Proposition D on Missouri’s 2018 midterm ballot asks voters whether to increase the tax on a gallon of gas. Should you vote for it?  Good question. If passed, Proposition D would raise the gas tax by a total of 10 cents, over four years. That doesn’t sound so bad, does it? After all, tax included, a gallon of gas in Missouri costs less than the same gallon in Illinois. You could argue that we’re getting a disproportionate bargain, and that voting yes would bring Missouri in line with neighboring states.

According to a summary published by the League of Women Voters of Metropolitan St. Louis, the current tax is 17 cents per gallon for both gasoline and diesel fuel, compared to Iowa’s 31 cents for gasoline and 32.5 cents for diesel fuel. The higher tax is estimated to generate at least $288 million annually for the Highway Patrol and $123 million annually to local governments for road construction.

I generally support tax increases, because it’s clear from the necessity of continuous cutbacks in services, Missouri government is not adequately funded. But then I started thinking about the regressive nature of sales taxes, and how this increase would put a disproportionate burden on people at lower income levels. And then I read an op-ed by former Missouri legislator Joan Bray. As someone who served 18 years on the Missouri legislature—with a major focus on transportation — Bray’s opinion carries weight. She is urging voters to say no to Prop D, saying that it contains a “poison pill that should outrage voters.”  Here’s her argument, as published in the St. Louis Post-Dispatch:

Just like the last two proposals for gas tax hikes, this increase would disproportionately help rural areas by funding only interstates and “letter highways.” Under the state constitution, gas tax goes solely to roads and bridges. None can be spent for urban or rural public transportation, passenger rail, ferries or bicycle paths. This proposal makes sure those modes continue to starve.

I had hoped that after the sound drubbing voters gave the last two gas tax hikes, the concrete cartel in Jefferson City would realize it should address the plight of all transportation modes. But it decided to obfuscate instead. It is promoting the tax for safety — funding the Highway Patrol — while shifting the patrol’s current appropriation to roads and bridges.

The bill’s poison pill defies responsible distribution of state revenue. It sets up the “Emergency State Freight Bottleneck Fund” into which the Legislature would appropriate general revenue. At last, the road and bridge guys could legally take from the pot of money already gutted by tax cuts to build their pet projects.

Who would lose from this sleight of hand? Anyone who relies on state funding for elementary and secondary schools, universities, mental health care, Medicaid, hospitals, criminal justice and prisons, environmental protections, and, not to forget, other modes of transportation without their own special tax like roads and bridges have.

Once again, myopic transportation planners in Jefferson City need to be denied. Locking the state into more funding that ignores the transportation needs of millions of urban, rural and poor Missourians seals the state’s fate in concrete.

Here’s the exact wording that you’ll see on the ballot under Missouri Proposition D. You decide. Full disclosure: Unfortunately, I voted absentee—and I voted yes—before Bray’s op-ed was published. Oops. Someone out there, please cancel me out with a no vote.

Shall Missouri law be amended to fund Missouri state law enforcement by increasing the motor fuel tax by two and one half cents per gallon annually for four years beginning July 1, 2019, exempt Special Olympic, Paralympic, and Olympic prizes from state taxes, and to establish the Emergency State Freight Bottleneck Fund? If passed, this measure will generate at least $288 million annually to the State Road Fund to provide for the funding of Missouri state law enforcement and $123 million annually to local governments for road construction and maintenance.

The post Gas tax [Proposition D] on MO ballot: I voted yes before I knew what I was doing appeared first on Occasional Planet.

The latest incarnation of a Republican tax “plan” includes repealing the estate tax. Republicans love to give it an evil connotation by referring to it as “the death tax.” They claim that they want to repeal it  to help “family farms and other family owned businesses.”

They are, of course, lying about all of it. The new tax “plan” is not a plan at all: It doesn’t reflect new thinking about taxation; it’s not based on a new theory of economics. It’s just a mishmash of giveaways to America’s richest people [who are also, not coincidentally, the biggest donors to Republican candidates], paid for by hurtful takeaways from lower-income taxpayers. If there’s a philosophy involved, it’s steal from the poor and give to the rich.

But the spin about this being a middle-class tax cut is just one of the big lies Republicans are peddling as they rush their tax bill through Congress, preferably under cover of darkness. The estate-tax gambit is also riddled with falsehoods.

Here’s what Republicans have said about the estate tax:

“For too long, this tax has threatened family-owned businesses—including women- and minority-owned businesses—from being passed down to their children and grandchildren,” says Representative Kevin Brady, chairman of the House Ways and Means Committee. But he is wrong, and not by accident. He is spinning and lying as fast as he can.

So, who actually pays estate taxes? An editorial in today’s New York Times lists three categories of people:

1. The top 0.2 percent. Some 11,300 American estates—about 0.2 percent—are estimated to be subject to the estate tax this year [2017]. The top tenth of income earners pay nearly 90 percent of estate taxes collected, and about one fourth of that total is paid by the richest 0.1 percent…Today, an inheritance must be larger than $5.49 million for an individual, or $10.98 million for a couple for their heirs to be liable for any estate tax at all.

How does your estate measure up? Unless you are Steve Mnuchin, Bill Gates, or Mark Zuckerberg, or

unless you hang out in those circles and share brokers, hedge fund managers and boardroom privileges with them, you’re probably not going to have to worry about your family suffering from an estate tax hit.

Please note, too, that as the New York Times editorial points out, while opponents of the tax say it taxes earnings twice, the fact is that more than half of the biggest estates consist of unrealized capital gains—like stocks that have appreciated without being sold—that have never been previously taxed.

How does that stack up with your stock portfolio? You’ve probably never sold a stock when its value went up, as a way to pay for college tuition or medical bills, right? You don’t need that money. You’ve just let it accumulate. Yeah, right.

2. A few dozen farmers, and even fewer minority business owners. About 80 family farmers or small-business people would be subject to the estate tax this year, according to the non-partisan Tax Policy Center.

Got that? A whopping 80 family farmers or small-business people. Trump and Paul Ryan would like you to believe that there are “millions,” of struggling ranchers, mom-and-pop grocers and minority contractors who are being harmed by the estate tax. Not true. Obviously, they’re trying to tug at our heartstrings, as we imagine the owners of a neighborhood shop suffering under the burden of the estate tax; but they’re using that false imagery to sell a tax repeal that would benefit only the richest of the rich.

The Times continues:  “The biggest winners in an estate tax repeal wouldn’t be day-to-day people. They’d be people like Trump, unless they’re…”

3. Morons: “Only morons pay estate tax,” Gary Cohn, Trump’s chief economic adviser, told Senate Democrats, meaning, it was later explained,” rich people with rally bad tax planning.” Many of the very wealthy use loopholes, like trusts, to avoid paying inheritance tax.

Nice touch, Gary. Not only are you screwing regular people with many of the provisions of the proposed tax bill, you’re making fun of them at the same time.

The Times editorial concludes with these facts:

An estate tax repeal would provide a tax windfall of more than $3 million apiece for the top 0.2 percent of earners, and more than $20 million for the wealthiest Americans. It would cost $239 billion in revenue over a decade. It offers nothing for middle-class people.

The post The truth about the estate tax: You’re probably not going to have to pay it appeared first on Occasional Planet.

Kansas Governor Sam Brownback [R]—who started the whole mess—knows it. The Republican dominated Kansas legislature—who gleefully made it happen—knows it, too. The radical, right-wing economic experiment in tax reduction that they imposed on Kansas citizens has failed—miserably, ignominiously, publicly—to do what its theoreticians promised it would do: magically stimulate the Kansas economy through that good-old, theoretical mantra known as “trickle-down” economics.

But for liberal/progressives who saw the trickle-down philosophy for what it really was—utter bullshit designed to kill the government programs that “fetter” capitalism—there is no real joy in its failure, because the effects Brownback’s policies have hurt people—actual people, not corporations—so badly.

We could, I suppose, take some satisfaction from the desperation now rampant among Kansas’ Republican “leadership,” and their decision to, with tails between their legs, do precisely what they said they would never have to do: raise taxes. We could say that, with Kansas raising taxes, pigs are flying and hell has frozen over.

But, in fact, there is little satisfaction to be taken, because, true to form—form being protection of the rich and punishment of the poor—they are “raising taxes” in the worst possible way.

The taxes they are raising are those that hit lower-income people the most. According to the Kansas City Star, a bill passed [June 2, 2015] in the Kansas Senate would increase sales taxes from 6.15 percent to 6.55 percent beginning July 1 and drop the sales tax on food to 4.95 percent in July 2016. It would eliminate most itemized deductions and raise the cigarette tax by 50 cents a pack to $1.29.

At the same time, they are steadfastly sticking to their low state-income-tax policy. According to BankRate.com,

Kansas revised its individual income tax system in 2013, going from three tax brackets to two and reducing the rates for both. At that time, the rates became 2.7 percent on the first $15,000 of taxable income, and 4.8 percent on taxable income of $15,001 and more.

By comparison, Iowa has nine income-tax brackets, with the highest being 8.98 percent [on taxable income over $68,176]

But even Kansas’ very low tax rate is not low enough for Gov. Brownback. When he was first elected, he vowed to repeal the state income tax entirely, claiming that reducing income taxes and raising sales taxes is a more efficient way to raise revenue and to attract businesses to the state. He is now seeing the disastrous results of that idea–a reported $400 million budget shortfall.

Kansas’ move to bump up sales taxes is shameful. Sales taxes are regressive, raising everyday costs disproportionately for those with less disposable income. Couple increased sales taxes with the state’s very low income-tax rate [or, worse yet, the absence of a state income tax—Brownback’s dream], and you have a situation in which lower-income people are, in effect, subsidizing their wealthier counterparts.

It’s obvious that a better solution would be to do the logical, responsible and fair thing: Institute a more realistic income-tax rate—in a progressive structure that would ask more of those who have more. Or, at the very least, institute a luxury tax on high-cost items. But apparently, even as its schools fall apart, its infrastructure goes unrepaired, its safety-net services fail, and its police, fire and EMS services go underfunded, Kansas’ state government is not interested in doing its job.

Kansas’ political leaders [and I use that term very loosely] have been using an economic argument that they know to be false, as cover for their penchant for helping their wealthy buddies and campaign donors. Their new revenue-producing, “corrective” policies cynically protect the rich and judgmentally punish the poor, rather than being anything remotely resembling the right thing.

The post Kansas raises taxes…reluctantly and nastily appeared first on Occasional Planet.

For the past 30 years, “We can’t afford it” has become the mantra of city councilmen, state legislators and even U.S. Congressional representatives.

But there is something terribly wrong with that.

What do lawmakers mean by “it?” There are many meanings. Sometimes, “it” is higher salaries for teachers. Sometimes, “it” is repairs to crumbling bridges. “It” can also refer to pay raises for the city workers who pick up our trash, clean the bathrooms in municipal buildings, and mop up after floods, windstorms and festivals. “It” also often refers to federal programs, like Medicare and Social Security, or to state-run programs like Medicaid and health care for children in indigent families.

The “we-can’t-afford-it” argument has become so ubiquitous that we have stopped questioning its validity and the reasoning behind it. The public—abetted by the media—has come to accept that there’s just not enough money, and that programs, services and benefits, of necessity, need to be slashed, because, well, that’s the way it is.

That acceptance is misguided.

In fact, we could afford all of the “its,” if we did what really needs to be done—and what anyone with an iota of sense about how government should operate knows is necessary—raise taxes in a way that would be fair [meaning, asking wealthier people to kick in their fair share].

But we don’t do that. Not only don’t we do it, we don’t even talk about it.

Why? Because, over the past 30 years, the right-wing’s anti-tax propaganda campaign has worked its way into America’s psyche. The Republican message machine has successfully convinced Americans that taxes are bad—even taxes that fund services and benefits that help people—like Social Security, police protection, fire and rescue, road repairs, and so many more. They’ve made taxes something from which we need “relief,” not something that assures the continuity of programs that people expect—and howl about when they are inadequate.

For a while, there was somewhat of a dialogue about this topic: Remember linguist George Lakoff? He fought bravely against the “tax relief” meme. But the fight seems to be over. The anti-taxers have won. Their message is so deeply embedded in today’s political discourse that they don’t even have to mention “tax relief” any more. Not in public statements. Not in media reports, either: No one actually reports on the context and the motivation behind all of this.

And so, the discussion has shifted: We simply assume that there’s no more money available. We can’t possibly expand programs or raise benefits or wages, the story goes, because there just isn’t any money for that.

But, in fact, there IS money for that. Mostly, it’s in the wallets and off-shore accounts of the wealthy people who are assiduously protected from fairer taxes by their Republican minions.

Social Security? There’s plenty of money out there. It’s just untapped, because the solution to Social Security’s purported issues—raising the ridiculously low taxation cap of $118,500—is not even being discussed anymore. The only discussion comes from the right—and what they’re talking about are things like cutting Social Security benefits, raising the eligibility age, privatizing the whole shebang, or eliminating it altogether. .

Infrastructure? There’s no money for that? Baloney. The money is there, but it might involve raising the tax on a gallon of gas. We can’t even bring that up anymore.

You get the idea. It applies across the board. The real reason that “we can’t afford that,” is not that the money doesn’t exist, it’s that we won’t contemplate what really needs to be done. The right-wing propaganda department has made it politically impossible to discuss doing these things. The anti-tax ideology has become so much a part of our national psyche that I’m not sure most people even know that they’ve internalized it. They want the programs; they need the services; they expect government to do the big things that only government can do: But they wring their hands, and sigh, and give up, because they’ve unwittingly adopted the notion that there’s no more money to be had.

Of course, the anti-taxers are not interested in “relief” for middle-class earners or poor people: They are about protecting the wealth of the wealthy. [And funneling money to the military—for which there is ALWAYS money—and, via tax breaks, to the defense contractors whose campaign contributions are mother’s milk to politicians.]

On a related note: A number of years ago, I attended a dinner honoring a healthcare executive. The keynote speaker was the chairman of the hospital corporation’s board—a well-known industrialist who made a fortune as a defense contractor. During his speech, he talked about the problems he had encountered in running a company. “The truth is,” he said, “that most managers and executives know what needs to be done. The problem is that they just don’t do it.”

The same goes for funding government programs. There’s no courage to do what reasonable people know has to be done. There’s no political will to buck the increasingly rich donor class who own the politicians. So, our elected representatives—at all levels—just go along. Not asking why—not even aware of why they don’t ask why.

And people suffer. But nobody talks about it.

The post “We can’t afford it.” The untrue, anti-tax mantra of 21st century government appeared first on Occasional Planet.

Have you noticed how mainstream media fills up a whole lot of airtime sounding off about our current do-nothing Congress? Just this morning, while driving in my car, I listened to yet another report on public radio about how the 113th Congress is on track to be the least productive in history.

There’s no disputing the pathetic public record of this current Congress. But have legislators actually been doing nothing? It looks to me like the media once again is taking the easy way out. If reporters and commentators would bother to look closer, maybe they’d see that congressional Republicans have been doing a whole lot of something.

And that something has cost taxpayers a bundle of change.

So let’s ask the obvious question: What have House Republicans been doing down there on the Potomac anyway? Well, for one thing they fought long and hard in court to defend the Defense of Marriage Act. You know, that was the act that was struck down by the Roberts court in a 5-4 decision. By the time they’d lost that battle, House Republicans managed to drain a tidy $2.3 million from the public coffers.

And how about the bogus blame game surrounding the tragic events at the American embassy in Benghazi? Republicans just can’t stop wasting time and treasure on whipping up trumped-up charges. Establishing the Select Committee on Benghazi to keep the finger pointing in the news already has cost $3.3 million. This year alone the House Benghazi panel is on track to send another $3 million down the hole. And the IRS has reported that it has  spent more than $14 million in taxpayer money accommodating Republican requests, turning over more than 600,000 pages of documents.

Remember the debt-ceiling battle and the fiscal-cliff debacle? Please don’t tell me Americans have forgotten that bit of theatre. The Republican lie was that voting against raising the debt ceiling was the fiscally responsible thing to do and would strengthen the economy. Way to go, House Republicans. How did that work out for us? That nifty tactic, along with just the threat of a government shutdown, resulted in the first downgrade of America’s credit rating in history. And the price tag to taxpayers? Just a drop in the bucket, folks, at $1.3 billion. (And what, you may ask, does that chunk of change buy these days, anyway? How about some badly needed infrastructure repairs that would create a ton of jobs in the construction industry.)

And don’t forget the government shutdown itself—a tactic heralded by right-wingers as a godsend to the good old Republic. That idiocy pulled a cool $24 billion straight out of the coffers.

And let’s not overlook the fifty symbolic votes by Republicans in the House to repeal or undermine the Affordable Care Act—amendments House members knew would be doomed if ever they reached the floor of the Senate. So far, Republicans have squandered $79 billion on that fight. But who’s counting? Republicans are banking on the fact that we’re not paying attention to the price tag.

And just in time for the midterm elections, here comes another wasteful tactic from Speaker of the House Boehner and House Republicans. With all of the economic challenges facing the middle class, young people, the working poor, and the elderly here comes a meritless and wasteful lawsuit, suing President Obama for his legally sound executive action delaying a requirement for employers to provide health-care coverage under the Affordable Care Act.

How much is that debacle going to cost? The perennially irresponsible John Boehner and House Republicans don’t have a clue or won’t tell us. And, if their behavior and official statements are any indication, they don’t care. It appears there isn’t a dirty tactic that Boehner and House Republicans can resist when it comes to sticking it to Obama, and they couldn’t care less that the taxpayer is picking up the bill. The trouble is that in their frenzy to sink the Obama presidency, they’re not just sticking it to Obama but sticking it to the rest of us as well.

Unfortunately, most of us are letting them get away with it because we’re too trusting, or too confused, or too tired, or too busy, or too poorly informed to figure out what’s going on.

So here we go again. Boehner and House Republicans are rolling out the lies. The fiction goes something like this: “This is for you, America. Trust us. We know what we’re doing.”

Really? Are we really going to believe them and hand them another term in office?

The post How much does our do-nothing Republican Congress cost taxpayers? appeared first on Occasional Planet.

The Republican-dominated Missouri legislature, acting out an ugly combination of anti-tax ideology and pure selfishness, has enacted a drastic income-tax cut that could throw the state into economic disarray. As the 2014 legislative session drew to a close, Republicans rammed through SB 509, which will lower the Missouri income tax rate, thereby reducing state revenues by an estimated $620 million per year. Democratic Governor Jay Nixon vetoed the bill when it reached his desk, calling it reckless. But Republicans–aided by one Democrat–overrode his veto by one vote.

According to the St. Louis Post-Dispatch:

In five annual steps beginning in 2017, the bill will cut the state’s top personal income tax rate to 5.5 percent from 6 percent and provide a new 25 percent deduction for business income reported on individual returns.

The cuts will be implemented only if state general revenue grows by at least $150 million a year compared with the high-water mark of the previous three years.

What does that mean? In his veto statement, Governor Nixon described the law this way:

…52 percent of the tax savings would go to the top 7 percent of taxpayers. Meanwhile, a family making the median income of $44,000 a year would receive a tax cut of only $32, Nixon said.

The bill is projected to cut income taxes by $620 million a year by 2022, though Nixon has warned that the tab could be much higher.

The governor contends that unclear wording appears to get rid of state income taxes for about 2.5 million Missourians. He cited a line in the bill that says that the top income tax bracket — which applies to people earning more than $9,000 — will be eliminated.

The Missouri Budget Project, which opposed the new law, says that the $150 million trigger point doesn’t make sense, because “Missouri needs $250 million a year in general revenue growth just to maintain current levels of service.”

But cuts to education and safety-net programs are not the only consequences of SB 590.

The tax-rate reduction mimics a similar law enacted in Kansas–not exactly a great role model for anyone. Kansas has reduced its income tax rate, and its generally accepted that the ultimate goal is to eventually eliminate state income tax entirely. In response, earlier this year,  Moody’s, the credit-rating agency, reduced that state’s rating from its second-highest (Aa1)  to its third-highest ranking (Aa2). According to the Wichita Eagle, “The lowered rating could mean that Kansas and KDOT will have to pay higher interest rates to borrow money for public spending.”

Moody’s explanation of the reason behind its rating downgrade should be a caution to Missouri legislators as they embark on this risky tax experiment:

We do not view the lack of a state income tax, in and of itself, as a credit weakness,” the report said. “However, eliminating a tax that has been in place for many years and has accounted for a large share of revenue entails risks. As the state income tax is removed, Kansas’ revenue structure will become more dependent on excise and severance taxes and the full economic impact is unclear.”

So, reduced revenue from income taxes, coupled with potentially higher interest rates: Not a healthy combination.

Are you listening, Missouri? Currently, Missouri is among only nine U.S. states that have earned the prized AAA rating from all three of the U.S major rating agencies . If Moody’s follows its own Kansas precedent, Missouri could lose that lofty rating. As Governor Nixon said, “Because of this spotless record, school districts and local governments pay a lower interest rate on bonds issued.  If Missouri were to be downgraded like Kansas, this interest rate would increase for future bond projects, resulting in hundreds of millions of dollars in additional interest payments.”

It’s futile to try to understand the logic behind this reckless move. By enacting this tax cut, Republicans–who loudly position themselves as the ‘”fiscally responsible” party–are undermining their own stated values by putting Missouri in financial jeopardy. I can only conclude that logic has little to do with this scenario: More likely, this law derives from the  self-serving, anti-tax ideology of billionaire political manipulators  like Missouri’s own Rex Sinquefield, whose fingerprints are all over this tax cut law. In recent years, Sinquefield has spent millions–via ad campaigns and, of course, massive campaign contributions to buy legislators’ votes– lobbying for the elimination of the state’s income tax. I can’t say with certainty that the bill that passed this week was a compromise nod to Sinquefield, but it’s hard to avoid that conclusion.

When I first came to Missouri, in the mid-1960s, the political landscape was fairly evenly divided between Republicans and Democrats. That balance has evaporated, and under Republican rule–saved only by the governorship of a Democrat–the state is declining fast,  as witnessed most recently by the state legislature’s refusal to expand Medicaid under the Affordable Care Act. It’s also worth noting that during the Civil War, Missouri was a border state-meaning a slave state that didn’t secede from the Union. Loyalties were divided within the state between the Confederacy and the Union, and those divisions are still in evidence.  Before the 1980s, the rest of the country viewed Missouri as Midwestern, aligned with states like Iowa and Minnesota. If sports alliances are an indicator, Missouri was a member of the Big Eight–a decidedly Midwestern, plains-state league. Now, even that has changed, and in 2012, the University of Missouri joined the SEC, long known as a southern sports conference. That says a lot about where Missouri is going.

The southward, right-wing, kill-government drift  is becoming quite clear all around me in my liberal, suburban, St. Louis island, and I’m feeling less comfortable and more depressed about the future than ever.

The post Reckless tax cut threatens Missouri’s prized AAA rating, as “fiscal conservatives” rule appeared first on Occasional Planet.

According to Huffington Post, corporations are keeping $2 trillion in offshore profits to avoid paying taxes. One of the many ways corporations enrich themselves is by giving money to elected officials who then tailor the tax code to benefit their bottom line. Elected officials of both parties, who are given campaign funds and promises of future lucrative consulting jobs, write laws that allow corporations to stash profits abroad, untaxed. So, corporations get to practice legal tax avoidance.

In Washington, D.C., corporate money is the not-so-secret ingredient in the legislative sausage making process. Rationalized by members of both parties, our money-soaked system ensures Washington works for the wealthy and not for ordinary people.

Offshore corporate income tax deferral

Under our loophole-infested U.S. tax law—specifically, the “offshore corporate income tax deferral”clause—corporations can avoid paying income tax on most of their overseas profits until those funds are brought back to the United States.

A handful of senators and congressmen object to our corporate written tax law. Senator Ron Wyden, one of the few calling for repeal of offshore deferral, aptly refers to the tax code as “a rotten carcass that the special interests feed on.”  I appreciate Senator Wyden’s candor.

The tax evasion problem keeps growing year after year. According to the Huffington Post, from 2008 to 2013, the total amount of corporate profits held offshore increased 93 percent. The amount of untaxed profits corporations are stashing abroad is estimated at $2 trillion. General Electric, Inc. leads the pack with $110 billion stored, who knows where, in the Cayman Islands? Then next is Microsoft with $76.4 billion, Pfizer with $69 billion, Merck with $57.1 billion and Apple with $54.4 billion. And the list goes on. They have plenty of willing tax havens to choose from.

What onerous taxes are these corporations avoiding? Huffington Post reports that the top U.S. corporate income tax rate is 35 percent, “though few multinationals pay anywhere near that thanks to tax-reducing loopholes written into the code in the past 28 years.

Alan Pyke at Think Progress weighs in on corporate tax evasion

These companies face no meaningful negative consequences to stashing trillions from the taxman. When they need to access their offshore cash for investing in production or personnel, they can simply use the untaxed profits as collateral for borrowing from the financial sector. There is no business reason to stop ducking U.S. taxes, so it is up to lawmakers to address the problem.

Pyke reports that many in Congress want to reform tax law, but insist on ways that would be very generous to companies that offshore profits. They would slash the corporate tax rate and/or offer a “tax holiday” for bringing money back to the U.S. But few in Washington are willing to propose an outright end to profit offshoring, also known as “profit shifting.” Without ending the practice entirely, because tax havens have such a low tax rate, even with lowering the tax rate and a tax holiday, the practice will continue. This kind of  “tax reform,” assures campaign funds will keep flowing into Congressmen’s re-election coffers.

The accounting industry helps corporations subvert democracy      

Jerry Alatalo, writing at The Oneness of Humanity, says the accounting industry is complicit in corporate tax evasion. He turns to Finance and Accounting Professor Prem Sikka who describes a “very lucrative global industry” that is having a huge impact on the world’s economy and overall conditions.

Professor Sikka points out that . . . “Financial engineering” is not taught at universities anywhere, but is the first item on the agenda for newly hired, freshly pressed accounting graduates at the Big Four—Ernst and Young, KPMG, Deloitte, and Price Waterhouse Cooper. Financial engineering is the focus of new hires’ initial training workshops, and is all about creating, selling, and implementing off-the-shelf tax avoidance evasion schemes for, and to, high net worth clients.

Taxes are not a “cost” to be minimized.

Alatalo says, because of his views, Professor Sikka is a renegade in the accounting world. He holds the idea that taxes—from the vantage point of everyone paying their fair share—are not a “cost” like raw materials used in the manufacturing process, wages paid to employees, office supplies, etc. Sikka points out that, “bending the rules, at any cost, to increase profits is now seen as an entrepreneurial skill.” From Alatalo’s post:

[Sikka] shared a statement by one of the Big Four, “our profitability rests on the ability of our employees to serve clients well.” There is no mention at all about the public interest. The professor recounts a debate he had with a manager from Price Waterhouse Cooper where his debate opponent finally says, “ . . . we create tremendous revenues for the state, and we have very many satisfied clients. Professor, what is your problem?” The professor responded with, “ . . . that is the language of drug pushers and pimps.”

The public cost of corporate tax evasion Alatalo reports:

The United Kingdom could be losing 30-150 billion, the European Union one trillion, and the U.S. Treasury 345-500 billion, maybe more. Developing countries’ revenue losses from tax evasion could be in the range of 500 billion per year—while total foreign aid is around 120 billion dollars.

Those figures are per year. What would the world be like if, year after year, that $2 trillion or so in unpaid taxes around the world was used for the public good?

The post U.S. corporations stashing $2 trillion in profits offshore appeared first on Occasional Planet.

From the time we were children, we have been indoctrinated to think of capitalism as the best economic system on the planet, synonymous with “freedom and democracy” and even America itself. Capitalism is the “American way,” and it holds out the promise to ordinary people, that if they apply themselves, they too can become wealthy. So, no surprise there’s a taboo when it comes to looking critically at how our economic system is organized and at whom it actually serves. To question capitalism, or to suggest other economic systems might be more humane and effective at helping everyone, is considered deeply un-American.

If there is poverty, we are taught, it is caused by individual lack of initiative and effort, or by social problems like racism, or by bad parenting, not by the economic system itself. This view is repeated in classrooms and churches, and woven into advertising and media. University economics programs assume capitalism as a given, and corporate owned media rarely questions capitalism as a system. Even those who call themselves “liberal” or “progressive” wholeheartedly support capitalism. We are taught that this system is superior because anyone has a chance to make it, and if you don’t make it, it’s your fault. “Making it” is defined narrowly as making a lot of money and owning the material possessions that go along with that. All the other intangibles that make life worth living are left out of the equation.

Capitalism creates poverty

In the United States, where we have the “best economic system on the planet” the level of poverty is startling. We are a country of absolutely enormous wealth, yet, according to the census bureau, more than one in every six people in the United States lives in poverty or near-poverty. Poverty is defined as living on $23,000 for a family of four—a ridiculously low and unrealistic figure. It’s nearly impossible to survive on this without government subsidies. Here’s a summary of Census data on poverty from Wikipedia:

In November 2012 the U.S. Census Bureau said more than 16% of the population lived in poverty, including almost 20% of American children, up from 14.3% (approximately 43.6 million) in 2009 and to its highest level since 1993. In 2008, 13.2% (39.8 million) Americans lived in poverty. Starting in the 1980s, relative poverty rates have consistently exceeded those of other wealthy nations. California has a poverty rate of 23.5%, the highest of any state in the country.

In 2011, child poverty reached record high levels, with 16.7 million children living in food insecure households, about 35% more than 2007 levels. A 2013 UNICEF report ranked the U.S. as having the second highest relative child poverty rates in the developed world (behind Romania).

When we shift our focus from poverty as caused by individual failure, and look at the economic system itself, capitalism’s role in causing poverty is quite clear. Rather than being designed to provide economic wellbeing for everyone, from the beginning capitalism was organized to allow a small elite to control most of the wealth produced by working people, along with the means to produce that wealth—the factories, machinery and tools. The capitalist system as practiced in the United States today, with regulations gutted and tax loopholes expanded, gives a massive share of total wealth and income to a small elite and leaves the remainder to be competed for among the rest of the population. Even mainstream media has acknowledged that income and wealth inequality are growing.

Core capitalist myth: greed is good

It’s a core myth of capitalism that greed is the prime human motivator, a positive creative force that is justified because the wealth generated will “trickle down” to the majority. That myth persists even though a substantial level of poverty exists in the wealthiest country in the world.

Because the decision of what to produce is driven by considerations of return on investment, the effect that product or service has on the larger society is never considered. For example, corporations create unhealthy food products and contribute to climate change while spreading  lies and misinformation to the public to protect profits.

The elite and the politicians who represent their interests keep telling us that America is the land of opportunity and that greasing the skids of opportunity is the answer to income inequality. In this mythical world, they say they want everyone to “have a chance,” yet it is a chance in what they, and increasingly the general public, know to be a gamed system.

During the so-called “golden age of capitalism,” right after the war and up to the 60s, the tax rates on the wealthy were high and corporations and banks were regulated. But when those protections that allowed a middle class to flourish started to be unraveled, first under Carter, then under Reagan, Bush and Clinton, the middle and working classes stated to go under.

Capitalism only considers wellbeing of shareholders, not society at large

Capitalism as a system is designed to maximize profits, so it was only a matter of time before the system would assert itself again with force. In that system, and by law, there can be no consideration of the well being of anyone except shareholders. So absolutely everything is fair game, from undermining social programs in order to pay lower or no taxes, to dumping toxic chemicals into rivers, to destroying small businesses in communities, to keeping wages as low as possible, to producing a pesticide that destroys bees, to closing factories and outsourcing jobs to poorer countries, to spending enormous amounts of money to buy politicians who, in turn, enact laws that enhance their bottom line. This sociopathic behavior is considered rational and normal, and even expected, within the capitalist system. The bigger the SOB you are in the corporate world, the more you are admired and valued.

Given the socially irresponsible behavior of corporations and their owners within the capitalist system, it’s no surprise that, in the United States, one in 6 people live at or near the poverty level or live in fear of ending up there. Contrary to conservative views, the poor are not lacking in initiative or intelligence. Many are working three low paying jobs to stay afloat. This is what the capitalist system produces. Poverty happens when behemoth corporations controlling massive amounts of wealth have no responsibility to anyone but themselves and shareholders.

Public debate about poverty focuses on the individual rather than on the economic system in which it occurs

Public debate about poverty, what little there is, is almost always about the individual. Liberals want to help the individual, to shore them up with public programs, until they can get on their feet and get back into, or join, the capitalist system. Conservatives, pointing to the failure of government programs like welfare and food stamps to lift people out of poverty, want to gut those programs claiming they cause laziness and dependency. Both liberals and conservatives avoid looking at the capitalist system itself as a primary cause of poverty.

Individual effort is a factor in economic and social success, but we all participate in a capitalist system. Leaving the system itself out of public policy discussion completely ignores capitalism as a causative factor in poverty, and allows the myths and destructive aspects of the system to continue.

It’s time to have an honest discussion about how capitalism really works, and for whom it works, not how we imagine it works, or wished it worked. On a personal level we may have to examine our own tendency toward greed and our justification and rationalizations for it. We may find that capitalism, and the greed and hyper-individualism enshrined within it, is incompatible with a humane, just, and compassionate society.

If not capitalism, then what?

This will be the topic of future posts.

The post Is capitalism really the best economic system? appeared first on Occasional Planet.

Like many progressives, I’ve been very frustrated by both the gridlock that Republicans have been causing in Congress and the ongoing mischaracterization of it by much of the mainstream press. No sooner had President Obama been sworn into office than Senate Minority Leader Mitch McConnell of Kentucky said that his main goal the upcoming Congressional session was to keep President Obama from being reelected. Fortunately he failed at that, but he and soon-to-be House Speaker John Boehner have successfully kept Congress from doing much of anything. If you’re a progressive, that’s not the direction (or non-direction) in which you’d like to go.

Now it seems that at least some Republicans do want to see movement. They call it going forward; others may see it more as going in reverse. According to the New York Times, Representative Dave Camp of Michigan, the chairman of the Ways and Means Committee, is proposing major changes in the federal tax code. His plan calls for “a cut in the top corporate income rate to 25 percent from 35 percent, and a reduction of the seven individual tax brackets to two — at 10 percent and 25 percent — according to aides familiar with the proposal.”

Why should we worry about something that sounds like needed breaks for the American people? First, taxes may actually go up when deductions such as home mortgage interest payments end. Second, rates this low may only be capable of funding the federal government if there are major cuts in both entitlement programs and other important discretionary spending. Years ago, a major reform bill from a Republican would have been cause for serious study; remember that Theodore Roosevelt was a Republican before he was a progressive. But now, it’s highly implausible that a bill, in this case one that runs 1,000 pages long, is likely to benefit either the middle class or those living in poverty.

“The Hill” reports more about the bill:

The House’s top tax writer rolled out a broad tax reform plan on Wednesday (Feb. 26) that would pare back tax breaks once thought untouchable and affect practically every part of American life.

The nearly 1,000-page plan unveiled by Ways and Means Chairman Dave Camp (R-Mich.) would pull back on the cherished deduction for home mortgage interest and embraces some ideas touted by Democrats, like scrapping the “carried interest” tax break used by hedge fund managers.

Camp said a discussion on making the tax code fairer and a more positive force for the economy was long overdue in Washington, given that the last successful tax reform effort was in 1986.

But the discussion draft, which included a summary that along ran almost 200 pages, quickly found detractors both on and off Capitol Hill, as trade groups and lobbyists found out who were the losers in the chairman’s outline.

Even before it was released, the top Republicans in both chambers had distanced themselves from the effort, with Speaker John Boehner (R-Ohio) scoffing at the possibility of a vote this year and Senate GOP Leader Mitch McConnell (Ky.) saying it would be better to do tax reform next year.

In fact, one of the few areas of bipartisan agreement is that tax reform has little chance for success this year, and some have suggested that the best-case scenario for Camp’s draft is to be a template for future efforts. But Camp was defiant, arguing Wednesday that the average person was ready for a tax code no longer littered with “special interest handouts.”

“You’re going to hear a lot about one provision or another,” Camp told reporters at a news conference introducing his long-awaited draft. “The truth is people want a simpler, fairer and flatter tax code.”

The Michigan Republican said he meets that goal by getting rid of 228 sections of the tax code, or roughly a quarter of its current 70,000 pages.

With changes to tax breaks for mortgage interest, charitable contributions, and state and local taxes, Camp also says that around 95 percent of households would be able to use the standard deduction and avoid itemizing – down from around seven in 10 right now. The deduction for state and local taxes – which Camp outright eliminates – is especially prized in Democratic states like New York and California.

But the release from Camp also acknowledges that he fell short on the House GOP goal of reducing the top individual rate to 25 percent. Roughly 99 percent of taxpayers, Camp says, will pay 25 percent or less, while the rest will face a top bracket of 35 percent.

Camp did succeed in lowering the corporate rate to 25 percent, by chopping off 2 percent a year over five years. In the process, Camp makes the prized credit for research and development permanent, while also stretching out depreciation schedules and getting rid of an accelerated cost recovery system.

Still, Camp also acknowledged that he was at times hamstrung by the fiscal cliff deal hashed at the end of the last Congress, which raised the top individual tax rate to close to 40 percent.

It appears that this bill will go nowhere fast, but in the long run, it could be a blueprint for what the GOP would like to enact if it had the legislative majorities to do so as well as the presidency. At first glance, the bill has a certain attractiveness, as any bill purporting to lower taxes would. But when I see plans like this, I hope for the kind of gridlock that has made today’s brand of Republicans famous.

The post This bill makes me want to stick with gridlock appeared first on Occasional Planet.

In a move that Business Week calls something that might have been “dreamed up by a 10-year-old after watching Thunderball,” the Senate Finance Committee plans to keep its members’ ideas for new and renewed tax loopholes under wraps until 2064. Wait, what?

The Senate Finance Committee is in charge of writing and rewriting the U.S. tax code. This year, the committee’s leadership is going with what they’re calling a “blank-slate” approach. They want to rewrite the tax code from scratch, wiping out all existing tax loopholes and giveaways, and either creating new ones or reconstituting some of the old favorites. The process they’ve been using involves asking members of the committee to submit their ideas for new, revived and revised tax breaks.

The deadline for these double-super-secret tax loophole preferences was July 26, 2013.

According to The Hill, here’s how it works:

Senate Finance Committee Chairman Max Baucus (D-Mont.) and the panel’s top Republican, Sen. Orrin Hatch (Utah), assured lawmakers that any submission they receive will be kept under lock and key by the committee and the National Archives until the end of 2064.

Deeming the submissions confidential, the Senate’s top tax writers have said only certain staff members — 10 in all — will get direct access to a senator’s written suggestions. Each submission will also be given its own ID number and be kept on password-protected servers, with printed versions kept in locked safes.

…Under the confidential procedures set by the Finance panel, other committee staffers will only be allowed to handle senators’ suggestions if supervised by at least of the 10 authorized staffers.

Both the Democratic and Republican sides will receive a copy of a submission, and authorized staffers are supposed to log when copies of those proposals are made, who made them and how many.

The submissions can be released publicly, the memo says, if they’re scrubbed of any way of identifying the senator behind them.

Ostensibly, the promise of secrecy is a way to encourage otherwise reluctant Senators to contribute their ideas–because it would be too scary to submit them with their names actually attached to them!

Given the mess known as the U.S. Tax Code, starting over actually sounds like an intriguing—if not totally practical—idea. But the way they’re going about it is about as undemocratic as it could possibly be: Committee members who submit their preferences have been assured that their ideas will be kept secret, to protect themselves from lobbyists and citizens who have other ideas.

Right. It would be such a bother to have citizens—constituents and taxpayers, that is—know what their representatives are doing and saying regarding taxes. We need to kept our constitutionally elected representatives safe from public scrutiny.

And, of course, secrecy will “protect” them from lobbyists. Really? You mean the lobbyists who suggest—I mean dictate —the very loopholes that Senators are proposing—I mean protecting. Senators don’t want to be protected from lobbyists: Lobbyists pay for their campaigns, for gawd’s sake. We’re the ones who need protecting.

Business Week sums it up this way:

…Any senator with a tax plea so secret it has to be physically locked away is definitely, absolutely not requesting it for the voters.

What a notion: Senators have the right to conduct this essential, public business in the dark, and to hide their actions in some kind of digital vault until we’re all practically, or actually, dead.  I was unhappy when the Warren Commission Report on the JFK assassination was locked away for 75 years, under the pretext of national security or some such thing. But this is beyond that. Sure, watching legislative sausage being made is ugly, but building in a  complete  lack of accountability is inexcusable. Baucus and Hatch should be embarrassed, and we should be outraged.

The post Senators’ tax-loophole suggestions to be kept secret for 50 years. Huh? appeared first on Occasional Planet.