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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)
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?

By Steve Weissman, Reader Supported News

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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+55 # Tje_Chiwara 2012-12-12 13:03
1) lift the $110K earnings cap on Medicare and SS tax;
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 . .
 
 
-15 # edge 2012-12-12 14:28
Quoting Tje_Chiwara:
1) lift the $110K earnings cap on Medicare and SS tax;
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.
 
 
+18 # Doll 2012-12-12 17:17
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.

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.
 
 
-6 # edge 2012-12-13 08:05
Quoting Doll:
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!
SNIP


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!!!
 
 
+4 # bingers 2012-12-13 11:14
You cannot assume landlords pass along the deductions to their renters. I'd say that landlord is in a tiny minority.
 
 
-4 # edge 2012-12-13 15:55
Quoting bingers:
You cannot assume landlords pass along the deductions to their renters. I'd say that landlord is in a tiny minority.


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.
 
 
+6 # RLF 2012-12-13 06:35
1) If you give the rich a break because they are limited on what they can collect then they don't collect welfare at all so they shouldn't have to pay at all. Same with numerous programs. This is not a criteria to consider...it was a scam when it was then and it is now.
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.
 
 
-6 # edge 2012-12-13 08:17
Quoting RLF:
1) If you give the rich a break because they are limited on what they can collect then they don't collect welfare at all so they shouldn't have to pay at all. Same with numerous programs. This is not a criteria to consider...it was a scam when it was then and it is now.
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.
 
 
+34 # MJnevetS 2012-12-12 13:04
The ability to 'repatriate' money, which is currently overseas, tax free, is at the top of every corporate 'wish list'. What happens with Obama's 'fiscal cliff' negotiations will tell interested observers and skeptical supporters (such as myself), a lot about the real Obama. Whether his second term will be in pursuit of his promised progressive goals or whether he is just another corporate shill, who was able to blind the electorate by the color of his skin. While the latter, if it were true, would mean our last election was a Sophie's Choice (Slow Death via Republican corporate shill or slightly slower death via Democratic corporate shill)
 
 
+4 # WestWinds 2012-12-12 14:15
Obama's "fiscal cliff" is really Obama's fiscal bluff.
 
 
+20 # wantrealdemocracy 2012-12-12 15:31
This is not Obama's fiscal bluff---it is the effect of the two corporately funded political parties serving their paymasters. It is all a show. Neither the Dims or the Repucks give a damn about us. The tax increase that will be labeled as Oboma taxing the rich is just chump change for those bastards. So they may pay 3% more---big cookie!! Does that get them to the rate that wage earners pay? In exchange for this the austerity will hit the working people with great pain and suffering---and we are the guys who PAY TAXES---the guys that don't pay taxes get 'bailed out'. I'd like to set bail for them till they go to court for their crimes.

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!
 
 
+24 # lorenbliss 2012-12-12 13:25
I voted for Obama assuming that after the election he would (again) shape-shift from Obama the Orator into Barack the Betrayer. Now -- obviously -- he's doing just that. Why then did I vote for the Betrayer rather than vote my progressive values? Though there's no doubt the Betrayer's long-term goal -- like that of all Democrats -- is to genocidally savage the socioeconomic safety net, the Romney/Ryan alternative was infinitely worse: immediate termination of Medicare and food stamps, radical reductions to Social Security that would have been immediately murderous. In other words, I (like every senior I know) voted with a de facto gun to my head: the hideous truth that reveals USian "democracy" as the biggest of Big Lies.
 
 
+3 # WestWinds 2012-12-12 14:25
Yes, and after this toxic cocktail of Bill Clinton (DLC-er;Bush policies), George W. (Bush policies), Obama (DLC-er;Bush policies), they want to now sell us the chaser: Hillary Clinton (DLC-er; War hawk and MORE Bush policies.)The horror of it all is that there are Democrats out there who actually think Hillary Clinton will do anything different than savage the socioeconomic safety net and drive us deeper into slavery. When does the Left stop being SOOOOOOO STUPID!!!??? I was a life-long Democrat but I finally had to crack my denial and leave. I am now Occupying the Green Party and I love it; no corporate connections and all of the FDR policies found in the New Deal. And, no, I took the plunge when some guy told me to "vote your conscience,"; I did and I didn't vote for Obama. Today, I'm not suffering the pangs of having believed the wife-beater in the White House, and I can respect myself in the morning.
 
 
+5 # KittatinyHawk 2012-12-12 19:04
Glad for you too bad Greens cannot get out of boredom enough to do something
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
 
 
+14 # Vardoz 2012-12-12 19:10
We are all victims of the corporate agenda to the race to the bottom. Corporations make more if we get less. Obama shed tears because he was so moved by the devotion of those who helped him to win. I hope this will translate into something better for the 99%. But nothing good will happen if we don't get out there and like they are in Michigan. Corporations, wall St the banks and the military are waging an economic war against us so if we bend over and take it what di we expect?
 
 
+23 # wwway 2012-12-12 13:36
I kdon't know about readers but we need to lift the income cap on deductions for SS. It's frustrating to know that our SS for generations but they just won't do it.
 
 
+5 # Toribeth 2012-12-12 14:00
We who voted for Obama didn't have a choice. Now we have to wait and hope for the best. Obama is Pres. for four more years. What does he have to risk or worry about?
 
 
+3 # KittatinyHawk 2012-12-12 19:05
If everyone on RSN actually did as much out in the real world as they do in cyber space we wouldn't need Politicians..bu t hey go back to sleep it is all you are good for
 
 
+1 # RLF 2012-12-13 06:43
One effect of falling wages is that we don't have money to buy the time to protest, etc. Not until an explosion and we can't work (like Syria)...one reason we are living in dangerous times.
 
 
-15 # MidwestTom 2012-12-12 14:12
When we talk about Social Security I wonder how many receiving benefits have paid little or noting into the system. In 2009 Congress included in the definition of disability depression. At that time we had about 3 million receiving disability benefits. On my last two visits to the local SS c office, out of about 30 people there were two with gray hair. Last week I cam across this from a financial site:

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.
 
 
+17 # Regina 2012-12-12 17:02
Tom: I gather that you never heard of hair dye, even for men. And what makes you think that the 30 persons you saw in the SS office were all there for depression diagnoses? Also, how can you jump to a conclusion based on 30 persons out of a regional population of millions?
 
 
+3 # RLF 2012-12-13 06:45
There is a real problem...at least in NY where the railroads were caught giving seminars on how to collect disability. Fraud is bad because it gives the arsehole repubs an excuse.
 
 
+5 # KittatinyHawk 2012-12-12 19:08
Wow can you imagine beong gleeful that your job has gone to China, wife left and no unemployment, you have no home, no transportation live in depressed area Depressed no we have people like you helping those in need
 
 
+18 # hpaa46 2012-12-12 14:16
From a CEO: It's not me. It's you... and the Nation. While my share of wealth increased over the last 30 years, most of you gained far less. Now, you are more educated and experienced, but still failing to keep pace with the growing economy that I'm enjoying. Half of you make way less than $50,000 but are way more likely to pay some tax on that than I am to pay anything on my first $50,000. The Nation is crawling, when it should be sprinting, toward a tax system that is adequate to rein in deficits while meeting vital public needs; sustainable, despite economic cycles and changing work force realities; and, above all, fair.
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.
 
 
+2 # RLF 2012-12-13 06:49
Low wages and high tax on the middle has created a school environment where no one in their right mind, besides rich kids, will study art or music. got to keep all the fun jobs for the rich!
 
 
+7 # bingers 2012-12-13 11:23
Quoting RLF:
Low wages and high tax on the middle has created a school environment where no one in their right mind, besides rich kids, will study art or music. got to keep all the fun jobs for the rich!


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.
 
 
+10 # MidwestTom 2012-12-12 14:17
I do not know how the law is written, but if one pays the top SS tax, one gets the maximum benefit. Is it possible that making people pay SS on $1.0 million, actually cut the benefits for those making $50,000? If that is not the case, we need to SS on every dime earned, with no top. Thus change would effect the really big incomes.
 
 
+21 # tadn54 2012-12-12 14:34
How 'bout we have corporations who shift jobs overseas for forfeit their last years' entire income when they do this.
 
 
+6 # bingers 2012-12-13 11:25
Quoting tadn54:
How 'bout we have corporations who shift jobs overseas for forfeit their last years' entire income when they do this.


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.
 
 
+16 # Thirdeye 2012-12-12 15:17
In a REAL shell game, the "pea" isn't underneath any of the shells. Watch the 1% find loopholes and shelters on whatever the outcome of this "fiscal cliff" B.S.
 
 
-4 # edge 2012-12-13 08:28
Quoting Thirdeye:
In a REAL shell game, the "pea" isn't underneath any of the shells. Watch the 1% find loopholes and shelters on whatever the outcome of this "fiscal cliff" B.S.


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!
 
 
+18 # Billy Bob 2012-12-12 15:55
I think the real shell game going on is all the tough talk about "standing firm" on raising taxes on the rich (by a tiny amount), while everyone in the MSM says the President MUST give in on "entitlements". Translation: the rich pay a tiny percentage more on income taxes, still don't pay more on anything else, and the rest of us suffer disproportionat ely due to cuts in Medicare, at the least.

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.
 
 
+5 # ghostperson 2012-12-13 10:15
The name for use of tax loop holes to fund offshoring at our expense in terms of jobs and revenue is called tax avoidance. Some refer to it as tax avoision.

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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