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Where Are Your Tea Bags Now? May 5, 2009

Posted by Kate Ryan in 2010 Budget, Barack Obama, Economic Stimulus, Economy, National Politics, Politics, Taxes.
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During the 2008 presidential campaign, the subject of corporate taxation was an oft-discussed issue.  John McCain and the Republicans cited the United States as having the highest marginal corporate tax rate in the world at 35% while the Irish Republic had the lowest at 14%.  Notwithstanding the current total global meltdown, the Irish economy was the hottest on the planet – showing the most growth and GDP gain in the developed world.  What was less discussed is that even though Ireland had a lower corporate tax rate, it actually has a higher amount of  corporate tax revenue as a percentage of GDP than the United States.  It’s about twice as much.

How can that be?  Well, Ireland does not have the strange and mystical tax law contructs that allow its corporations to evade taxes like the U.S. has.  Many economists believe that if the loopholes allowing U.S. companies to evade taxes were closed, the U.S. corporate tax rate could be reduced to around 20% – and still bring in more revenue.  The GAO estimates that U.S. corporations use these loopholes to evade over $100 million per year in taxes.  What’s worse is that these same tax loopholes encourage American companies to move jobs overseas because there is a tax benefit for them to do so. 

Yesterday, President Obama announced a plan to reform the tax code and close the loopholes.  “The way to make American businesses competitive is not to let some citizens and businesses dodge their responsibility, while ordinary Americans pick up the slack. Unfortunately, that’s exactly what we’re doing,” Obama said.  Indeed.  The U.S. Public Interest Research Group (USPIRG) released a report on April 15 – tax day for most of us regular folk – that showed how this corporate tax avoidance impacts everyday citizens.  This practice shifts the tax burden to individuals; California taxpayers are on the hook for $11 billion more, Texas taxpayers are paying $8.5 billion more than necessary.   The Obama administration hopes that the changes they are proposing will create or bring jobs back to the U.S., add $210 billion in tax revenue to the Treasury, and help to lower the overall corporate tax rates.  Plus, the administration is beefing up the R & D tax credit to encourage business to do development activities within the United States.  Who could possibly be opposed tothat?

The Republicans (and Conservadems), of course!

Senate Minority Leader Mitch McConnell of Kentucky immediately pounced on the Administration’s plans by releasing a statement that the plan will “raise business taxes” at a time of economic trouble.  I didn’t know that if you were avoiding taxes, being asked to start paying them was a tax increase (it follows along the same logic as eliminating the earnings cap on Social Security is a tax increase).  The U.S. Chamber of Commerce – our government’s corporate shill – also came out against the plan, as did Democratic Senator Max Baucus, Chairmain of the Finance Committee.  “I want to make certain that our tax policies are fair and support the global competitiveness of U.S. businesses. These policies must be designed to encourage economic growth and create good-paying jobs Americans need right now,” he said.

How sad for us.  Our representatives in Congress, elected by and for us, are more interested in corporate profits rather than their constituents.  The government has thrown billions of dollars at corporate interests in the last six months and we the people are like mongrel dogs waiting for scraps from the table. 

Those companies that took our tax money?  The GAO found 18,857 businesses registered at the Ugland House in the Cayman Islands (pictured above).  Some of them are  Morgan Stanley – which has 273 subsidiaries in tax havens, with 158 in the Cayman Islands alone.  Citigroup has 427, with 90 in the Cayman Islands, and 59 of Bank of America’s tax-haven subsidiaries are there as well.    These businesses are using OUR tax money to avoid paying taxes.  Its surreal.

On April 15 – U.S. tax day – thousands of people held protests around the country obstensively about taxes and government spending.  Named, “Tea Parties”, these demonstrations were held to highlight the unfairness in the U.S. tax code.  The parties were organized by Republican operatives and publicized by the Republican Party news network, Fox.

So where are your tea bags now?

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Redistribution of Wealth? Yes, We Should! February 27, 2009

Posted by Kate Ryan in 2010 Budget, Barack Obama, Economy, Health Care, National Politics.
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want2President Obama unveiled his $3.55 trillion budget yesterday to great praise or damnation – depending upon which side of the aisle you sit on.  To Democrats, Liberals, and Progressives, this budget represents a necessary shift in the country’s priorities away from war, corporate welfare, and greater income inequality and toward strengthening families and communities.  To Republicans and Conservatives, however, the budget represents unbridled social spending, big government, and excessive taxation on the entire American populace.  Bob Ehrlich, former GOP Governor of Maryland, said on “Hardball with Chris Matthews” yesterday that the President’s budget, “is all about class warfare, all about punishing success.”  On the “News Hour with Jim Lehrer” last night, Douglas Holz-Eakin, former director of the CBO and John McCain’s campaign chief economic adviser said that the budget “uses the income tax for redistribution…There is no question that this is a redistribution of wealth.”

On the same program, Robert Greenstein from the Center on Budget and Policy Priorities, disputed Eakin’s assertions.  According to Greenstein, the budget contains “courageous” spending cuts by revisiting medicare and medicaid reimbursements (opposing the heath care industry), by returning the government to direct lending for student loans (opposing the financial industry), and by ending subsidies for wealthy farmers (opposing agri-business).   Mr. Greenstein also explained that the “tax hikes” are merely a roll-back of rates to what they were prior to George Bush’s presidency, during which time people making over $1 million per year saw a tax cut of over $150,000 each.  “I did not recall that the richest Americans were suffering before George Bush,” Greenstein said.

That’s the point.

The eight years of the Bush presidency presided over one of the greatest upward redistributions of wealth in American history.  Between 1967 and 2005 the share of income going to the top 5% of all households increased from 43.6 percent to 50.4 percent, while the share going to the bottom fifth fell from 4 percent to 3.4 percent. In 2004 those in the top one percent experienced a 12.5 percent increase in their incomes while everyone else, the other 99 percent of the population, saw an increase of only 1.5 percent.  When adjusted for inflation, wage and salary earning Americans saw their incomes lower than any time since 1970 last year.  And this is only income that we are talking about.  When you consider wealth – that is the value of all marketable assets when all debts, such as home mortgages and credit card debts are subtracted, yielding a person’s net worth – the top 20% of Americans own 84% of the net worth and 91% of the nation’s financial wealth.  

How did this happen?  Why didn’t we notice this insidious robbery that was happening under our noses?

First, the Bush administration advanced policies and relaxed regulation to make credit easier.  This allowed the regular, middle-class American to live the lifestyles we were told we could have without noticing that we didn’t have any money to pay for it.  The Bushies made it easier to use our houses as piggy banks and played upon our optimism that the housing market had no bottom.  It told us to sink our money in the stock market and we’d all have millions to retire on.  It used the power of the bully pulpit to convince us that the Unions that made sure our mothers and fathers had jobs with pensions, health insurance, and living wages were criminal and unnecessary.

Second, it distracted and divided us with fights over social issues.  They convinced us that if “Adam and Steve” got married our civilization would end.  They encouraged us to rally for the unborn while simultaneously cutting programs supporting the already born.  They pushed us into ignorance and idiocracy by having us advocate for creationism, intelligent design, and abstinence-only sex education.  In short, they treated us like the rubes we all behaved like.  And they laughed all the way to the bank.

Well, enough is enough.  It is time that we bring some equality back into our fiscal policy in this country.  I am not against rich people – I would like to become one someday – but I am against excess.  I believe that it is every person’s obligation to make sure that society functions for everyone.  We are judged by how we treat the least among us and I think if we went to our judgement tomorrow – we’d all be fucked.