For an elite group of American CEOs, sacrifice is for chumps.
As the nation struggles with budgetary constraints, Congress has exempted a group of imperial CEOs and their companies from contributing to the solution.
One special group of CEOs enjoys huge compensation packages while presiding over companies that pay little or no taxes. Twenty-five companies paid their CEOs more last year than they paid in U.S. corporate taxes, according to a new report from the Institute for Policy Studies that I co-authored.
Instead of building better products or providing superior customer service, they spend millions to lobby Congress to change the tax laws so they don't have to pay.
John Lundgren, the CEO of toolmaker Stanley Black and Decker, got a 234 percent pay hike in 2010, bringing his compensation to $32.6 million. Meanwhile the company is shedding thousands of jobs and moving more operations and profits offshore. They have 50 subsidiaries in offshore tax havens. Instead of paying taxes, they collected a $75 million refund.
Twenty of these 25 companies spent more money lobbying than they paid in taxes. When confronted by their tax dodging, their PR flaks complain, "We are just obeying the law." Last year, these 25 companies spent $150 million to influence the law, through lobbying and campaign expenditures.
These companies win gold medals in accounting gymnastics, using subsidiaries in low- or no-tax countries to avoid their tax obligations. Here's how the game works: A corporation pretends its profits are earned in offshore subsidiaries while its losses are incurred in the United States. At tax time, these corporations report to Uncle Sam that all they have are losses. Together, these 25 companies have 556 subsidiaries in tax havens like the Cayman Islands, Ireland, and Bermuda.
These U.S.-based companies use our taxpayer-funded infrastructure, including roads, bridges, broadband, and transportation. They benefit from taxpayer-funded research and spin-off products like the Internet, advanced jet engines, and drug research. Their corporate assets are protected by the U.S. military, police departments, and firefighters — and they rely on our U.S. justice system to defend their intellectual property.
Yet 20 of these companies paid no taxes in 2010. They didn't chip in one dime to pay for the services they enjoy — and that contribute enormously to the success of their businesses. Five companies paid symbolic amounts of taxes, less than the paychecks of their CEOs. But most, in fact, collected checks from Uncle Sam.
We taxpayers just hired Boeing for $35 billion to build new aircraft for the U.S. military. Honeywell also receives huge U.S. government and military contracts. But we don't require either company to pay a nickel for national defense or public services.
As wages for most Americans have remained stagnant over the last several years, these imperial CEOs saw their compensation jump 27.8 percent between 2009 and 2010. The average CEO of an S&P 500 company collected $10.8 million in compensation. But the CEOs of these notorious tax dodgers were paid an average of $16.7 million in 2010.
Shareholders should reward CEOs for building better products or delivering better services, not for accounting gymnastics that game their tax bills down. Shareholders at Stanley Black and Decker are trying to reverse their CEO's pay grab.
Congress should pass the Stop Tax Haven Abuse Act, which would generate an estimated $100 billion in revenue annually. It would save jobs at patriotic U.S. companies that are forced to unfairly compete with corporate tax dodgers on an unlevel playing field.
Our nation needs all hands on deck, with everyone pulling their weight to address our fiscal challenges. As we try to recover from the worst economic depression since the 1930s, middle-class taxpayers and domestic businesses shouldn't have to carry these slacker companies on their backs.
The rum-soaked beverage and balmy breeze were starting to erode my leftist resistance to luxury. Let’s face it, sipping a Mai Tai from a beachfront terrace with a million-dollar view of Diamond Head will dull the edge of the most hardened class warrior. But just as I was slouching into vacation mode, I made the mistake of cracking open Sarah Vowell’s Unfamiliar Fishes. With my second cocktail in one hand and her book in the other, I soon discovered the whole sordid tale of how Christian zealotry, political chicanery, and ruthless exploitation dropped the Hawaiian Islands into the laps of America’s 19th century conquistadores.
Damn, just as I was starting to enjoy this place my social conscience kicks in!
Motivated – though somewhat reluctantly – to find Hawaii’s contemporary oppressors, I accepted an invitation from Derrick Kiyabu to visit MA’O Organic Farm on Oahu Island’s west side. The drive took me past Honolulu’s cheek-to-jowl ocean view condos and the Pearl Harbor Naval Base before the H1 Freeway deposited me onto Highway 93. This is the approximate place where the sign “Now Leaving Paradise, Welcome to Poverty” would be placed if tourist officials chose to acknowledge such things. But lacking most of what vacationers are looking for from a tropical getaway, the Wai’anae Coast, as it is commonly known, can only offer fast-food joints, scruffy commercial buildings, and residential housing that rival the worst of third-world Asia. I guess this is why the Lonely Planet guidebook refers to the region, almost quaintly, as “a little bit of Appalachia by the sea.”
My pre-farm tour reached a crescendo when I happened by a homeless encampment cobbled together along a one-mile stretch of state beach. Late model cars – many rusted and in various states of disassembly – jerry-rigged shelters, and a mish mash of makeshift camping and cooking gear presented such a scene of utter destitution that even knuckle-dragging conservatives would advocate for immediate relief.
As I moved inland a couple of miles, the landscape and impressions changed. Small sections of dry, flat farmland intermingled with vast tracks of military land – securely fenced and sporting giant arrays of submarine-tracking sonar towers capable of detecting a flushing toilet in a Russian sub north of Okinawa. It is here though, amid palm and banana trees, that you’ll find the peaceful acres of MA’O Organic Farms, armed with nothing more dangerous than wholesome organic produce and 40 or so farm interns between the ages of 17 and 24.
Like almost all the interns and staff, Derrick is wearing the farm’s “No Panic, Go Organic” t-shirt. Noting some of the underlying principles of the program, he reminds me that “pre-contact” Hawaiians were 100% food self-reliant and that their traditional farming methods were totally organic. In a more pragmatic vein, he also explains the program’s business model: “Organic produce generates the most revenue from our customers such as Whole Foods, numerous natural food stores, CSA members, and Honolulu’s high-end restaurants.” As a self-described social enterprise, the non-profit farm generates 40 percent of its million-dollar-plus annual budget from produce sales. This is how they support the youth development and leadership program that is at the core of the farm’s mission. Promoting food security in the surrounding region is secondary to the need to generate funds for instructional costs, community college tuition, and stipends for the workers.
Without a doubt, the produce is top-notch. The packing sheds – two retrofitted chicken coops – are filled with interns washing and packing perfect heads of green and white bok choy, glowing red radishes, and gorgeous greens. A big whiteboard lists all the customers and the number of units each will purchase that day. As the young people pack each order in MA’O Farms custom boxes and load them on to the refrigerated delivery truck, the pride is evident in their smiles; after all, they grew it, picked it, and packed it. From the sales revenue, they’ll be paid a monthly stipend by it. Moreover, the produce will help send them to college.
But MA’O isn’t just another scheme to reconnect kids to land, food, and a little income. According to Kamu Enos, MA’O’s Social Entrepreneur Director, the farm is a training and leadership development program designed to overcome the poverty and social dysfunction that was so evident on my drive in. He tells me that “this region of Oahu has the highest concentration of native Hawaiians on all the Islands. We also have a 20% poverty rate, which is disproportionately higher for Hawaiians. Over 40% of our kids drop out of school and only 10% of our graduating high school class goes to college, and many of those leave during the first year.” Derrick puts the problem more succinctly, “Our public education system has ripped off our kids.”
When I noted the unusually high number of very heavy people I saw in Wai’anae, Kamu explained that, like other Native American communities, the ravages of Spam, loss of land, and the decline of traditional practices have taken their toll on peoples’ bodies as well as their souls. In what might be called the second wave of white man’s disease (the first, as Sarah Vowell makes clear, was the 19th century smallpox and measles epidemics brought by missionaries and seamen that reduced the native Hawaiian population from 300,000 to 40,000), the American fast-food diet and the paucity of fresh fruits and vegetables are degrading the community’s health. “The root problem,” said Kamu, “is the disconnect between our land, people, and economy. Instead [of controlling these things], we exist under the predatory practices of the military.” Not only does the Defense Department control most of the land in the region, military recruiters find local Hawaiians easy targets for enlistment because good civilian job opportunities are so few.
Getting control of land, especially for farming, is a daunting challenge for Hawaiians – there’s not much affordable, arable land that developers don’t already have their mitts on. But sugar daddies do show up, and they are not always the kind that operated sugar cane plantations. In MA’O Organic Farms’ case, the sweet guy is none other than Pierre Omidyar, founder of E-Bay. He generously dropped a cool million on the program, which, with assistance from the Trust for Public Land, bought the 11 acres that are now the heart of the farm.
Pua, 21, is a MA’O youth leader and the first member of her family to go to college. She recently received her associate degree from Leeward Community College and is scheduled to start at the University of Hawaii at Manoa in August. She tells me that high school didn’t prepare her for college, but with her mother’s encouragement and MA’O’s help – counseling, remedial instruction, and peer support – she’s climbed some pretty steep personal cliffs and is now ready for bigger challenges. While she’s not likely to pursue farming as a career she credits the farm program with giving her the emotional tools she needed to succeed. “The farm experience is an inspiration. Like college, it’s hard work. The farm grounds you because you have to manage your time, you have to work as a team with others to succeed, and you have to face the consequences of your actions.”
For other young people like Pua, the path out of poverty starts with a walk down the farm’s vegetable rows. Many start to eat better and lose weight. Kainoa is one youth worker who actually lost 130 pounds by exercising and changing his diet. But what the program cultivates even more than the farm’s well composted soil is the interns’ state of mind. Disempowered, brought up with low expectations, some homeless, they were staring at a future that promised little but a swift descent into diabetes and a life in the unemployment line. Now the steps out of poverty are more visible.
To grow and sell a half-million dollars of organic fruits and vegetables every year is no small feat. But to raise dozens of young leaders who can challenge the dominance of the condo kings and restore the economic and physical health of their people would no doubt bring a smile to the ancient kings and queens of Hawaii.
Administrators didn’t violate the First Amendment when they expelled a Nevada high school student who sent instant messages containing an alleged hit list, a federal judge has ruled.
In 2008, Landon Wynar sent messages to a friend known in court papers as J. In his messages, Wynar threatened violence against some female students. One message read: “that stupid kid from vetch, he didn’t do shit and got a record. I bet I could get 50+ people, and not one bullet would be wasted.”
J. forwarded the messages to R., another student, who suggested that they tell Douglas County High School authorities. After J. and R. told school officials, Wynar was suspended for 10 days and then expelled for 90 days.
In October 2009, Landon and his guardian, Mark Wynar, sued school officials claiming that they violated Landon’s constitutional rights, including his First Amendment right to free-speech when he was punished for his off-campus speech.
On Aug. 10, U.S. District Judge Larry R. Hicks rejected these claims in Wynar v. Douglas County School District. Hicks reasoned that even though the speech originated off campus, most courts would apply the “substantial disruption” test from the U.S. Supreme Court’s 1969 decisionTinker v. Des Moines Independent School Districtif the speech were brought to the attention of school authorities. Under the Tinker test, school officials can restrict student speech if they can reasonably forecast a substantial disruption of school activities.
“Where a student’s speech is violent or threatening to members of the school, a school can reasonably portend substantial disruption,” Hicks wrote, adding that “the court finds that defendants had a reasonable basis to forecast a material disruption to school activities.”
Hicks noted that Landon Wynar specifically referenced April 20 — the anniversary of the infamous school shooting at Columbine High School in Littleton, Colo., as a date for the shooting and “made specific references to girls and the school by name.”
Wynar insisted that the messages were only jokes, not real threats. But Hicks said that even if they were jokes, school officials “still had a reasonable basis to forecast a substantial disruption to school activities.”
The Wynars’ attorney, Jeffrey S. Blanck, said his clients hadn’t decided whether to appeal the ruling.
“I am not happy with the decision because this was purely off-campus speech and the kid did not intend to harm anyone and didn’t convey an intent to harm anyone,” Blanck said. “This was joking between friends and the friend joked back.
“This kid spent 33 days in jail before a juvenile court judge tossed out the criminal charges.”
Requests for comments from the school district’s attorney went unanswered.
Dan and Isabelle sit patiently on the folding metal chairs in the tastefully decorated waiting room of Seattle’s Ballard Food Bank. Intelligent, soft-spoken, and in his late 50s, Dan is a chronically underemployed architectural draftsman who barely managed to eke out three days of temporary work over the past week. His unemployment benefits have long since evaporated and he’s thinking about applying for food stamps, although he cringes as the words leave his mouth. With his shrunken income dedicated to keeping a roof over his head, he and Isabelle are two among 1,200 or so neighborhood residents who will request a shopping cart-full of food this week at the food bank.
Peggy Bailey, Ballard’s Operation Manager, is one of those dedicated, unflappable souls whose work holds the lives of others together as the larger universe spins out of control. Her recitation of statistics is the “growth” story that you’ll hear from any of the 60,000 emergency food sites across America. “In 2001 we were serving about 350 people per week; four years ago it was 450; now we’re serving between 1,100 and 1,200.” Peggy escorts me past tattooed skateboarders, young women clutching babies, and unshaven men for whom a good night is a dry patch of grass underneath a bridge.
Like all the 25 volunteers (out of a total of 100) on hand this day – good neighbors who keep the flow of people safe and dignified – Peggy beams with pride over the food, large walk-in refrigerators, and the recently retrofitted 6,200-square-foot machine shop that’s been their new home for only a year (after relocating from their cramped, dilapidated home of nearly 40 years). Almost half of the available food is produce, some of which comes from nearby Pea Patch community gardens and local fruit tree gleaners. An abundant supply of artisan bread, fresh dairy products, and even enough frozen meat to give each person two packages, fill the shelves. Not only can you select from a rather remarkable range of products: e.g. microwaveable entrees that retail for $9.00 at Trader Joes, there’s also a “no-cook” section that, in an average month, serves 350 people without kitchens. In addition, nearly 100 bags are assembled and delivered weekly to shut-ins and people with special dietary needs.
Unlike food banks in days of yore, Ballard does more than give away food. If you don’t have a permanent address, they’ll act as your personal post office box, a service currently used by 480 people. Case workers from the Department of Social and Health Services try to connect food bank users with SNAP (food stamps) as well as medical and dental services. Need help paying your rent or electrical bill? You can apply for a $300 voucher for the former and $200 voucher for the latter.
When I asked Peggy how she keeps up with the demand for food, she told me, almost blithely, that enough food was not a problem. In a comment that would make her the envy of every food bank worker in America, she said, “We’ve never had to turn anyone away due to lack of food. This is a very generous community. We have Whole Foods, Trader Joes, Safeway and dozens of other food donors.” While supporting five paid staff, three trucks, and a good-size modern facility, the food bank gets 95% of its operating funds from private donations, receiving only $40,000 per year from Seattle city government. One anonymous individual, for instance, gives the Ballard Food Bank $2,000 each month just to buy fresh dairy products.
In contrast to the generosity of the surrounding neighborhoods, you have the U.S. House of Representatives. If the miracles that these Seattle residents pull off every day make Christ’s feeding of the 5,000 look like a cheap card trick, the House majority’s proposal to slash $3 billion from SNAP, WIC, and TEFAP makes Scrooge look like a Salvation Army volunteer. At a time when the nation’s economy is still on life support and when a record 43 million Americans are receiving food stamps, the House Republicans want to hack the safety net with a machete while leaving the silver cutlery of hedge fund operators untarnished. Take from the poor, but don’t touch a dime of the rich.
Ballard is a human-scale urban environment whose sloping landscape gently lowers you to the shores of the Puget Sound. On street corners, food bank volunteers greet the homeless people by name, who, in turn, respond in a friendly manner, pleased that there are people who don’t avert their eyes. Stroll a few blocks north of Market Street, and you’ll come to a lovely park where grassy slopes and park benches are populated by homeless men catching a ray or two of Seattle’s stingy sunlight. In the opposite corner is a small skateboard tunnel where young dudes, hat brims cocked at precise angles, practice their chutes and curls. Between the skaters and the homeless are several fountains that spray giggling toddlers cheered on by happy moms.
The park reflects Ballard’s values: there’s room for everybody, diversity is encouraged, and the community does its darnedest to meet everyone’s needs. But, beneath this cloak of tolerance, there is a creeping sense that there may be limits to what any group of caring people can do. Perhaps it’s symbolized by the police cruiser stationed just across the street from the “homeless end” of the park. Maybe you hear it in the voices of the young men at the food pantry who were too ashamed to give me their names, but did say that in spite of a couple of years of college they couldn’t find jobs. “We’re not trained for anything.” Or perhaps you can smell it on the breath of the middle-aged drunken man, who according to Peggy had been “doing so well up until now.”
If the House Republicans have their way, the Ballard Food Bank’s waiting room could very well become so crowded that the smiling volunteers will be replaced by stern-faced security guards. When I asked John, an 87-year old food bank volunteer of 12 years, what he thought was behind the ever rising number of clients, he said emphatically, “It’s all about the economy. I see how embarrassed people are who are asking for help, but you can either sleep on the street or come to the food bank.” One has to ask if that is the vision that the budget cutting, non-taxing conservative minority have for America. If that is true, and every statement from the Republican leadership seems to suggest that it is, then one has to ask where the rage is at this time in our nation’s history.
How big must food banks get to contain the ever-swelling legions of un- and underemployed workers? How much food will Ballard’s neighborhood grocers have to donate to ensure that all the young mothers can feed themselves as well as their babies? Is there indeed a tipping point when community compassion can no longer clean up the mess made by mean-spirited politicians who avert their eyes from the growing victims of a failed American dream?
Evelyn, 87, has been volunteering at the Ballard Food Bank for 15 years, longer than anyone else. She’s a feisty, retired machinist who worked for a Boeing Aircraft subcontractor. Sitting at a table where she was sorting nuts into small plastic bags for the home delivery sacks, Evelyn shared the most commonly expressed reason for volunteering at food banks. “If you’ve been blessed, you have to give back.” Yes, I said, I’d heard that sentiment from many people in the emergency food world, but I wondered if there wasn’t something else. At that point the fiery machinist union member took over from the charitable grandmother. Growing up during the Great Depression on a Minnesota farm, she did not need the reason for rage explained to her. “Things have to change in this country,” she said, eyes narrowing and pronouncing each syllable more distinctly. “The idea of not taxing the rich is ridiculous. We have to stop farm and oil subsidies. We got to get politicians to care about people all the time, not just when they’re trying to get elected.”
Compassion and “giving back” may not be sustainable when one class of Americans lives under the House Republicans’ Golden Fleece, while bourgeoning flocks live under highway overpasses. So that compassion may live, we must sometimes release the rage.
If your child's pediatrician diagnosed a contagious bug and prescribed medication, what would you do? Same as most parents, no doubt. Get the medicine. Give it to your kid. When a child's health is at stake, we tend to follow doctor's orders.
In May, the American Academy of Pediatrics issued a widely publicized clinical report regarding kids and sports drinks. The AAP recommended cutting back on such drinks for kid athletes. In so many words, the kids' doctors group found them to be unnecessary at best, and at times even harmful.
Dr. Holly Benjamin of the AAP Council on Sports Medicine and Fitness noted: “For most children engaging in routine physical activity, plain water is best, Sports drinks contain extra calories that children don’t need, and could contribute to obesity and tooth decay."
It's been three weeks since the AAP issued that statement. How many of us have heeded this simple advice? Anyone?
The sport-drink industry isn't exactly urging us to shut the spigot. Gatorade, for one, spends tens of millions each year in sports marketing. According to the Sports Business Journal, the four major sports leagues have deals with Gatorade as do a majority of teams in those leagues. Dozens of star players are paid to pitch the sports drink including Peyton and Eli Manning, Dwayne Wade, Kevin Garnett and Landon Donovan. Seventy-four college programs count Gatorade as a sponsor as do 13 college conferences and 11 bowl games.
Oh, and Gatorade is a highly visible sponsor of high school sports. Next spring, check out the ESPN Rise National High School Invitational Presented by Gatorade. I did last March. In a gym in suburban D.C., it was me, about 700 fans and about 700 Gatorade logos.
Maybe I'm off base and water is about to make a comeback as the kids' thirst quencher of choice. That would please your kid's doctor. It might not make the Manning brothers happy.
Sports drink photo by toniwbusch on Flickr. Used under Creative Commons.
"The suicides and murder-suicides, the property crime, the child neglect -- we often assume these are tied to problem gambling ... but we rarely tie the disparate pieces together into the obvious whole." Review of High Stakes in the Las Vegas Sun, July 5, 2011
America is becoming hooked on gambling. From the millions of dens and dorm rooms lit by online poker games to the neighborhoods transformed by new casinos and slot machine parlors, legalized gambling has become an integral part of our lives.
With a singular blend of investigative journalism and poignant narratives of gambling addiction, award-winning journalist Sam Skolnik provides an in-depth exploration of the consequences of this national phenomenon. The result is High Stakes, an unflinching look at the explosive growth of legalized gambling in our country, the concurrent rise of addicted gamblers, and what it all means.
Thirty-five years ago, casinos were legal in just one state, Nevada. Today, legalized gambling has morphed into a $92 billion industry established in all but two states. As elected officials are urging voters to expand gambling's reach, the industry's supporters and their equally impassioned detractors are squaring off in prolonged state-by-state battles. Millions of Americans are being asked to decide: Are the benefits worth the costs?
Industry officials and their political allies assert that gambling is an effective way to raise revenue and create jobs. But these rewards come at a steep price. Fast-rising numbers of addicted gamblers are causing higher indebtedness and bankruptcy rates, as well as increased divorces, suicides, and gambling-related crime. Skolnik shows how the gambling industry is targeting Asian Americans-and why this population, more than any other ethnic group, is likely to develop gambling problems. He also illustrates how gambling has helped turn Las Vegas into America's most dysfunctional community, and how the upsurge of poker and Internet gambling has created a new generation of gambling junkies.
In High Stakes, we meet politicians eager to promote legalized gambling as an economic cure-all, scientists wrestling with the meaning of gambling addiction, and ensnared players so caught up in the chase that they've lost their livelihoods and their minds. Throughout it all, Skolnik-an avid poker player-never loses sight of the human side of these struggles.
The average federal tax rebate this year is around $3000. By now we all understand that there is no point investing that money in the national casino known as Wall Street. You could be fiscally responsible adults and take that money to pay off some debt, but that would counter the brilliant economic recovery policy first coined by George Dubbya after the 9/11 attacks: go shopping.
But shopping for what? How about taking the $3000 to spruce up the kitchen or go on a nice vacation? Not a bad idea. But perhaps an even better one is to invest in the most important thing of all: a new, more perfect you. In other words, maybe you should spend that tax rebate on some cosmetic surgery or at least some Botox?
As Joan Kron, a senior editor at Allure magazine told me when I was researching my book, American Plastic: Boob Jobs, Credit Cards and Our Quest for Perfection
No one says you shouldn’t go to college because you don’t want to improve your intelligence. What’s the difference between a facelift and college? People know they’ll keep their jobs if they make themselves look better.
Now you could do what many Americans already do and use that tax rebate to travel somewhere cheaper, warmer, and more willing to give you some lipo for a few thousand bucks. I’ve interviewed cosmetic surgeons from the Dominican Republic and Mexico who say their cosmetic surgery tourism business is busiest right after tax rebates arrive in the U.S. But there are obvious dangers to traveling outside the country for major surgery, like having complications later on that no US surgeon is willing to treat for fear of liability. Also, in terms of the Dubbyean economic policy of saving the US economy through consumption, it only works if we consume within our borders.
Probably the best answer is to do what nearly 85% of cosmetic surgery patients do: put your plastic surgery on plastic money. That’s right. Charge it. With $3000 down, you probably qualify through one of the medical credit loan sharks, uh, I mean companies, for the “low” rate of about 14%. Of course if you don’t want to put that $3000 down, expect to pay about 30% interest. Plus any fees and fines if you miss a payment.
In other words, cosmetic surgery is the subprime mortgage industry of the body. Banks, having learned long ago that the best way to make money is by charging high interest rates and fees (a process known by as “financialization”) figured out that they could lend Americans money for a more perfect body, charge them an arm and a leg, and make some serious profit. Care Credit, a division of General Electric, is the largest medical credit company. According to Barron’s, GE’s health care division has the opportunity for double-digit earnings growth.
Care Credit is happy to lend money for cosmetic surgery, not to the rich and famous, but to average Americans. That’s why over 70% of those getting cosmetic surgery earn less than $60,000 a year. It’s also why Care Credit is under investigation in the state of New York for “predatory lending practices.”
Of course if there’s one thing we now understand, it is that debt will make us poorer even as the corporations that lend us money much wealthier. And although we would all look more “perfect” with those new boobs, we won’t be able to do anything but work to try to keep up with the interest payments. So perhaps the real answer of what to do with our tax rebates is to invest in the seemingly recession-proof industry of plastic beauty and the American search for bodily perfection. After all, if we can’t look perfect, we can at least exploit the desire to do so for our own gain. And in this way make the roulette wheel that is Big Finance and Big Beauty go round.
Shaxson, a veteran journalist, slices through the technical jargon to reveal the devastating impact of what he calls “the offshore system” on economic health, global poverty, and our state and federal budget deficits.
Tax havens, or more accurately “secrecy jurisdictions,” are the mechanisms through which wealthy individuals and multinational corporations move money around the planet to avoid taxation and regulation. These same mechanisms facilitate criminal activity, from drug money laundering to terrorist financing networks.
According to Shaxson, there are about 60 “secrecy jurisdictions” around the world, countries with loose incorporation rules, bank reporting and financial transparency requirements. Those of us in the U.S. are most familiar with some of the Caribbean tax havens such the Cayman Islands, Bermuda, and the Bahamas. But technology and pharmacy companies often create subsidiaries in countries like Ireland and the Netherlands to hold patents and intellectual property to reduce US taxes.
The offshore system has spawned a huge tax avoidance industry, with teams of lawyers and accountants who add nothing to the efficiency of markets or products. Recent stories about General Electric’s storied tax dodging dramatize the ways that modern multinationals view their tax accounting departments as profit centers.
At a time when federal and state lawmakers are grappling with huge budget deficits, the impact of corporate tax dodging is getting new attention. The cost of tax havens is estimated to be over $100 billion of lost revenue each year. And a coalition of over 20 U.S. companies have launched their “WinAmerica” campaign to lobby a “tax holiday” on $1.2 trillion in overseas profits they want to bring back to the U.S. Opposing these measures is a whole grassroots movement, US UNCUT, that has emerged to argue: “No Budget Cuts Until Tax Dodgers Pay Up.”
Shaxson argues that almost every major economic story and crisis can trace its roots back to the offshore system. The financial practices of the “shadow banking system” that triggered the 2008 global economic meltdown were facilitated through an opaque and unaccountable finance sector built around layers of off shore tax havens. The two biggest recipients of taxpayer bailout funds are, by no coincidence, huge users of the offshore system. Citigroup has 427 subsidies in tax havens and Bank of America has 115.
At the heart of the global system of off shore tax havens is the transfer of wealth –away from communities and the global south and into the bank accounts of the planet’s wealthiest and most powerful citizens and corporations. For those who care about global poverty and trade, the offshore system is how wealthy elites move their money out of the nations of the global south –and why resource rich nations are unable to effectively tax the corporations that extract their natural wealth. Shaxson cites reports that estimate trillions of dollars of illicit financial flows out of African countries over the last two decades.
Shaxson, who lives in Switzerland, is in the U.S. this week to promote the book and did a press conference with U.S. Senator Carl Levin, champion of legislation to stop tax haven abuses. Congress has been slow to tackle the off shore problem, but the tide is turning.
Treasure Islands was released in the UK in January and quickly became a best selling non-fiction book. It has become the bible of the UK Uncut movement, a grassroots effort to stop budget cuts and make corporate tax dodgers pay. The U.S. Uncut movement, inspired by efforts from across the Atlantic, has over 80 protests planned for the coming tax day weekend. On Friday 4/15, author Shaxson be joining US UNCUT to do a creative “book signing” at the offices of a prominent tax dodger in Washington DC.
Or so claim governors and lawmakers all over the country. Our states and our nation can no longer afford, their plaint goes, the programs and services that Americans expect government to provide. We must do with less. We need "austerity."
But we're not broke. Not even close. The United States of America is awash in wealth. Our corporations are holding record trillions in cash. And overall individual wealth in the United States, the Credit Suisse Research Institute reported this past fall, has risen 23 percent since the year 2000, to $236,213 per American adult.
We have, these indicators of overall wealth suggest, survived the Great Recession quite nicely. So how can average families — and the national, state, and local governments that exist to serve them — be doing so poorly? Why do "deficits" dominate our political discourse? What explains the red-ink hurricane now pounding government budgets at every level?
This Tax Day report (pdf) identifies two prime drivers behind our current budget "squeeze."
One, we have indeed become wealthier than ever. But our wealth has become incredibly more concentrated at our economic summit. U.S. income is cascading disproportionately to the top.
Two, we are taxing the dollars that go to our ever-richer rich — and the corporations they own — at levels far below the tax rates that America levied just a few decades ago. We have, in effect, shifted our tax burden off the shoulders of those most able to bear it and away from those who disproportionately benefit from government investments the most.
These two factors — more dollars at the top, significantly lower taxes on these dollars — have unleashed a fiscal nightmare. Can we wake up in time to avoid the crippling austerity that so many of our political leaders insist we must accept?
This report offers both an analysis of our current predicament and a series of proposals that can help open our eyes to a far more equitable — and brighter — future.
Key Tax Facts
15,753: The number of households in 1961 with $1 million in taxable income (adjusted for inflation).
361,000: The number of households in 2011 estimated to have $1 million in taxable income.
43.1: Percent of total reported income that Americans earning $1 million paid in taxes in 1961 (adjusted for 2011 dollars)
23.1: Percent of total reported income that Americans earning $1 million are likely to pay in taxes in 2011, estimated from latest IRS data.
47.4: Percent of profits corporations paid in taxes in 1961.
11.1: Percent of profits corporations paid in taxes in 2011.
Highland Hills is one of those down-and-nearly-out communities that’s allowed a glimpse of prosperity but never gets to taste it. The Dallas skyline looms large and shining across the hazy north Texas horizon and is linked to this poverty-plagued neighborhood by a seven-mile ribbon of light-rail steel. Ledbetter Avenue crosses the train line passing by vacant buildings, vast stretches of empty parking lots, and a dizzying array of “For Sale,” “For Lease” and “For Jesus” signs. Named for the renowned guitar picker Lead Belly who did time in these parts – both in and out of prison – the Avenue speaks little in the way of promise, but wails the blues of poverty loud and clear.
Like cockroaches in a post-nuclear winter, the neighborhood’s only commercial survivors appear to be pawn shops, Dollar stores, and fast-food joints. One supermarket, a Minyard whose cinder-blocked and windowless façade is about as inviting as the entrance to Stalag 13, is the only retail food source in the several surrounding miles of food desert. But a lifeline from an unlikely source has been tossed Highland Hills’s way by a group of innovative academics. Paul Quinn College, a historically black college that sits just off Interstate 45 at the neighborhood’s eastern edge, is committed to lifting its neighboring community’s physical and economic health with a combination of food, farming, and servant leadership.
There’s no little irony in this partnership. To drive by the Paul Quinn campus is to, well, keep on driving. There are no signature ivy-clad buildings or tree-shaded quads to invite college-shopping families for a leisurely tour. In fact, the first roadside buildings you see are in various states of demolition, reflecting, in part, the plunge in student enrollment from 600 to 100 (it’s now climbed back to 200) and the school’s loss of accreditation (it’s been able recently to earn back probationary status). At first glance anyway, and like the adjoining neighborhood it wants to help, Paul Quinn appears to be hanging on to life by no more than a pea tendril.
But first glances are deceiving, and pea tendrils are stronger than they look. And when your back's to the wall and nobody, even your own government, will help you, you fight like hell, you do the unexpected, and you take risks.
In Paul Quinn’s case, not only did the college take risks, it committed a grievous sin, at least by Texas standards – they terminated their football program and turned their field into an organic farm. Yes, in the shadow of the Super Bowl, with the specter of Tom Landry looking down, and the holy glare of Friday night lights forever dimmed, Paul Quinn ripped up its sacred turf where football cleats once tread, and planted – goalpost to goalpost – peas, lettuce, carrots, strawberries, and more, lots more.
While the roar from the football stands may have subsided, it doesn’t mean that the field has fallen silent. When Andrea Bithell, the farm manager, announced to student and staff volunteers that the kohlrabi had gone in last week, everyone cheered. Showing a group of farm visitors where the corn would be planted later this spring evoked a round of applause from several students who proclaimed their love of its sweet kernels. Indeed the competitive spirit and enthusiasm so much a part of college athletics is hardly lacking at “Food for Good Farm,” the name chosen to denote it’s larger mission of education, community service, and healthy food for all. Sounding more like a coach than a farmer, Andrea uses words like hustle to describe her student crew’s hectic effort to plant and seed the two-acre field. When the volunteers complained about working in the cold and the rain, they were reminded that football games are played in all kinds of weather. Even the plants are forced to compete in a set of 12 trial beds located in the field’s south end zone. Here students will test different growing methods and evaluate their potential financial rate of return.
Elizabeth Wattley, Paul Quinn’s Director of Service Learning, proclaimed with pride that the farm’s tomatoes were better than anything she’d ever bought in a grocery store (she confessed that until her introduction to the farm during its first spring in 2010 she had been afraid of dirt). One student, biology major Symphonie Dawson, giggled when she described the farm’s mascot emblazoned on their t-shirts. “It’s the ‘Fighting Okra,’ an image of the vegetable wearing boxing gloves. We chose it because last year’s okra crop seemed to go on forever.” The “Rah-rah, Go Team, Go!” energy previously reserved for football games has been channeled into the end-zone to end-zone planting of 1,500 strawberry plants, 6,600 onions, a new asparagus bed, and dozens of varieties of vegetables. “The farm is the light of the college,” is the assertive way Elizabeth put it.
For a school that was on the ropes, Paul Quinn has gained a reprieve by discovering the multiple benefits of farming while also turning its attention outward to the community. One prominent need that the farm is already addressing is healthy living and eating, no small concern on today’s college campuses, especially one that is surrounded by a food desert. “Before their work on the farm, students wouldn’t eat carrots unless they were smothered in Ranch dressing,” noted Andrea. But by getting their hands in the dirt – a task that usually took two or three visits to the farm to get past the “yuck” declaration – students started eating carrots right out of the ground, dirt and all. “They actually taste,” said Elizabeth, pausing for a moment to find the right adjective, “carrot-tee.”
By engaging students enrolled in the school’s biology and social entrepreneurship courses, the farm gives scores of people in their late teens and early twenties a chance to get hands-on laboratory experience at the same time they get their hands in the dirt. Even the students who don’t care to venture into the world of bugs and compost get a taste of the farm’s output. Paul Quinn’s cafeteria now offers a monthly feature designed to showcase the farm’s harvest and introduce students to food that is healthy, tasty, and oh-so local. But Jasmine Wynn, a freshman legal study major, may have summed up the farm’s health benefits best. “I’m a city girl from Dallas, and for me the farm was something new. I liked being out there. I also started getting serious about my diet last year and decided that organic food is better for you. It’s just part of a healthier lifestyle, and I want to stick around for a long time.”
The lack of farming experience or a farm background has not been a deterrent to anyone’s participation, including Paul Quinn’s President Michael J. Sorrell. With public policy and law degrees from Duke University, his stellar resume indicates he has represented American Airlines and Morgan Stanley, served on numerous prestigious commissions including an assignment at the White House, and was selected in 2009 as one of the 10 Best Historically Black College and University presidents. Notably lacking from Dr. Sorrell’s career synopsis, however, are any agricultural credentials, and ironically, his business achievements include representing top-flight athletes like Utah Jazz All-Star Deron Williams. So why did he eliminate the football program and then have the audacity to convert the field to a farm?
A big part of the answer no doubt lies in his personal commitment to the concept of servant leadership, which, like the farm, he brought to Paul Quinn. With such simple but difficult to live by ideas like putting others before self, leaving the world a better place than you found it, and maintaining a spiritual faithfulness, Dr. Sorrell not only preaches what he practices (he personally teaches a freshman course in servant leadership), he practices what he preaches. And the farm is at the center of that practice.
Isaiah 58: 9-12 gets prominent mention on the College’s website which also touts the school’s Christian underpinnings. The scripture admonishes us (some would say “teaches us”) “to pour yourself out for the hungry…then shall your light rise in the darkness…and you shall be like a watered garden.” Holding aside the self-interest in doing good (and why not?), The Food for Good Farm has its heart and mind set on serving the hardscrabble community that surrounds it. Though a share of the harvest goes to the school’s cafeteria, 10 percent goes to a local food pantry, a sizeable share is also sold on a weekly basis to the community from the field’s former hot dog stand, and just to preserve some historical symmetry, the Dallas Cowboys buy a small share of the farm’s organic veggies, which, if sustained over time, will no doubt catapult “America’s Team” into a Super Bowl.
The school’s initial attempt to solve the community’s food access problem was to offer free land to any supermarket that wanted to build a store there. But there were no takers in a marketplace where nearly 40 percent of the residents lived in poverty. So like in days of old when the nearest general store was 100 miles away, and your only choice was to shoot or grow your dinner, Paul Quinn took to farming. The “adaptive re-use” of the football area has been impressive under Andrea’s and Elizabeth’s leadership. Not only are the hash stripes gone but so are the top four inches of sod and dirt that were replaced by dump truck loads of pure organic matter. Reflecting the program’s absolute commitment to organic farming, there was simply too much distrust of the chemical residues from years of maintaining a perfectly green gridiron. The goalposts remain as do the blocking sled, scoreboard and the entire set of bleachers running the length of both sides of the field. But the former press box is about to be turned into a chicken coop and Elizabeth retains some hope that the bleachers can be retrofitted as a greenhouse. Acres of adjoining and nearly vacant land are already being eyed for farm expansion, especially if a recently applied for federal grant comes through. On the day this reporter visited, a local apiarist was scouting out locations for nearly a dozen beehives. And according to Symphonie, the campus’s coolest guy, a very sharp dresser from Brooklyn, NY, wants to join the “bee program.”
None of this extraordinary progress has come cheaply. Elizabeth estimates that well over $100,000 in capital expenditures have been required to accomplish this conversion, and the on-going operating costs –Andrea is on the payroll half-time as is a variety of students who receive some compensation, especially during the summer season – are only marginally offset by farm sales. An upcoming April fundraiser featuring urban farming rock star Will Allen will hopefully swell the coffers sufficiently to enable the farm to buy its own tractor (it now pays for contract equipment services).
But the rapid development of the farm and the rising fortunes of Paul Quinn College have come with a price – small or large depending on your perspective. The Good Food Farm is the result of a fifty/fifty partnership between the college and PepsiCo’s Food for Good Initiative. The college makes it clear that this is an equal partnership and that PepsiCo has not placed any strings on their giving. While Elizabeth acknowledges some inherent contradictions – yes, Pepsi and other soda manufacturers have contributed more than their fair share of calories to America’s obesity crisis – she feels their support has been entirely above board. Other than cleaning up its tarnished image, one cannot detect either covert or overt sinister motives in PepsiCo’s support. Yet, with 11 teaspoons of sugar in each 12 ounce can of Pepsi-Cola and their ferocious attempt over the years to hook children with their iconic brand, one can’t help but confront the ethical contradictions: where does the greater good lie, and when does one begin to slide down the slippery slope? Though the Bible offers little in the way of guidance when dealing with the PR strategies of modern corporations (obesity, for instance, having not appeared on the world stage for another 2000 years), the college might choose to at least make the topic grist for future classroom discussions.
In the meantime, it’s hard to argue with the outcome of the Paul Quinn/PepsiCo partnership. Texas has one less football field and one more organic farm, clearly a net gain for humanity. Students from the captain of the basketball team to entering freshman are eating better, getting over their aversion to bugs, and getting their hands in the dirt (Symphonie noted that her nails look much healthier now that she regularly jams them into the soil). And the Highland Hills neighborhood is enjoying the health and aesthetic benefits of living adjacent to Dallas’s closest farm.
Under Dr. Sorrell’s able leadership Paul Quinn is rising from the ashes, or should we say compost pile. Elizabeth and Andrea are guiding the growth of what would be considered an ambitious venture at a major university let alone a college as small as Paul Quinn. And the Fighting Okra, well, they just might be on their way to a national championship.
“Since Dustin Hoffman heard that memorable ‘just one word,’ plastic has re-made American society. In a stroke of brilliance, Laurie Essig brings together plastic credit cards, bodies, and gender identities by telling the story of how economic insecurity has intersected with the celebrity culture and the neo-liberal ideology of choice. Essig's well-researched and original analysis deserves our serious attention.” —Juliet Schor, author of Plenitude: The New Economics of True Wealth
As the new year begins, many people's thoughts turn to "improving" their bodies, and, in our age of quick solutions, plastic surgery often is looked at as a shortcut to perfection. Over the last decade there has been a 465 percent increase in cosmetic work, and we now spend over $12 billion annually on procedures like liposuction, face-lifts, tummy tucks, and boob jobs. In American Plastic: Boob Jobs, Credit Cards, and Our Quest for Perfection, sociologist Laurie Essig argues that this transformation is the result of massive shifts in both our culture and our economy—a perfect storm of greed, desire, and technology.
Plastic is crucial to who we are as Americans, Essig observes. We not only pioneered plastic money but lead the world in our willingness to use it. It's estimated that 30 percent of plastic surgery patients earn less than $30,000 a year; another 41 percent earn less than $60,000. And since the average cost of cosmetic work is $8,000, a staggering 85 percent of patients assume debt to get work done. Using plastic surgery as a lens on better understanding our society, Essig shows how access to credit, medical advances, and the pressures from an image- and youth-obsessed culture have led to an unprecedented desire to "fix" ourselves.
This fall I had the privilege of releasing my second book Food Rebels, Guerrilla Gardeners, and Smart-Cookin' Mamas: Fighting Back in an Age of Industrial Agriculture. As it makes the rounds of book reviews, and I tour the interview and lecture circuit – casting myself as it were to the lions of the marketplace – I have found that the book's first responders are drawn to its main title and less so to the subtitle. This is as I expected. People naturally want to hear stories about doers, real-life action heroes, and pioneers who might lead us out of the wilderness of the industrial food system. They are eager to get their hands in the dirt and less patient with the intellectual gymnastics required to deconstruct the half-truths of Big Food and its kissing cousin, Big Agriculture. The philosophical framework, so to speak, that mountaintop above the din and the thrum of the real world where many writers, including this one, love to dwell, is too often by-passed by the harried reader earnestly searching for a shortcut to the answer.
So allow me to use this space to reacquaint you, diligent reader, with the Big Idea of Food Rebels and why, in my humble opinion, it matters. I opened the book with a few lines from from Fyodor Dostoevsky's parable The Grand Inquisitor: "Today, people are persuaded more than ever that they have perfect freedom, yet they have brought their freedom to us and laid it humbly at our feet…And we alone shall feed them…Oh, never, never can they feed themselves without us! In the end they will lay their freedom at our feet, and say to us, 'Make us your slaves, but feed us.'" I spare little subtlety in drawing a parallel between this iconic passage of Western literature and the industrial food system's quest to control the hearts and minds of us, the dependent food consumer. After all, we know, as the industrial food system loves to remind us, that we are staring down the twin barrels of too many people and too little food.
Interestingly, the same lead was used in a recent review of Food Rebels by "Food Safety News." After going on for nearly three pages with an accurate, blow-by-blow account of the book's main points, the reviewer concludes with "Although Winne delivers strong arguments for the alternative food system, his book too glibly disparages the benefits of the industrial food system—namely, an inexpensive food supply, a system that can meet the growing worldwide food demand…." So, in the spirit of Auld Lang Syne, let me offer a selective retrospective of the industrial food system's sins for 2010 'less them "be forgot, and never brought to mind."
In California cities like San Jose, voters this election passed ballot measures to weaken the retirement system for public workers. These are the same kind of measures that have brought workers into the streets of France for weeks in protest.
Beyond the ballot initiatives, the election season of 2010 was filled with rhetoric blaming public workers for the economic woes of cities and states. It's hard to understand, in an era of foreclosures by banks that pay their executives bonuses of millions of dollars, while getting bailouts from the Federal government, why public workers should be held responsible for the current economic crisis. Who contributes more to the welfare of our communities - a teacher or a hedge fund manager?
But perhaps the most important thing to remember is what these workers do. These photographs are meant to inspire some obvious questions. Can people do this work, if they're then cast adrift once they're too old? What would happen to all of us if they didn't do these jobs?
David Chura is the author ofI Don’t Wish Nobody to Have a Life Like Mine: Tales of Kids in Adult Lockup. He has worked with at-risk teenagers for the past 40 years. For 26 of those years, he taught English and creative writing in community based alternative schools and in a county penitentiary. His writings have appeared in the New York Times as well as other scholarly and literary journals.
At the beginning of my ten years teaching teenagers in a county lockup I was always surprised, and yes, disappointed, when one of my students got rearrested.
Jail’s a sobering place no matter how tough you want to think you are. The deprivation, brutality, and oppression gets your attention especially if you’re 15 years old. So once locked up, many of the kids I taught saw my jailhouse classroom as an opportunity to do something productive. Along with education, some got counseling to deal with their addiction and anger problems; others reconnected with family and church. When they were released, they talked about changing their lives for the better. They were sincere and determined, and I was hopeful that they would do just that.
Over time, though, my attitude changed. More and more I was surprised when a student didn’t return. Despite society’s puzzlement as to why jail is a revolving door for so many teens, the reasons became obvious to me: The kids I taught might have made significant changes while locked up, but the world they were sent back into—poor, violent, defined by racism—had not. I’ve seen teens walk out the prison gates alone, carrying nothing but a plastic bag with their clothes, a token for the bus, and the county’s other freebie—the wise words, “Don’t come back.” That’s all. No planning, or guidance, or support to make the mega-changes needed to turn their lives around, changes that when you’re a kid with no resources feel insurmountable.
One major stumbling block for any former inmate is jobs. Ex-offenders don’t get hired. Teenage ex-offenders get hired even less. When I asked guys, “What are you doing back here?”, they would talk about not being able to get jobs they knew they were qualified for because they had a record. It’s hard to “do the right thing” when the streets and their hustles—drugs, auto theft, guns, robbery—are the only employers eager to hire you back.
Shelina Zahra Janmohamed is the author of Love in a Headscarf. She is a leading commentator on British Islam and is author of the award-winning blog, Spirit21. Named one of the UK's hundred most influential Muslim women by the Times of London, Janmohamed lives in London. This post is from her weekly column at The National UAE.
Let's stop talking about politics and extremism. We need to go shopping.
Trade was arguably one of the things that once made the Muslim world great (and rich), and created fluid and mutually binding relationships with other great world powers.
Star products included spices from as far afield as India and Indonesia, Oman’s sweet fragrances of frankincense. And coffee, ah, dear wonderful coffee with its warm hug of caffeine first thing in the morning, also came from the Muslim world.
So, at a time when global relations are showing the odd sign of strain (anyone mentioned the mis-labelled "Ground Zero" mosque recently?), what antidote could be more fitting than the resurgence of Islamic branding and marketing as a 21st century phenomenon?
You all think I’ve lost the plot, don’t you? Some Muslims are going to be up in arms that I’m advocating a supposedly consumerist-capitalist-slave-making-spirituality-stifling paradigm. And Islamophobes are going to say that I’m trying to hide an Islamist take-over inside my recyclable plastic shopping bags.
Ogilvy & Mather, one of the world’s largest marketing and advertising agencies, has commissioned research to better understand the world’s 1.6 billion Muslim consumers. The segmentation of consumers was not just for shopping’s sake, but to get under the skin of what makes "real" Muslims tick, those 1.599999 (recurring) billion Muslims, not the handful of crazy ones who think the way to get your fifteen minutes of fame is to blow things up.
Maybe it’s the juxtaposition of the seeming frivolity of shopping versus the scary headlines of bombings that gives rise to this kind of angst. Or maybe it’s that people who stand to benefit most from upholding the “Clash of Civilizations” thesis don’t want us to see the things we have in common as human beings. These shared aspirations include trying to become better human beings, world peace, eradication of poverty, equality and justice for all, and an end to exploitation, violence and suffering. Oh yes, and we all need stuff, starting from the basics like food, clothing and construction materials.
So, given our shared human need for things which we need to buy, perhaps we can use trade and commerce, built on ethical, sustainable and non-exploitative principles, to understand a bit more about each other and to build relationships. Please note that I am not advocating a materialist, exploitative, disposable culture. I’m simply pointing out that all human beings need things to survive, and trade is a basic of human civilisation.
So what did Ogilvy & Mather’s research tell us about Muslim consumers? Importantly, instead of judging them on a single dimension of how "devout" they are, it looked at what role religion plays in their lives. Their findings identified two broad categories which they labelled "Traditionalist" and "Futurist" and in each one were a further three segments. "Traditionalists" have a desire for harmony and belonging, they are quietly proud of their faith and align with values of tolerance and compassion. "Futurists" see themselves as steadfast followers of Islam in a modern world. They are individualists who "choose" Islam. Their pride is intense, regardless of the extent to which they would be categorized as "devout."
The research insights are meaningful because the trick to successful commerce is the same as that needed for international relations and diplomacy: it is to understand the drivers and motivations of people and to give them due recognition.
So, when we talk about trade with Muslims, we might find ourselves positively addressing wider issues of international relations. In the world of shopping, I believe they call that a "two for the price of one" offer.
Congress is actively debating whether to retain President Bush's 2001 and 2003 tax cuts for the wealthy that are due to expire at the end of this year. President Obama supports extending tax cuts for households with incomes under $250,000, but ending the tax breaks for higher income households.
Here are five good reasons for Congress to let them go.
1. Borrowing to Give the Rich Tax Breaks is a Really Bad Idea. We've already borrowed $700 billion since 2001 to pay for these tax cuts. Maintaining them for another decade would cost an estimated $700 billion, plus interest on the national debt estimated at $126 billion. Does it really make sense to send interest payments to China and millionaire bond-holders in the U.S. -so that we can cut taxes for U.S. millionaires and billionaires?
2. There are 700 Billion Better Ways to Use the Money. Consider the superior ways to spend $700 billion. We could use a portion to reduce budget deficits. We could make long overdue investments in infrastructure such as bridges, roadways, railroads, water treatment facilities, retrofitting buildings -things that make our economy strong and competitive. We could direct funds to make the transition to the new economy that is less dependent on foreign oil. In the short-term, all these investments would create millions of jobs. In the long term, it would put the economy on better footing for the future. There are a billion better ways to use the money.
3. Restores Balance to Tax Code. Over the last half century, Congress has steadily reduced tax obligations for the very rich and global corporations. Between 1960 and 2004, the top 0.1 percent of U.S. taxpayers -the wealthiest one in one thousand -have seen the share of their income paid in total federal taxes drop from 60 to 33.6 percent. Restoring the tax rates to pre-2001 levels would be a very slight increase, yet begin the process of rebalancing the tax code.
4. It Won't Hurt the Economy. You've heard the blather about how taxing the rich is going to hurt the economy. But cutting the taxes for the wealthy are an ineffective way to help the economy. A recent analysis by the Congressional Budget Service ranked 11 strategies to spur the economy and create jobs. Cutting taxes for the rich was the worst ranked strategy. Here' the reality: Taxing the rich is different than taxing the middle class. According to Moody's, the rich save more of their tax cuts while working people and middle class spend it in the economy. Over the last decade, the top wealth holders have shifted trillions of dollars into speculative investments that have hurt the economy.
5. Reduces the Dangerous Concentration of Wealth and Power. We're living in a period of unprecedented economic inequality. A recent series by Tim Noah in the online journal Slate examined the "Growing Divergence" of wealth and income. Taxes is one of the ways we reduce these inequalities.
A final reason is that the U.S. public supports letting these tax cuts for the rich expire. A recent Gallup Poll reveals that 59 percent of the population support letting the tax cuts for the rich expire -while 37 percent support extending them. Polls rarely reveal support for any form of taxation -which indicates that a majority of Americans -including those who will pay the higher taxes - recognize the imprudence of extending them. Alan Greenspan, who supported the tax cuts in 2001, has now reversed his position and believes the time has come to raise taxes.
Or, for that matter, why does Best Buy have one in the Republic of Mauritius? And why does the supermarket chain Supervalu, which has exactly zero stores outside the U.S., maintain five subsidiaries in exotic locales like the Grand Cayman Islands?
Tax avoidance might be the answer. All three of these countries are known as tax havens, places where corporations and wealthy individuals can hide their income from the IRS. According to a U.S. Government Accountability Office report, 83 of the 100 largest U.S. corporations now have subsidiaries in offshore tax havens. Recent studies have estimated that these schemes enable big companies to dodge between $37 and $60 billion a year in taxes.
Small businesses don't have the option of hiding profits overseas, which puts them at a distinct competitive disadvantage. The U.S. now has, in effect, two tax systems: one for corporations and one for small businesses.
Beginning around 1980, the World Bank and the IMF began imposing a one-size-fits-all formula for development, called structural adjustment programs. These required borrowing countries to adopt a package of economic reforms, such as privatization, ending subsidies and price controls, trade liberalization, and reduced worker protections. After more than two decades, there is no strong evidence that this approach has achieved its stated goal of stimulating growth, while the toll on working people has been staggering. The IRCA commission report acknowledged the potential for harm by noting that "efforts should be made to ease transitional costs in human suffering."
The North American Free Trade Agreement, however, was not intended to relieve human suffering.