Nel's New Day

February 2, 2015

President Releases Budget, Opposes GOP in Mandatory Vaccinations

Have you heard all that squealing coming out of Washington, D.C. today? It’s not Sen. Joni Ernst (R-IA) castrating pigs with the new tool that Sen. Lindsey Graham (R-SC) gave her. No, it’s the release of President Obama’s 2016 budget, the book of how to get money and where to spend it.

In brief, he wants more spending, tax breaks for the middle class and poor workers, and higher taxes on the wealthy and large banks. The entire process is symbolic because Congress passes the budget, and this year’s Congress is GOP-controlled. Therefore, Congress will largely ignore anything that the president recommends. The budget, however, is a distinct document about the values of political parties and individuals, and the president has set up the debate for these issues.

  • Expand the child care tax credit by up to $3,000 per child;
  • Establish a $2.2 billion grant program to encourage states to create paid sick and family leave programs;
  • Begin a four-year program to improve roads, bridges and railways nationwide;
  • Help pay for preschool for 4-year-olds from poor and middle-income families;
  • Expand and extend tax credits for parents paying for child care, college students paying tuition, and low-wage childless workers;
  • Increase the Pentagon’s budget by $38 billion;
  • The president’s budget wishlist:
  • Increase the pay of military and federal employees by 1.3 percent;
  • Extend unemployment insurance;
  • Provide $215 million for research known as “precision medicine,” which involves using patients’ genetic information to tailor medications specifically to their bodies;
  • Set up a dedicated fund for fighting wildfires.

Declining debt: Sen. Orrin Hatch (R-UT) accuses the president of being “fiscally irresponsible,” but according to the White House, the budget will begin to pay down the national debt while not increasing the debt. Officials say that the plan gives a $474 billion deficit, 2.5 percent of the GDP, down from $583 billion and matching the deficits of the past 50 years. The recent increase in the deficit came from tax funding because of decreased income. With cuts in federal spending and increased taxes, the deficit has declined. A growth in economy during the next decade with the president’s proposals will cause the debt to decline to represent 73.3 percent of GDP in ten years, down from the current 75 percent.

Funding sources: The president has always wanted limits on tax breaks that help the top two percent of the wealthy to keep the deficit in line. This proposal reduces the deficit by $1.8 trillion through spending cuts and tax increases, possibly one on tobacco to pay for early childhood education.

Other possible proposals:

  • Raising the capital gains tax, paid by investors when they sell at a profit.
  • Imposing a new tax on inheritances.
  • Cutting corporate tax rate to 28 percent while taxing overseas profits at 14 percent when companies bring them back to the United States.
  • Levying a tax on large banks to compensate for the advantage they gain in the market from being seen as “too big to fail.”

Affect of new taxes: Families with children would benefit from the credit for child care, but the increase in the capital gains tax and the tax on banks could mean higher prices or lower wages.

GOP response: House Ways and Means Committee Chairman Paul Ryan (R-WI) said that his party will not separate corporate tax reform from an overhaul of the individual tax code. They want to raise funding for the military but no one else.

The next step: The GOP will have to put together its own budget, hoping to keep both voters and the wealthy contributors to their campaigns happy. Right now, they’re worried about passing a bill that funds Homeland Security before February 28 of this year.

The budget fails to follow the sequestration that imposed automatic spending cuts, but the austerity of the past several years may be loosened because the GOP are going to want some of the same things that the president does. For example, the highway trust fund is empty by June: people in both parties understand that the U.S. infrastructure is rapidly crumbling, making this area a priority.

President Obama’s budget plan would end the strict spending caps on domestic and defense programs by raising military spending by $38 billion over the capped level and nondefense spending by $37 billion. Social Security spending would rise from $891 billion this year to $1.6 trillion in 2025, and Medicare would climb from $529 billion to over $1 trillion. These programs would increase from 13.2 percent of the economy this year to 14.8 percent in a decade, while domestic and defense programs under Congress’s discretion would shrink to 4.5 percent of the economy in 2025, from the current 6.4 percent. Tax increases on the wealthy, big banks, and fees of hedge fund and private equity managers would raise almost $1 trillion in the same time. If the House passed the former Senate bill on immigration, the deficit could shrink by $158 billion.

The GOP may not want to give a one-time corporate tax rate on overseas profits brought back into the country to be used for infrastructure construction, but it’s an idea put forward by Sen. Rand Paul (R-KY) who also wants to be president. Tech giants like Apple, Google, and Microsoft are some of the corporations that keep most of their cash abroad to avoid paying U.S. taxes. After the initial 14 percent tax to bring the money home, companies would have to pay at least 19 percent on future offshore earnings with no loopholes or opportunities for deferral. Companies have at least $2 trillion overseas.

The president’s goal for transportation and infrastructure of $478 billion is more than one-third above the current spending rate and a 75 percent increase for mass transit. Half of that money would come from the current taxes on gasoline and other fuels. Another $238 billion would come from the one-time surge of taxes as corporations are forced to pay 14 percent on profits now parked abroad.

The proposal of a major expansion of the earned income credit for low-income workers without children is also backed by Ryan.

The talk about vaccinations overshadowed the discussion of the president’s budget on the media today. President Obama came out yesterday and said that he thought that vaccinations were vital. With an outbreak currently at 102 cases in 14 states possibly because children were infected at Disneyland, the spread across the nation is becoming more dangerous. The 644 cases last year in the U.S. was the most since the early 1990s. About two of every 1,000 people with measles will die; others suffer hearing loss, pneumonia, and brain swelling.

Two potential presidential candidates said today that vaccinations should be optional rather than mandated. Trying to look presidential while touring a vaccine laboratory in Cambridge, England, New Jersey Gov. Chris Christie, who forcibly isolated healthy Kaci Hickox because of her proximity to Ebola victims, asked for “some measure of choice” regarding vaccinations against measles and other diseases in children. He was followed by Sen. Rand Paul (R-KY) who said that move vaccines should be voluntary because children end up “with profound mental disorders after vaccines.” Paul added, “The state doesn’t own your children.”

Public outcry caused Christie to back-pedal; an aide said that he believes vaccines are “an important public health protection.” On the other hand, Paul doubled down on his claim that vaccinations should all be “voluntary.” He has an anti-vaccine history with his past membership in Association of American Physicians and Surgeons, a group of pro-life doctors who believe that abortion increases the chance of breast cancer in women, consider Medicare to be “evil” and “immoral,” question the link between HIV and AIDS, and protest vaccinations for health workers.

April 16, 2013

Corporations’ Excessive Tax Breaks

While you faithfully paid your taxes by yesterday, 26 major American corporations that made $205 billion in pretax profits paid nothing in federal corporate income tax between 2008 and 2011. In 2011 corporations paid a 12.1 percent effective tax rate, the lowest in four decades. Corporations want to have the same rights as “persons,” but real persons can’t have the tax advantages of corporations.

Corporations get tax breaks when they…

Break the law: BP’s toxic mess in the Gulf of Mexico or Wells Fargo’s abusive lending practices that cost tens of thousands American families their homes were fully deductible.

Fall on hard times: When corporations lose money, they can use these losses not only to fully offset taxes for that year but also carry those losses into the future for up to seven years.

Face no income threshold: After Superstorm Sandy devastated millions of American families, they picked up the full cost of damage equal to 10 percent of their annual reported income before any tax deduction. Corporations can deduct every cent of their losses. Firms including Verizon and other utilities serving the New York and New Jersey areas saved millions of dollars on their 2012 taxes by deducting the full costs of Sandy damage.

Take advantage of deferral: The five million U.S. citizens working abroad pay U.S. taxes on foreign earnings; U.S. corporations can indefinitely delay paying U.S. taxes on income earned abroad.

Go public: Facebook made a profit of more than $1 billion last year but paid no corporate tax and got a refund of $451 million after its initial public offering. Using the tax deductibility of executive stock options, Facebook will avoid paying $2 billion in future year.

Hire a lobbyist: Big business hires 17,500 registered tax lobbyists (5400 of them past Congressional lawmakers) to keep their taxes low while the rest of the people have almost no one arguing their interests.

Keep a cow: Florida, wealthy developers, lawmakers, and some corporations put cows on their land for a short time and then qualify for agriculture tax breaks. From New Jersey to Colorado, people use everything from sheep to beehives to take advantage of this break.

Choose a nation with low or no taxes: U.S corporations have trillions stashed offshore in countries where they have no employees or offices by registered their patents in a tax haven nation that imposes no taxes on corporate income. Until recently, people just muttered about how outrageous these are without realizing their unbelievably huge holdings. Until now.

A computer leak, complete with two million names and email addresses, shows that the rich shelter up to $32 trillion in cash in the British Virgin Islands. Equivalent to the economies of both the U.S. and Japan, this is half the world’s GDP. Just $3.5 trillion could eliminate the world’s poverty in 20 years. Below is a visual with $100 bills double-stacked as high as a person to show just one trillion dollars. The tiny figure in the lower left-hand corner represents a person. Then imagine $32 of these.

trillion

The leaked records detail offshore holdings of people and companies in more than 170 countries and territories over the past 30 years. Among nearly 4,000 American names is James R. Mellon, a member of the dynasty starting such companies as Gulf Oil and Mellon Bank. Like many other owners of offshore entities, he used third parties’ names as directors and shareholders of his companies that transferred tens of millions of dollars among his bank accounts.

The United States is losing at least $150 billion a year in taxes because of these offshore havens, $90 billion from corporations. A study from the Massachusetts Public Interest Research Group found that offshore tax dodging annually costs the Commonwealth $1.6 billion. For example, Pfizer pharmaceutical company, with $73 billion stashed in offshore havens, has not reported any taxable income in the last five years in this country.

Documents identified 30 American clients accused in lawsuits or criminal cases of fraud, money laundering, or other serious financial misconduct. They include ex-Wall Street titans Paul Bilzerian, a corporate raider who was convicted of tax fraud and securities violations in 1989, and Raj Rajaratnam, a billionaire hedge fund manager who was sent to prison in 2011 in one of the biggest insider trading scandals in U.S. history.

In the 1990s, the Organization for Economic Cooperation and Development tried to get tougher on money laundering, but the effort ebbed in the 2000s. Offshore remains a “zone of impunity” for anyone determined to commit financial crimes, said Jack Blum, a former U.S. Senate investigator who is now a lawyer specializing in money laundering and tax fraud cases.

Another legal corporate tax scam has been highlighted by Pulitzer Prize-winning journalist David Cay Johnston, who wrote that 21 states allow 2,700 specially-selected corporations such as GE and Procter & Gamble to keep leftover taxes that are withheld from workers. The state marks the workers’ taxes as paid, and the workers don’t get back any extra taxes.

Workers don’t know that they are losing billions of dollars to corporations. They think that their taxes are going for public projects.

Johnston wrote about the report  prepared by Good Jobs First, a nonprofit taxpayer watchdog organization:

“Why do state governments do this? Public records show that large companies often pay little or no state income tax in states where they have large operations. Some companies get discounts on property, sales and other taxes. So how to provide even more subsidies without writing a check? Simple. Let corporations keep the state income taxes deducted from their workers’ paychecks for up to 25 years.”

Johnston described some deals that states cut with corporations to divert $5.5 billion from public needs to corporate gain, highlighting Illinois, New Jersey, Ohio, and Kentucky. His latest book, The Fine Print, describes laws that allow the largest corporations to raise prices and reduce services. His two earlier books are Perfectly Legal, about taxes, and Free Lunch, about all the subsidies given to rich people. According to Johnston, 2,600 corporations out of the 6 million corporations in this country own 80 percent of the nation’s business assets.

Keep in mind that conservatives are wrong when they tell you that corporations need these cuts to keep creating jobs. They have consistently either cut jobs or moved them overseas in the past few decades while they benefited from keeping the profits, mostly tax free. Almost two years ago, a Federal Reserve report showed that U.S. corporations are holding more cash on their balance sheets than at any time in nearly a half century because they aren’t investing or hiring workers.

We need these loopholes closed. Tell your Congress representatives and senators!

July 23, 2012

Corporations Dodge Taxes

Filed under: Uncategorized — trp2011 @ 8:38 PM
Tags: , , ,

Conservatives incessantly complain about how the United States has the highest corporate tax rate in the world. Rate, maybe. Taxes, not at all. This was clarified again when Susan Ford, a senior executive Corning Inc., testified last week to the House Ways and Means Committee in its ongoing hearing on “tax reform and the U.S. manufacturing sector.”

During 2008-2011, Corning Inc. earned $3 billion dollars. During that time period, it paid $0 in U.S. income tax.  During that same time period, it also received a $4 million tax refund.  Ford’s testimony was that the company paid an effective U.S. tax rate of 36 percent and a foreign tax rate of 17 percent. The 36 percent figure (probably highly inflated) comes from taxes on profits earned overseas that haven’t yet been paid and won’t be unless the company decides to bring the money back to the United States.  “Effective tax rate” subtracts the taxes that are paid to a foreign country. So Ford is saying that Corning paid all these taxes (if indeed they did!) to a foreign country with nothing left over for the United States.

In fact, Corning paid -0.2 percent taxes. And this company is not alone in its ability to pay negative federal income taxes: 26 of 30 major businesses begging to have their taxes lowered also paid negative federal income tax rates. The U.S. could make a fortune if the government eliminated tax havens and loopholes.

The “effective tax rate” for corporations in 2011 was 12.1 percent, a 40-year low and far below the rate for middle-class people in this country. Real wages for 98 percent of the people in the United States fell 2 percent in 2011 while employees worked longer hours without raises, took pay cuts, and gave up benefits just to keep their jobs. The system that Ford testified in favor of would not only allow huge corporations to take more money from the taxpayers but also move another 800,000 jobs offshore from the United States.

Those with the most money are able to evade taxes. They are the ones who control government. Mitt Romney is a prime example of this problem.

The other point is that tax cuts result in job losses, not gains. Higher taxes during the 1990s produced more employment; the Bush tax cuts in the 2000s started a decline in employment which hasn’t been overcome because the tax cuts continued in 2010. If the United States doesn’t increase taxes for the wealthy and deadbeat corporations, it will continue to punish the people without jobs.

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