives of employees lower on the corporate food chain with this strategy, ensuring that lenders churned out as many loans as possible, regardless of quality. The result is a devastating chain of fraud starting at the Wall Street CEO and ending at the mortgage broker. In the below video for American News Project, Lagan Sebert outlines the operations subprime mortgage giant Ameriquest and their Wall Street enablers, Citigroup.
Obama deserves some credit for acknowledging that corporate tax-scamming is a problem—Presidents Bill Clinton and George W. Bush were happy to sign-off on laws that made it easier for wealthy companies to evade taxes. But Obama’s crackdown doesn’t go nearly far enough. His plan would only bring in about 10% of the revenue the U.S. Treasury Department thinks it is losing through these scams. If Obama is serious about restoring accountability to Wall Street, that commitment does not end with the tax code. It is equally essential for Obama to secure new regulations on CEO pay that tie compensation to meaningful, long-term profits instead of short-term risk-taking, and to hire financial regulatory officials who will not tolerate endemic fraud.
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