The government is a protection racket for the 1 percent

The financial crisis was clearly good for some people.

“In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.”

The government is a protection racket for the 1 percent
Bill Moyers and Michael Winship
Moyers & Company
April 21, 2014

The evidence of income inequality just keeps mounting. According to “Working for the Few,” a recent briefing paper from Oxfam, “In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.”

Our now infamous one percent own more than 35 percent of the nation’s wealth. Meanwhile, the bottom 40 percent of the country is in debt. Just this past Tuesday, the 15th of April — Tax Day — the AFL-CIO reported that last year the chief executive officers of 350 top American corporations were paid 331 times more money than the average US worker. Those executives made an average of $11.7 million dollars compared to the average worker who earned $35,239 dollars.

As that analysis circulated on Tax Day, the economic analyst Robert Reich reminded us that in addition to getting the largest percent of total national income in nearly a century, many in the one percent are paying a lower federal tax rate than a lot of people in the middle class. You may remember that an obliging Congress, of both parties, allows high rollers of finance the privilege of “carried interest,” a tax rate below that of their secretaries and clerks.

And at state and local levels, while the poorest fifth of Americans pay an average tax rate of over 11 percent, the richest one percent of the country pay — are you ready for this? — half that rate. Now, neither Nature nor Nature’s God drew up our tax codes; that’s the work of legislators — politicians — and it’s one way they have, as Chief Justice John Roberts might put it, of expressing gratitude to their donors: “Oh, Mr. Adelson, we so appreciate your generosity that we cut your estate taxes so you can give $8 billion as a tax-free payment to your heirs, even though down the road the public will have to put up $2.8 billion to compensate for the loss in tax revenue.”

All of which makes truly repugnant the argument, heard so often from courtiers of the rich, that inequality doesn’t matter. Of course it matters. Inequality is what has turned Washington into a protection racket for the one percent. It buys all those goodies from government: Tax breaks. Tax havens (which allow corporations and the rich to park their money in a no-tax zone). Loopholes. Favors like carried interest. And so on. As Paul Krugman writes in his New York Review of Books essay on Thomas Piketty’s Capital in the Twenty-First Century, “We now know both that the United States has a much more unequal distribution of income than other advanced countries and that much of this difference in outcomes can be attributed directly to government action.”

Recently, researchers at Connecticut’s Trinity College ploughed through the data and concluded that the US Senate is responsive to the policy preferences of the rich, ignoring the poor. And now there’s that big study coming out in the fall from scholars at Princeton and Northwestern universities, based on data collected between 1981 and 2002. Their conclusion: “America’s claims to being a democratic society are seriously threatened… The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.” Instead, policy tends “to tilt towards the wishes of corporations and business and professional associations.”

Last month, Matea Gold of The Washington Post reported on a pair of political science graduate students who released a study confirming that money does equal access in Washington. Joshua Kalla and David Broockman drafted two form letters asking 191 members of Congress for a meeting to discuss a certain piece of legislation. One email said “active political donors” would be present; the second email said only that a group of “local constituents” would be at the meeting.

One guess as to which emails got the most response. Yes, more than five times as many legislators or their chiefs of staff offered to set up meetings with active donors than with local constituents. Why is it not corruption when the selling of access to our public officials upends the very core of representative government? When money talks and you have none, how can you believe in democracy?

Sad, that it’s come to this. The drift toward oligarchy that Thomas Piketty describes in his formidable new book on capital has become a mad dash. It will overrun us, unless we stop it.

Exemption Gives Rich People Obscene Real Estate Tax Breaks

Exemption Gives Rich People Obscene Real Estate Tax Breaks
Gothamist.com
July 14, 2013

The requirements for New York's tax abatement program to entice developers to build new housing tightened in 2008, but rules tend to mean very little when money is involved. This weekend Times reports that recently passed state legislation exempted several luxury buildings under construction from certain requirements for the tax break, including One57 and 30 Park Place. The law gives property owners a 10-year pass on real estate taxes—so the buyer of the $115 million penthouse at One57 would have an annual bill of under $18,000, when they would typically owe $300,000.

The abatement law, known as the 421A program, is complicated and controversial. Created in the '70s to spur economic growth, it has since added affordable housing requirements and tighter restrictions, restrictions that developers apparently had no trouble skirting.

“The idea of the program was that tax subsidies can be an important tool to create residential housing and affordable housing that otherwise wouldn’t be built,” said Vicki Been, the faculty director of the Furman Center for Real Estate and Urban Policy. “I don’t see how giving a tax break to a building like One57 helps either of those goals.”

As if to offer some warped concept of "balance," the article notes that these tax breaks could be offset by obscenely high hidden fees tacked on to the sale agreements (the proceeds of which go to the developers, not state or city coffers).

At 432 Park Avenue, which will be the tallest condo in the Northern Hemisphere when it opens in 2015, full-floor penthouses are priced between $72.5 million and $95 million and will be saddled with common charges of more than $17,000 a month.

On top of those costly common charges come fees like the mandatory membership in the building’s gym, known as The Club at 432 Park Avenue, which bases its charges on the size of the apartment, with larger units owing more. Then there is the $2,000 that owners are required to pay annually toward the building’s dining room, and the additional $1,200 in private dining services that owners are required to buy annually, whether or not they use the restaurant.

Pity the owners of the $72.5 million apartments who owe mandatory gym membership fees.

Who pays taxes? Employees replace corporations in big shift over past decades

"We should not be so mad at Apple for doing what the law allows. We should be mad that the law allows Apple and other companies to keep billions of dollars of cash offshore and out of the government coffers, where it could be helping the unemployed and our crumbling infrastructure and such. Another thing we can get mad about is how the "corporate tax reform" that Cook and other corporate leaders are always banging on about will actually serve to make it so companies pay even less in taxes than they do now."

The 1 Chart That Reveals Just How Grossly Unfair The U.S. Tax System Has Become
Mark Gongloff
huffingtonpost.com
05/22/2013 Updated: 05/23/2013

Click to enlarge.

Notice the beige stripe that is shrinking steadily? That stripe is the percentage corporate taxes contribute to total federal revenue. And notice the olive-green stripe that has swollen to be larger than the beige stripe used to be? That is the contribution of payroll taxes to federal revenue.

What this shows is how dramatically corporate tax contributions have shrunk in the past several decades, and how our personal taxes have risen to fill the gap. Payroll taxes now make up 35 percent of all federal government tax receipts, up from 11 percent in 1950. Corporate income taxes, meanwhile, now make up less than 10 percent of federal revenue, down from about 26 percent in 1950...

Assuming companies pay half of the payroll taxes in this chart, the total tax burden for individual Americans is ...about 63 percent of total federal revenue...that is up from about 45 percent in 1950.

Michele Bachmann denies benefiting from government aid

Michele Bachmann denies benefiting from government aid
As Michele Bachmann kicks off her run for the GOP presidential nomination, she defends herself against allegations surrounding the hundreds of thousands in government funds that went to her family farm and a counseling clinic.
By Richard A. Serrano
LA Times
June 26, 2011

With a new Iowa poll putting her in a dead heat with the front-runner for the Republican presidential nomination, Rep. Michele Bachmann deflected allegations that she and her family had benefited from government assistance programs and said that hundreds of thousands of dollars to her family farm and a counseling clinic went instead to her employees and her in-laws.

"My husband and I did not get the money," she said, appearing on Sunday news talk shows as she prepared to officially open her campaign in her original hometown of Waterloo, Iowa.

The Los Angeles Times reported Sunday that Bachmann, a congresswoman from Minnesota and "tea party" favorite, portrayed herself as a fiscal conservative while also benefiting from government funds and federal farm subsidies. An examination of her record and finances showed that a counseling clinic run by her husband received nearly $30,000 from the state of Minnesota in the last five years, with part of the money coming from the federal government. And a family farm in Wisconsin, where she is listed as a partner, received some $260,000 in federal subsidies.

Bachmann and her staff declined to talk to about the government assistance for the L.A. Times article. But asked about the issue on "Fox News Sunday," she insisted that she and her husband had not benefited at the expense of federal and state taxpayers.

"First of all," she said, "the money that went to the clinic was actually training money for employees. The clinic did not get the money. And my husband and I did not get the money either. That's mental health training money that went to employees."

As for the farm, she said it belonged to her father-in-law. "It's not my husband and my farm," Bachmann said. "And my husband and I have never gotten a penny of money from the farm."

As the Los Angeles Times reported on Sunday, however, in financial disclosure forms, Bachmann reported receiving between $32,503 and $105,000 in income from the farm, at minimum, between 2006 and 2009.

Bachmann also repeated her stance that she was opposed to federal earmarks that sponsored pet projects for politicians back home and said she believed "the states have to build roads and bridges," not the federal government.

But asked whether that was an inconsistency given that her family appeared to be benefiting from government aid, she said the clinic money was spent to train employees when they otherwise would have been there working.

Bachmann also was asked about the farm subsidies on CBS' "Face the Nation." She suggested the public instead should be outraged about a sharp increase in government limousines in the two years since President Obama took office.

She also said she had been a Christian since she was 16 and that God often steered her political course....

Nonpartisan Tax Report Withdrawn After G.O.P. Protest

Nonpartisan Tax Report Withdrawn After G.O.P. Protest
By JONATHAN WEISMAN
New York Times
November 1, 2012

WASHINGTON — The Congressional Research Service has withdrawn an economic report that found no correlation between top tax rates and economic growth, a central tenet of conservative economic theory, after Senate Republicans raised concerns about the paper’s findings and wording.

Mitch McConnell, the Senate Republican leader, center, and other Republicans raised concerns with an economic report that questions a central tenet of conservative economic theory.

The decision, made in late September against the advice of the agency’s economic team leadership, drew almost no notice at the time. Senator Charles E. Schumer, Democrat of New York, cited the study a week and a half after it was withdrawn in a speech on tax policy at the National Press Club.

But it could actually draw new attention to the report, which questions the premise that lowering the top marginal tax rate stimulates economic growth and job creation.

“This has hues of a banana republic,” Mr. Schumer said. “They didn’t like a report, and instead of rebutting it, they had them take it down.”

Republicans did not say whether they had asked the research service, a nonpartisan arm of the Library of Congress, to take the report out of circulation, but they were clear that they protested its tone and findings...

The Veil of Opulence

The Veil of Opulence
By BENJAMIN HALE
The New York Times
August 12, 2012

More than 40 years ago the philosopher John Rawls, in his influential political work “A Theory of Justice,” implored the people of the world to shed themselves of their selfish predispositions and to assume, for the sake of argument, that they were ignorant. He imposed this unwelcome constraint not so that his readers — mostly intellectuals, but also students, politicians and policy makers — would find themselves in a position of moribund stupidity but rather so they could get a grip on fairness.

Rawls saw clearly that principles of justice like the golden rule or mutual benevolence, are subject to distortion.

Rawls charged his readers to design a society from the ground up, from an original position, and he imposed the ignorance constraint so that readers would abandon any foreknowledge of their particular social status — their wealth, their health, their natural talents, their opportunities or any other goodies that the cosmos may have thrown their way.

In doing so, he hoped to identify principles of justice that would best help individuals maximize their potential, fulfill their objectives (whatever they may happen to be) and live a good life. He called this presumption the “veil of ignorance.”

...Meanwhile, we give little thought to how challenging this can be for those who suffer from chronic illnesses or disabling conditions. What Rawls also saw clearly was that other classic principles of justice, like the golden rule or mutual benevolence, are subject to distortion precisely because we tend to do this.

Nowadays, the veil of ignorance is challenged by a powerful but ancient contender: the veil of opulence. While no serious political philosopher actually defends such a device — the term is my own — the veil of opulence runs thick in our political discourse. Where the veil of ignorance offers a test for fairness from an impersonal, universal point of view — “What system would I want if I had no idea who I was going to be, or what talents and resources I was going to have?” — the veil of opulence offers a test for fairness from the first-person, partial point of view: “What system would I want if I were so-and-so?” These two doctrines of fairness — the universal view and the first-person view — are both compelling in their own way, but only one of them offers moral clarity impartial enough to guide our policy decisions.

Those who don the veil of opulence may imagine themselves to be fantastically wealthy movie stars or extremely successful business entrepreneurs. They vote and set policies according to this fantasy. “If I were such and such a wealthy person,” they ask, “how would I feel about giving X percentage of my income, or Y real dollars per year, to pay for services that I will never see nor use?”

We see this repeatedly in our tax policy discussions, and we have just seen the latest instance of it in the Tax Policy Center’s comparison of President Obama’s tax plan versus Mitt Romney’s tax plan. “He’s asking you to pay more so that people like him can pay less,” Obama said last week, “so that people like me pay less.” Last Monday he drove the point even harder, saying that Romney’s plan is like “Robin Hood in reverse.” And certainly, Romney’s selection on Saturday of Paul Ryan as his running mate will keep this issue in the forefront of our political discourse.

Of course, the veil of opulence is not limited to tax policy. Supreme Court Justices Samuel Alito and Antonin Scalia advanced related logic in their oral arguments on the Affordable Care Act in March. “[T]he mandate is forcing these [young] people,” Justice Alito said, “to provide a huge subsidy to the insurance companies … to subsidize services that will be received by somebody else.” By suggesting in this way that the policy was unfair, Alito encouraged the court to assess the injustice themselves. “If you were healthy and young,” Justice Alito implied, “why should you be made to bear the burden of the sick and old?”

The answer to these questions, when posed in this way, is clear. It seems unfair, unjust, to be forced to pay so much more than someone of lesser means. We should all be free to use our money and our resources however we see fit. And so, the opulence argument for fairness gets off the ground.

It is one thing for the very well off to make these arguments. What is curious is that frequently the same people who pose these questions are not themselves wealthy, nor even particularly healthy.

Instead, they ask these questions under the supposition that they are insisting upon fairness. But the veil of opulence operates only under the guise of fairness. It is rather a distortion of fairness, by virtue of the partiality that it smuggles in. It asks not whether a policy is fair given the huge range of advantages or hardships the universe might throw at a person but rather whether it is fair that a very fortunate person should shoulder the burdens of others...

Mitt Romney's "Son of Boss" reveals truth about Romney and taxes

Did Romney enable company's abusive tax shelter?
By Peter C. Canellos and Edward D. Kleinbard
August 8, 2012
(CNN)

Mitt Romney's refusal to release tax returns in the critical years of his income accumulation has done little to dispel the legitimate concern that arises from hints buried in his scant disclosure to date: Did he augment his wealth through highly aggressive tax stratagems of questionable validity?

Opinion: Why won't Romney release more tax returns?

One relevant line of inquiry, largely ignored so far, is to examine what exists in the public record regarding his attitude toward tax compliance and tax avoidance. While this examination is hampered because his dealings through his private equity company, Bain Capital, are kept shrouded, there are other indicators.

A key troubling public manifestation of Romney's apparent insensitivity to tax obligations is his role in Marriott International's abusive tax shelter activity.

Romney has had a close, long-standing, personal and business connection with Marriott International and its founders. He served as a member of the Marriott board of directors for many years. From 1993 to 1998, Romney was the head of the audit committee of the Marriott board.

During that period, Marriott engaged in a series of complex and high-profile maneuvers, including "Son of Boss," a notoriously abusive prepackaged tax shelter that investment banks and accounting firms marketed to corporations such as Marriott. In this respect, Marriott was in the vanguard of a then-emerging corporate tax shelter bubble that substantially undermined the entire corporate tax system.

Son of Boss and its related shelters represented perhaps the largest tax avoidance scheme in history, costing the U.S. many billions in lost corporate tax revenues. In response, the government initiated legal challenges that resulted in complete disallowance of the losses claimed by Marriott and other corporations.

In addition, the Son of Boss transaction was listed by the Internal Revenue Service as an abusive transaction, requiring specific disclosure and subject to heavy penalties. Statutory penalties were also made more stringent to deter future tax shelter activity. Finally, the government brought successful criminal prosecutions against a number of individuals involved in Son of Boss and related transactions not associated with Marriott, including principals at major law and accounting firms.

In his key role as chairman of the Marriott board's audit committee, Romney approved the firm's reporting of fictional tax losses exceeding $70 million generated by its Son of Boss transaction. His endorsement of this stratagem provides insight into Romney's professional ethics and attitude toward tax compliance obligations... Editor's note: Peter C. Canellos, a lawyer, is former chair of the New York State Bar Association Tax Section. Edward D. Kleinbard is a professor at Gould School of Law at the University of Southern California. He is the former chief of staff of Congress's Joint Committee on Taxation.

The Rich Get Even Richer

The Rich Get Even Richer
By STEVEN RATTNER
New York Times
March 25, 2012

NEW statistics show an ever-more-startling divergence between the fortunes of the wealthy and everybody else — and the desperate need to address this wrenching problem. Even in a country that sometimes seems inured to income inequality, these takeaways are truly stunning.

Economic Scene: Inequality Undermines Democracy (March 21, 2012)

In 2010, as the nation continued to recover from the recession, a dizzying 93 percent of the additional income created in the country that year, compared to 2009 — $288 billion — went to the top 1 percent of taxpayers, those with at least $352,000 in income. That delivered an average single-year pay increase of 11.6 percent to each of these households.

Still more astonishing was the extent to which the super rich got rich faster than the merely rich. In 2010, 37 percent of these additional earnings went to just the top 0.01 percent, a teaspoon-size collection of about 15,000 households with average incomes of $23.8 million. These fortunate few saw their incomes rise by 21.5 percent.

The bottom 99 percent received a microscopic $80 increase in pay per person in 2010, after adjusting for inflation. The top 1 percent, whose average income is $1,019,089, had an 11.6 percent increase in income.

This new data, derived by the French economists Thomas Piketty and Emmanuel Saez from American tax returns, also suggests that those at the top were more likely to earn than inherit their riches. That’s not completely surprising: the rapid growth of new American industries — from technology to financial services — has increased the need for highly educated and skilled workers. At the same time, old industries like manufacturing are employing fewer blue-collar workers.

The result? Pay for college graduates has risen by 15.7 percent over the past 32 years (after adjustment for inflation) while the income of a worker without a high school diploma has plummeted by 25.7 percent over the same period.

Government has also played a role, particularly the George W. Bush tax cuts, which, among other things, gave the wealthy a 15 percent tax on capital gains and dividends. That’s the provision that caused Warren E. Buffett’s secretary to have a higher tax rate than he does.

As a result, the top 1 percent has done progressively better in each economic recovery of the past two decades. In the Clinton era expansion, 45 percent of the total income gains went to the top 1 percent; in the Bush recovery, the figure was 65 percent; now it is 93 percent...

In 1952, corporate taxes were 6.1% of GDP; in 2009, corporate taxes were 1% of GDP

50 Amazing Numbers About the Economy
By Morgan Housel
The Motley Fool
October 21, 2011

...In 1952, corporate taxes were 6.1% of GDP, and employment taxes were 1.8% of GDP.

In 2009, corporate taxes were 1% of GDP, and employment taxes were 6.3% of GDP...

Stop Coddling the Super-Rich

Stop Coddling the Super-Rich
By WARREN E. BUFFETT
New York Times
August 14, 2011

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

Republicans roll eyes at Obama's (accurate) assertion that taxes were higher under Reagan

Republicans roll eyes at Obama's (accurate) assertion that taxes were higher under Reagan
by Jed Lewison
Daily Kos
Jun 02, 2011

First, the facts (.xls):

During Ronald Reagan's presidency, total federal tax revenue as a percentage of GDP averaged 18.2%, reaching a low point of 17.3% in 1984.http://www.blogger.com/img/blank.gif

During Barack Obama's presidency, total federal tax revenue as a percentage of GDP has averaged 14.9% and is projected to drop to 14.4% in 2011.

Second, the punchline:

GOP members engaged in a lot of “eye-rolling” according to a member who was on hand to hear Obama, who invited House Republicans to the White House for discussions on the debt ceiling. The White House and Republicans are trying to reach a deal on spending cuts that could allow the $14.3 debt ceiling to be raised.

“(The President) made a comment like the tax rate is the lightest, even more than (former President Ronald) Reagan,” Rep. Lee Terry (R-Neb.) told The Hill following the meeting.

House Oversight and Government Reform Committee Chairman Rep. Darrell Issa (R-Calif.) joked that during the meeting, “We learned we had the lowest tax rates in history … lower than Reagan!”

The fact is, one of our biggest fiscal challenges is that taxes are too low, yet not only do these guys refuse to even consider raising them, they never get tired of denying the plain reality that we have historically low taxes. Perhaps if they acknowledged that simple fact, then they'd have to admit that taxes aren't the problem: underinvestment is.

For Super Rich, Taxes Keep Falling

For Super Rich, Taxes Keep Falling
April 17, 2011
ABC News' Kevin Dolak reports:

With just one day left for Americans to file their tax returns, the super wealthy can look forward to paying significantly less than they would have two decades ago: Since 1992, the average federal income tax actually paid by the wealthiest 400 households in the country has fallen from 26 percent to 17 percent.

But why, if the top income tax rate in the U.S. is 35 percent, are the very, very wealthy paying such a small percent of their income into taxes? Short answer: tax breaks. There are built-in tax breaks in every bracket that everyone can take advantage of, including breaks for having children, paying a mortgage and furthering education.

According to Washington, D.C.-based think tank Tax Policy Center, the number of tax breaks is so high that this year it is estimated that 45 percent of households will not pay any taxes whatsoever.

Roberton Williams explained to The Associated Press the conundrum that leads to these tax-free households.

"It's the fact that we are using the tax code both to collect revenue, which is its primary purpose, and to deliver these spending benefits that we run into the situation where so many people are paying no taxes," Williams said.

This has led to efforts to overhaul the tax laws on both sides of the political aisle, and today on “This Week with Christiane Amanpour,” Treasury Secretary Timothy Geithner accepted that disagreements remain with Republicans on the scope of how to reform the tax.

"We have very big disagreements on what the right balance is," Geithner said. "The things we're going to disagree on for some time, we can take more time to resolve."

However, he said he does not believe fundamental deficit reduction can happen without ending the Bush-era tax cuts for the wealthiest Americans, which were extended in a temporary agreement last December, and remain in place in House Budget Committee chairman Paul Ryan's budget plan passed Friday by the House.

Geithner said he thinks the deficit can be reduced without raising taxes on the middle class, by ending tax loopholes and deductions that primarily go to wealthier Americans who itemize their tax returns.

"Those benefits, even like the mortgage interest deduction that lets people have two homes, pretty expensive homes … if you target them on the most fortunate Americans, they can afford to take a little bit larger share of the burden," Geithner said. “They can afford to do that, and it's the responsible thing to do for the economy."

"Patriotic Millionaires": Raise our taxes, please!

Apr 13, 201
"Patriotic Millionaires": Raise our taxes, please!
Republicans insist that raising taxes on anyone would be catastrophic. But some of the most affluent disagree
By Justin Elliott
Salon.com

Patriotic Millionaires for Fiscal Strength, a group of dozens of the wealthiest Americans that formed last year during the fight over whether to extend the Bush tax cuts, is now jumping into the budget battle just as President Obama is expected to call for an end to the Bush cuts on the rich.

"For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you increase taxes on incomes over $1,000,000," the group writes in a new letter to Obama, Harry Reid, and John Boehner. "We make this request as loyal citizens who now or in the past earned incomes of $1,000,000 per year or more."

Last year, Obama signed a bill to extend the Bush tax cuts after originally proposing that the two highest tax rates return to 36% and 39.6%, up from the Bush tax cut levels of 33% and 35%.

One of the signatories of the new letter, film and television producer Linda Gottlieb, explained her participation to me this morning: "For me to be sitting and hoarding my money is insane," said Gottlieb, whose producer credits include Dirty Dancing and who now teaches at NYU's Tisch school. "We all give to charity, but that's not the same as creating a more equitable society."

Gottlieb said she has been upset by the experience of her grandchildren, who attend a New York City public school where arts education has been cut and parents have had to organize an auction to try to fill the gaps. She added that raising taxes on the wealthiest people would be an important way of reducing the deficit.

"For rich people to moan and groan -- nobody likes to pay increased taxes -- but it's not going to change your life in any important way," she said. "What it can do is help your country."

The millionaires who comprise the group are in the process of reaching out to more of their wealthy peers and may take a trip to Washington at some point down the road, according to Erica Payne of the Agenda Project, the New York-based progressive group that is behind Patriotic Millionaires.

Meanwhile, Speaker John Boehner said Tuesday that any tax increases are a "nonstarter." So expect a big fight on this ahead.

G.E.’s Strategies Let It Avoid Taxes Altogether

G.E.’s Strategies Let It Avoid Taxes Altogether
By DAVID KOCIENIEWSKI
Series: But nobody pays that
New York Times
March 24, 2011

General Electric, the nation’s largest corporation, had a very good year in 2010.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.

In a regulatory filing just a week before the Japanese disaster put a spotlight on the company’s nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back.

Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.

Yet many companies say the current level is so high it hobbles them in competing with foreign rivals. Even as the government faces a mounting budget deficit, the talk in Washington is about lower rates. President Obama has said he is considering an overhaul of the corporate tax system, with an eye to lowering the top rate, ending some tax subsidies and loopholes and generating the same amount of revenue. He has designated G.E.’s chief executive, Jeffrey R. Immelt, as his liaison to the business community and as the chairman of the President’s Council on Jobs and Competitiveness, and it is expected to discuss corporate taxes.

“He understands what it takes for America to compete in the global economy,” Mr. Obama said of Mr. Immelt, on his appointment in January, after touring a G.E. factory in upstate New York that makes turbines and generators for sale around the world.

A review of company filings and Congressional records shows that one of the most striking advantages of General Electric is its ability to lobby for, win and take advantage of tax breaks.

Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law, from more generous depreciation schedules on jet engines to “green energy” credits for its wind turbines. But the most lucrative of these measures allows G.E. to operate a vast leasing and lending business abroad with profits that face little foreign taxes and no American taxes as long as the money remains overseas.

Company officials say that these measures are necessary for G.E. to compete against global rivals and that they are acting as responsible citizens. “G.E. is committed to acting with integrity in relation to our tax obligations,” said Anne Eisele, a spokeswoman. “We are committed to complying with tax rules and paying all legally obliged taxes. At the same time, we have a responsibility to our shareholders to legally minimize our costs.”

The assortment of tax breaks G.E. has won in Washington has provided a significant short-term gain for the company’s executives and shareholders. While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion.

But critics say the use of so many shelters amounts to corporate welfare, allowing G.E. not just to avoid taxes on profitable overseas lending but also to amass tax credits and write-offs that can be used to reduce taxes on billions of dollars of profit from domestic manufacturing. They say that the assertive tax avoidance of multinationals like G.E. not only shortchanges the Treasury, but also harms the economy by discouraging investment and hiring in the United States...

How I learned to stop being a lazy American and pay my part for what matters

Apr 15, 2010 06:01 EDT
Suck it, Tea Party: I love Tax Day
How I learned to stop being a lazy American and pay my part for what matters
By Steve Almond
Salon

Like a lot of Americans, I've spent a small but deeply unfortunate fraction of my recent life puzzling over the Tea Party's Tax Day Extravaganza of Irrational Grievance, or whatever they're calling it.

As a longtime resident of the Boston area, it's especially galling to see a bunch of angry old white people -- many of whom, we learned recently, are on the federal dole -- behave as if their democratically elected officials are foreign despots. It would probably behoove the Fourth Estate to draw a thick line between genuine victims of colonialism and sore losers.