The upward redistribution of income in the U.S. is undermining the nation’s Social Security:
if you’re a millionaire, February 16th is the last day that you will pay into the social security for the entire year. That’s because the Federal payroll tax cap is set at $127,000, so any money made beyond this point, is not subject to taxation that would fund this very crucial Federal social program.
See Real News Network interview with Dean Baker of the Center for Economic Policy Research here.
Portland, Oregon, has instituted a first-ever tax on corporations that pay their CEOs more than 100 times as much as their workers. Econ4’s Doug Smith told the Portland City Council:
“Instead of building a real economy beneficial to all, these unethical pay practices spread outsourcing, offshoring, tax avoidance, downsizing and the substitution of good-paying permanent jobs with temporary, precarious employment.”
Read about it here.
A new report details how companies duck paying their taxes – and free-ride on those of us who do:
Fortune 500 companies are holding nearly $2.5 trillion in accumulated profits offshore for tax purposes.
Read the report here.
Interesting numbers from the New York Times:
The top 1 percent includes about 1.13 million households earning an average income of $2.1 million.
Raising their total tax burden to, say, 40 percent would generate about $157 billion in revenue the first year. Increasing it to 45 percent brings in a whopping $276 billion. Even taking account of state and local taxes, the average household in this group would still take home at least $1 million a year.
If the tax increase were limited to just the 115,000 households in the top 0.1 percent, with an average income of $9.4 million, a 40 percent tax rate would produce $55 billion in extra revenue in its first year.
That would more than cover, for example, the estimated $47 billion cost of eliminating undergraduate tuition at all the country’s four-year public colleges and universities, as Senator Bernie Sanders has proposed, or Mrs. Clinton’s cheaper plan for a debt-free college degree, with money left over to help fund universal prekindergarten.
Read more here.
Nobel laureate Joseph Stiglitz writes:
A rich country with millions of poor people. A country that prides itself on being the land of opportunity, but in which a child’s prospects are more dependent on the income and education of his or her parents than in other advanced countries. A country that believes in fair play, but in which the richest often pay a smaller percentage of their income in taxes than those less well off. A country in which children every day pledge allegiance to the flag, asserting that there is “justice for all,” but in which, increasingly, there is only justice for those who can afford it. These are the contradictions that the United States is gradually and painfully struggling to come to terms with as it begins to comprehend the enormity of the inequalities that mark its society.
Read more here.
S&P makes another important connection:
Extending our analysis to public finance, we find that income inequality is undermining the rate of state tax revenue growth.
For the report, see here.
For press coverage, see here.
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.