Weissman writes: "Keep your eye on the three shells. President Obama promises not to back down on his promise to raise personal income taxes on the rich."
President Barack Obama speaks at a campaign rally in Fayetteville, North Carolina 10/19/08. (photo: Jim Young/Reuters)
Is Obama Playing a Shell Game on Tax Reform?
12 December 12
This is the report Steve Weissman's analysis below is based on: The CEO Campaign to 'Fix' the Debt.
eep your eye on the three shells. President Obama promises not to back down on his promise to raise personal income taxes on the rich. Several leading CEOs, including Lloyd Blankfein of Goldman-Sachs, say they will happily pay higher income taxes if government cuts spending and introduces personal and corporate tax reform. And the big business-backed Campaign to Fix the Debt, whose CEOs met with Obama, are pushing a tax reform proposal that would exempt American corporations from paying any tax at all on their overseas income. Under which shell will we find the big money?
"The CEO Campaign to 'Fix' the Debt: A Trojan Horse for Massive Corporate Tax Breaks" gives the shell game away. Published by the Institute for Policy Studies (IPS), a left-leaning Washington think tank (whose founders I worked with politically in the 1960s), the report reveals just how much money the globe-trotting corporations stand to gain - and how much lost revenue ordinary taxpayers and small businesses will have to make up.
As the IPS report explains, the CEOs who back Fix the Debt personally saved $41 million last year from the Bush tax cuts. Consider that a rough estimate of what it might cost them if Obama fulfills his promise and does away with the tax cuts for those making over $250,000.
But that's small beer for the CEOs. "The 63 Fix the Debt companies that are publicly held stand to gain as much as $134 billion in windfalls" if Congress exempts them from paying taxes on overseas income by changing to what is called a territorial tax system. That is, companies would be liable to pay taxes only on income earned within the territory of the United States.
Corporate lobbies began pushing for this multi-billion dollar "reform" long before debts and deficits became their rallying cry. And, for good reason from their point of view.
Under our present system, they owe Uncle Sam the difference between the taxes they pay overseas and what they would have to pay under US tax rates. But they pay only if and when they bring the money back home. The result is that America corporations are now holding trillions of dollars overseas, which the proposed "reform" would allow them to bring back to the United States tax free. This is the immediate windfall they would receive if they have their way.
The CEOs claim they would then invest the money to create jobs in America. But that is pie in the sky. American multi-nationals already sit on huge piles of cash in the US and most are not using them to create jobs.
Their jobs argument also fell flat after 2004, when corporate lobbyists convinced Congress to pass the so-called American Jobs Creation Act. This allowed the multi-nationals to bring their overseas money back at a bargain basement tax rate of 5.25%. According to the IPS report, "Instead of creating jobs, the biggest beneficiaries downsized. Pfizer, for example, cut more than 10,000 US jobs in the six years after it repatriated $40 billion."
Tax reform is needed, to be sure. But not the kind "Fix the Debt" is pushing. One big target should be the accounting rules that allow American multi-nationals to write off their costs against American taxes while transferring their profits to shell corporations in low-rate tax havens. Stopping that would go a long way to bringing jobs home.
A veteran of the Berkeley Free Speech Movement and Ramparts magazine, Steve Weissman lives in France, where he is currently working on a book, "Big Money: How Global Banks, Corporations, and Speculators Rule and How To Break Their Hold."
Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.
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2) Cap the Mortgage deduction at some realistic level;
3) Cap all other deductions at some other realistic level;
4) Tax corporations like individuals (especially if they get free speech) or simply allow them to pass through income to individuals if they want to complain about "double taxation" . . .(oh, is that already available??)
5) Don't subsidize risky investments, ie capital gains, as more worthy than plain old hard salaried work by a different tax rate . .
Not too bad with some modifications.
1) On the Corporate side yes no limit, individuals are limited in what they get when they retire so leave that cap.
2) Not unless you cap what Landlords can deduct too!
Folks that rent really get the same deduction since their landlord deducts mortgage interest too!
3) No problem :)
4) Eliminate Corporate taxes completely and only tax Dividends at a HIGHER rate ( paid at the time the dividend is paid and not on the individual tax return).
That eliminates Corporations trying to hide money or use loopholes.
5) Don't agree, risk capital creates jobs, AND you capped deductions in #3 already.
Folks that rent really get the same deduction since their landlord deducts mortgage interest too!
3) No problem :)
4) Eliminate Corporate taxes completely and only tax Dividends at a HIGHER rate ( paid at the time the dividend is paid and not on the individual tax return).
That eliminates Corporations trying to hide money or use loopholes.
5) Don't agree, risk capital creates jobs, AND you capped deductions in #3 already.
No, Edge, renters do not deduct mortgage interest. Where did you get that loopy idea?
Corporations, with no physical body cannot produce goods and services. They cannot create real wealth. Only humans can. Tax the corporations big time, tax dividend and interest big time. This is all unearned money. No goods and services are ever produced by this activity. Give the humans, who actually work for a living, the tax breaks, not the blood suckers.
No, Edge, renters do not deduct mortgage interest. Where did you get that loopy idea?
SNIP.
Let me type slower so your loopy brain can understand it!
If you RENT, then your landlord DEDUCTS his expenses, and MORTGAGE interest is one of those.
STILL WITH ME?
If your landlord could nor deduct his interest then he WOULD CHARGE MORE to compensate!
STILL WITH ME?
In BOTH cases the OWNER of the property deducts the mortgage interest and the person that lives there gets a benefit from that deduction!
In one case it is the same person, owner occupied, in the other case the owner takes the deduction and the person living there pays a lower rent due to the deduction!
I hope I typed slow enough for you :)
STILL NOT CONVINCED, ask any landlord if he will raise rents if he loses the mortgage deduction!!!
Rent is what the landlord and tenant will accept from each other.
If the landlord can't deduct his mortgage interest he will lose that money or raise the rent on the tenant. PERIOD!
The landlord does NOT look at each deduction in a vacuum as you make it sound!
It is his net income/loss that he looks at and buys/sells the property raises/lowers the rent.
If he loses the interest deduction the that effectively lowers the value of the rental property.
The same is true for the home owner.
What he/she can afford is a function of their net costs and income.
2) Capital gains is these guy's jobs...are you saying that they won't do their jobs if they have to pay income tax? Business used to be able to go to a bank and finance projects but now they have to go to private financiers for the most part. Glass/Steagal reinactment would get them back in the business of supporting sustainable business and not bubbles. It takes care of any job loss.
Small business uses banks for most of their loans, big business has almost always used the markets to raise money.
When rates are high they sell stock to raise money, when rates are low they sell bonds.
Sometimes they sell bonds and buyback stock too.
We made a big mistake by voting and having hope that this could improve things for the working people. Now there is only one method for us to try and stop the cuts. We must get out on the streets in huge numbers to scare the creeps in Congress and let them know they must heed what we the people say. We want the rich to pay taxes. We want these awful wars to end. We want a major project to put people to work repairing our failing infrastructure. Take a look at New Orleans and New York---your town in next!
And we must face the truth about the effect of burning all that oil. We must change our fuelish ways!
I have been waiting for these elitists to stop boring us and get into doing something..stil l waiting. Few have stood up to the Challenge, fewer will
Agora Financial Dec. 12, 2012
On Social Security, the effect of adding Depression as a reason for disability
Social Security disability. The number of Americans collecting these benefits has more than doubled... from 4.9 million in 2009 to 10.8 million as of last August. Some of these recipients began collecting when their extended unemployment ran out. Tab: $190 billion in fiscal year 2012.
If we keep adding people the system WILL go broke.
The President's tax cut meets these tests:
It's simple. It lowers taxes on the first dollars you earn, not the next million.
It's necessary. Every dime of taxes you pay on the first dollars you earn, delays the time you can stop scraping by and start getting ahead.
It works. At last, a tax savings where it counts - a real chance for you to accumulate wealth, like I've done, for home, health, education, and retirement.
Not a handout. It is a ladder of opportunity, climbed through personal responsibility by you and others who want to move up or find a way out.
It's just. A bigger tax bite on the top part of high incomes is payback to the nation's citizens, volunteers, neighbors, and families who, partners and shareholders, together secure a vibrant, stable USA where fortunes can be made and preserved.
Our taxes are thew lowest since the Truman administration. Now would everyone quit bleating about high taxes and realize the problem is low taxes on the rich, and instead of raising them 3% they should be doubled back to the rate when Reagan came into office and planred the seeds of destruction by lowering that rate which he fixed by raising the rate on the middle class 12 times.
Reagan was a stumblebum, which despite being better than Bush, would never be chosen by today's Republicans because he wasn't a hater. But because the people aren't aware of how badly he damaged the country, is still popular, so the Republicans still pay him lip service.
I have been vainly pushing the idea for years that there should be a 3 million dollar fine for every job outsourced, 1 to the federal government, 1 to the person whose job was destroyed by the greedy scumbags, and a half million each to the state and locality that had their jobs shipped out.
It is Obama running that game!
Raising RATES is not the problem and Obama knows it!!!
You guys hate Romney, so let's raise the tax to 100% what would that do to his income tax return ???
ANSWER = NOTHING!!!
He does not earn wages so his tax rate is ZERO.
You need to forget RATES and work on total taxes.
Obama is just protecting his rich buddies like Warren Buffet. His taxes will go up very little too since the bulk of his money does not come from wages.
Now the guy that owns the corner store he WILL pay more under Obama's plan because his money does come from wages!
Conservatives would gladly pay 2% more in income taxes (still leaving capital gains off the table), just to ensure more of the poor will suffer as a result.
Big Business holds profits off shore until they strike a deal. Last time (ca. 2005 or thereabouts) they got to repatriate it to take advantage of domestic investment opportunities at a rate of 5.25%. Not the 33%+ for income tax, not 15% for capital gains tax.The phrase used for such interests, last time, was "Benedict Arnold billionaires."
They justify it as part of the disingenuous "job creators" patter. They don't actuall do it, like a filibuster, they just have to say they will do it. ell, the Bush tax cuts were supposed to have that effect. The last wave of repatriating offshore profts was supposed to have that effect. So where the **ck are the jobs?
Globalization was not inevitable. It was a search for ever more and larger markets and lower labor costs to maximize profits and to hell with local impact. Vulture capitalists call the impacts "construction destruction." Constructive for whom?
Makes you want to slap 'em upside the head with an iron skillet doesn't it.
It seems to me Americans are getting angrier and angrier and one day the fit is going to hit the fan.
Getting plutocrats to listen is like a blind man talking to a room of deaf people.
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