Thursday, November 24, 2011

Happy Thanksgiving to the Top 1%

The rich are settling in for a nice Thanksgiving feast at their mansions today, while millions are struggling just to eat.

Now our politicians are looking at ways to stimulate the economy and balance the federal budget with a proposed $4.2 billion cut for the food stamp program that currently assists 45 million Americans, rather that cut $4.2 billion in defense spending. (See the report at YouTube)

Happy Thanksgiving to the top 1%!

Taxes: The Poor Man's Revenge

Taxes. That would be my weapon of choice in a "class war". Like at any other time in history, they won't fold, they'll still make money...they just won't have as much to stuff in their own pockets.

Big banks & big businesses own Congress? So tell me something new.

But if the big banks and big corporations own Congress, how can we get our "elected" leaders to change the tax laws?

First, we have to try to find some honest people in Congress...a near impossible task these days. We need people that aren't just beholden to the big banks and big corporations - - - the powers that get them elected and re-elected.

And that's also why we need publicly-funded elections, like we used to have. Or else how can we get a current millionaire in congress to tax themselves?

In the meantime, we have to put up with their arrogance, indifference, apathy, and false accusations.

  • When CEOs lay us off and we apply for jobless benefits, they call that a "hand out."
  • When politicians cut our entitlements, they call that "a shared sacrifice".
  • When we ask the rich to pay their share, they call that "punishing the job creators".
  • When corporations lie, cheat, steal and dodge taxes, they call that "doing business".
  • When we speak up to complain, they call that "class warfare".
  • When we're ignored and protest the injustice, they call that "anarchy".

Even though Abraham Lincoln once said, "To sin by silence, when they should protest, makes cowards of men.”

What is tyranny and corruption when half of congress are already millionaires, but yet they write no law that says they can't benefit from insider trading in the stock market? Do our lawmakers need a law to tell them? Over the last three years they have exponentially increased their personal wealth by doing just that.

Members of Congress benefit the same way as CEOs in the defense industry do, or like investment bankers and hedge-fund mangers on Wall Street. When they sell their stocks after one year, they only pay 15% in capital gains taxes (and it's the same for dividends paid on those stocks).

By doing this, they all escape the top marginal income tax rate of 35%, and they pay the same effective tax rate as someone who's only earning $8,500 a year from hourly wages (15%).

This is a rip off by our government for government revenues. Also: Members of congress, CEOs and other executives on the boards of large corporations (e.g. bankers, private investors, and hedge fund mangers) all benefit from the $106,000 cap on Social Security taxes.

Again, someone who is only earning $8,500 a year pays Social Security taxes on 100% of their gross earnings, while a CEO earning $8.5 million a year only pays 1.24% of their earnings in Social Security taxes because of the cap.

But if CEOs pay lobbyists big money to have congress rig the tax code in favor of the wealthy (including themselves), how can we change this inequity in our tax collections? Why can't capital gains and dividends be taxed as regular income like they once were before 1921?

Why are all the personal and corporate taxes written to mostly favor the rich? Because rich people (Congress) write the laws. An senior members get junior members to follow their lead with promises of promotions to lucrative and powerful congressional committees. Companies that lobby Congress the most usually pay less in taxes.

An article at the Huffington Post (Tax the Rich! In Fact, Let's Double Their Taxes!) explains how we could go back to the tax rates of the 1950s, but even going back to the Clinton-era would be better than the current tax code after the Bush tax cuts. But I would still prefer that all tax capital gains and dividends be taxes as normal income because after all, it really is just an income stream that's going into someone's pants pockets. It's not cash sitting in an off-shore bank account of a corporate treasury waiting to be invested in another factory to hire people. Read: "Wealthy corporations with a trillion dollars stashed offshore lobby for a 'holiday' from U.S. taxes"

And after their CEOs cash out their millions of dollars in vested stock options after one year, that money is taxed at 15%, not at the higher top marginal rate of 35% if they had been paid a weekly paycheck like you.

I wrote an article called You Pay Hidden Entitlements for the Rich that has a link to an article called Tax breaks for billionaires: Loophole for hedge fund managers that explains in a lot more detail.

From the CBO: "The payroll tax rate is lower in the highest quintile because much of the wages in that quintile are above the maximum income subject to Social Security taxes [$106,800] because capital income [capital gains] is a larger share of income at the top. Social insurance taxes [Social Security and Medicare taxes] also accounts for the largest share of taxes paid by households in all but the top quintile. The impact of the corporate income tax also rises with income, as the CBO assumes that the tax is borne by capital income, and capital income is a larger share of income at the top of the distribution. The impact of excise taxes, relative to income, is highest for lower-income households."

This tax scam has been going on for 90 years. Because of Citizens United, we can't get money out of politics, so the wealthy and large corporations can continue to get those elected who will always pass laws that favor them and the rich. It's an infinite circle. How can we find and break the weakest link if the people want to take their country back from corporate America?

And how can we get our leaders in Congress and the Supreme Court to be held accountable to a law of ethics? It seems nearly impossible, considering our limited options on election day.

In case you forgot:

- BANK OF AMERICA: In 2009, Bank of America didn’t pay a single penny in federal income taxes, exploiting the tax code so as to avoid paying its fair share. “Oh, yeah, this happens all the time,” said Robert Willens, a tax accounting expert interviewed by McClatchy. “If you go out and try to make money and you don’t do it, why should the government pay you for your losses?” asked Bob McIntyre of Citizens for Tax Justice. The same year, the mega-bank’s top executives received pay “ranging from $6 million to nearly $30 million.”

- BOEING: Despite receiving billions of dollars from the federal government every single year in taxpayer subsidies from the U.S. government, Boeing didn’t “pay a dime of U.S. federal corporate income taxes” between 2008 and 2010.

- CITIGROUP: Citigroup’s deferred income taxes for the third quarter of 2010 amounted to a grand total of $0.00. At the same time, Citigroup has continued to pay its staff lavishly. “John Havens, the head of Citigroup’s investment bank, is expected to be the bank’s highest paid executive for the second year in a row, with a compensation package worth $9.5 million.”

- EXXON-MOBIL: The oil giant uses offshore subsidiaries in the Caribbean to avoid paying taxes in the United States. Although Exxon-Mobil paid $15 billion in taxes in 2009, not a penny of those taxes went to the American Treasury. This was the same year that the company overtook Wal-Mart in the Fortune 500. Meanwhile the total compensation of Exxon-Mobil’s CEO the same year was over $29,000,000.

- GENERAL ELECTRIC: In 2009, General Electric — the world’s largest corporation — filed more than 7,000 tax returns and still paid nothing to U.S. government. They managed to do this by a tax code that essentially subsidizes companies for losing profits and allows them to set up tax havens overseas. That same year GE CEO Jeffery Immelt — who recently scored a spot on a White House economic advisory board — “earned total compensation of $9.89 million.” In 2002, Immelt displayed his lack of economic patriotism, saying, “When I am talking to GE managers, I talk China, China, China, China, China….I am a nut on China. Outsourcing from China is going to grow to 5 billion.”

- WELLS FARGO: Despite being the fourth largest bank in the country, Wells Fargo was able to escape paying federal taxes by writing all of its losses off after its acquisition of Wachovia. Yet in 2009 the chief executive of Wells Fargo also saw his compensation “more than double” as he earned “a salary of $5.6 million paid in cash and stock and stock awards of more than $13 million.”

Why hasn't this been dealt with yet?

"The regulation of derivatives transactions that are privately negotiated by professionals is unnecessary. Regulation that serves no useful purpose hinders the efficiency of markets to enlarge standards of living." - Alan Greenspan, chairman, Federal Reserve, 1987-2006

Investigate: The Commodity Futures Trading Commission and the Federal Office of Thrift Supervision (regulators) and their relationship with the Securities and Exchange Commission (overseers), the relationship between the Federal Reserve (our central bank and U.S. Treasury) and commercial banks (e.g. Goldman Sachs), and their relationship to members congress (e.g. Republican Senator Phil Gramm's bill, the Glass–Steagall Act, that de-regulated banks), and all those who serve on the Senate Banking Committee. And the Justice Department, who hasn't prosecuted a single wrong-doer of the financial collapse.

From the documentary, Inside Job: The Film that Cost Over $20 Trillion to Make.

  • Inside Job: "So what you're saying is, you helped to blow the world up."
  • Financial regulator: "You could say that."

The Justice Department could not cite any federal regulator that it had named in the prosecution of IndyMac (or any other banks) related to the financial crisis.

Those who benefited the most from the financial meltdown and who paid a low "effective" corporate tax rate (or paid none at all) were the banks.

And the people who sat on their board of directors (e.g. CEOs) who were paid with capital gains, and only paid 15% in capital gains taxes, were the bankers and con-artists (oxymoron?) who received money from taxpayers (TARP) at near 0% interest from the Federal Reserve.

They paid the same "effective" tax rate as a single mom with 2 kids who only earned $8,500 a year. The banks did not pay 35% in corporate taxes and the banking executives did not pay the top marginal rate of 35% on their personal salaries and bonuses as "regular income".

Congress writes the tax laws and the banks OWN Congress.

When Republicans Taxed, and the Democrats Didn't

New York Times: During the flush years of the 1950s and 1960s, Republican leadership was reluctant to advocate tax cuts. In 1953, for example, Dwight Eisenhower said the country “cannot afford to reduce taxes, reduce income, until we have in sight a program of expenditures that shows that the factors of income and of outgo will be balanced.”

And when his successor, John F. Kennedy, proposed sharp tax cuts in 1963, the more conservative Republicans in Congress opposed them because the cuts would expand the deficit.

"10 Things We Want"

A Proposal for Occupy Wall Street - Submitted by Michael Moore

1. Eradicate the Bush tax cuts for the rich and institute new taxes on the wealthiest Americans and on corporations, including a tax on all trading on Wall Street (where they currently pay 0%).

2. Assess a penalty tax on any corporation that moves American jobs to other countries when that company is already making profits in America. Our jobs are the most important national treasure and they cannot be removed from the country simply because someone wants to make more money.

3. Require that all Americans pay the same Social Security tax on all of their earnings (normally, the middle class pays about 6% of their income to Social Security; someone making $1 million a year pays about 0.6% (or 90% less than the average person). This law would simply make the rich pay what everyone else pays.

4. Reinstate the Glass-Steagall Act, placing serious regulations on how business is conducted by Wall Street and the banks.

5. Investigate the Crash of 2008, and bring to justice those who committed any crimes.

6. Reorder our nation's spending priorities (including the ending of all foreign wars and their cost of over $2 billion a week). This will re-open libraries, reinstate band and art and civics classes in our schools, fix our roads and bridges and infrastructure, wire the entire country for 21st century internet, and support scientific research that improves our lives.

7. Join the rest of the free world [by doing as they do] and create a single-payer, free and universal health care system that covers all Americans all of the time.

8. Immediately reduce carbon emissions that are destroying the planet and discover ways to live without the oil that will be depleted and gone by the end of this century. (This blogger believes this issue is too complicated of an issue to be included as a "demand" in this list.)

9. Require corporations with more than 10,000 employees to restructure their board of directors so that 50% of its members are elected by the company’s workers. We can never have a real democracy as long as most people have no say in what happens at the place they spend most of their time: their job. (For any U.S. businesspeople freaking out at this idea because you think workers can't run a successful company: Germany has a law like this and it has helped to make Germany the world’s leading manufacturing exporter.)

10. We, the people, must pass three constitutional amendments that will go a long way toward fixing the core problems we now have. These include:

a) A constitutional amendment that fixes our broken electoral system by 1) completely removing campaign contributions from the political process; 2) requiring all elections to be publicly financed; 3) moving election day to the weekend to increase voter turnout; 4) making all Americans registered voters at the moment of their birth; 5) banning computerized voting and requiring that all elections take place on paper ballots. (This blogger has issues with #5 for various reasons, and believes a more secure and honest method can be done from home on our computers like we do our banking.)

b) A constitutional amendment declaring that corporations are not people and do not have the constitutional rights of citizens. This amendment should also state that the interests of the general public and society must always come before the interests of corporations.

c) A constitutional amendment that will act as a "second bill of rights" as proposed by President Franklin D. Roosevelt: that every American has a human right to employment, to health care, to a free and full education, to breathe clean air, drink clean water and eat safe food, and to be cared for with dignity and respect in their old age.

Low Corporate Taxes = Excessive CEO Salaries

It doesn't matter what a corporation pays in taxes as compared to GDP, or how it's compared to any other index of measure (to skew the numbers), it's what they actually pay to the U.S. Treasury after loopholes (aka "deductions") that matters most. And for the last 25 years corporations have actually paid historically low taxes.

While today some corporations may have paid the maximum rate of 35% (when it was over 50% in the 1950s), many others paid ZERO, with the average being only 18%.

The same can be said for their CEOs and other high-income earners. While although the top bracket is also almost historically low (at 35%, when it was once over 90%), what they actually pay is nearer to 15% because the majority of their income is earned through capital gains.

And because corporations have been paying a low effective corporate tax rate for decades, that didn't keep them from outsourcing jobs overseas for cheap labor, but rather, it did enable them to pay very excessive CEO salaries...who only mostly pay 15% in federal income taxes on their capital gains.

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1 comment:

  1. Mitt Romney, the GOP candidate, who once had a hard time finding a bill in his wallet that wasn't a $100, told an audience that "I'm not looking to put money in people's pockets."

    Nancey Pelosi: "We have the smoking gun. If you need further proof that Congressional Republicans are putting big Wall Street banks before middle class families, look no further than an explosive memo prepared by former John Boehner staffers-turned-banking lobbyists"

    NEWT GINGRICH must think that janitors are currently being overpaid for their work, and that their job is so easy a child could do it.