When corporations avoid taxes, investment banks take their cut:
Investment banks are estimated to have collected, or will soon collect, nearly $1 billion in fees over the last three years advising and persuading American companies to move the address of their headquarters abroad (without actually moving). With seven- and eight-figure fees up for grabs, Wall Street bankers — and lawyers, consultants and accountants — have been promoting such deals, known as inversions, to some of the biggest companies in the country, including the American drug giant Pfizer.
Just last week, President Obama criticized these types of transactions, calling the companies engaged in them “corporate deserters.” “My attitude,” he said, “is I don’t care if it’s legal. It’s wrong.”
Quiz for today: who said this?
The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power.
Answer: Teddy Roosevelt in a 1910 speech in Osawatomie, Kansas. Paul Krugman quotes Roosevelt to make the case that taxing the rich to safeguard democracy is as American as apple pie. Krugman also quotes Irving Fisher’s 1919 presidential address to the American Economics Association, warning of the dangers of “an undemocratic concentration of wealth.”
“How,” Krugman asks,” did such views not only get pushed out of the mainstream, but come to be considered illegitimate?”
Good question. Krugman’s conclusion is right on the money:
[T]he demonization of anyone who talks about the dangers of concentrated wealth is based on a misreading of both the past and the present. Such talk isn’t un-American; it’s very much in the American tradition.
Read his column here.
That’s the question posed by Senator Elizabeth Warren. She will introduce a bill to levy a minimum tax on incomes above $1 million (known as the “Buffet rule”), and devote the revenue to lowering interest payments on student debt:
Warren’s plan would allow students with outstanding student loans to refinance at lower rates. The cost of the change would be covered by a “dollar for dollar” effort where for “every dollar the Buffet rule brings in, we use that dollar to refinance student loan debt.”
Learn more here.
Jeffrey Sachs writes that investing in our future will require new tax revenues, along with reined-in war spending and real health care reform:
Much as conservatives hate to admit it, the landslide election of Bill de Blasio as mayor of New York City may prefigure the start of a new swing of the national political pendulum as well. He won a resounding victory, in part by calling for a small rise in taxes to fund preschool education, a major reform that would help relieve the disadvantages faced by poorer children. The recent meeting of mayors at the White House may give a hint of possible local pressures for increased public investments and public services. We’ve been on a thirty-year course of diminished public investments in our future. The dismal results are plain to see.
Read his piece here.
In his classic novel Animal Farm, George Orwell famously wrote that “some are more equal than others.” Turns out the same is true for public education in the United States. Eduardo Porter’s column in the Times explains why America’s educational playing field is far from level:
The United States is one of few advanced nations where schools serving better-off children usually have more educational resources than those serving poor students, according to research by the Organization for Economic Cooperation and Development. Among the 34 O.E.C.D. nations, only in the United States, Israel and Turkey do disadvantaged schools have lower teacher/student ratios than in those serving more privileged students.
Andreas Schleicher, who runs the O.E.C.D.’s international educational assessments, put it to me this way: “The bottom line is that the vast majority of O.E.C.D. countries either invest equally into every student or disproportionately more into disadvantaged students. The U.S. is one of the few countries doing the opposite.”
Read his piece here.
Bill Gross, managing director of the investment firm PIMCO, urges the 1% to get some common economic sense:
1) Growth depends on investment and investment in part depends on an equitable rebalancing of personal income taxes, capital gains and carried interest.
2) The era of taxing “capital” at lower rates than “labor” should end.
3) Investors in the U.S. and elsewhere must look for investment in the real economy, not share buy-back maneuvers that artificially elevate stock prices.
Read his blog on the “Scrooge McDucks” of the world and the need for real tax reform here.
From Robert Reich’s blog:
A basic economic principle is government ought to tax what we want to discourage, and not tax what we want to encourage.
For example, if we want less carbon dioxide in the atmosphere, we should tax carbon polluters. On the other hand, if we want more students from lower-income families to be able to afford college, we shouldn’t put a tax on student loans.
Read his post here.
Check it out, kids:
U.S. Senator Bernie Sanders (Ind- VT) on corporate takers:
In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.
On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country.
Read more here.
Tracking state subsidies to corporations. Check out their latest report:
Read it here.