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FOCUS | Happy Tax Day, and Why the Top 1% Pay a Much Lower Tax Rate Than You Print
Tuesday, 15 April 2014 12:49

Reich writes: "Many millionaires pay a lower federal tax rate than many middle-class Americans. Some don't pay any federal taxes at all."

Economist, professor, author and political commentator Robert Reich. (photo: Richard Morgenstein)
Economist, professor, author and political commentator Robert Reich. (photo: Richard Morgenstein)


Happy Tax Day, and Why the Top 1% Pay a Much Lower Tax Rate Than You

By Robert Reich, Robert Reich's Blog

15 April 14

 

http://www.youtube.com/watch?v=NdV_CfDRjDc

 

t’s tax time again, April 15, when our minds turn toward paying the taxes we owe or possibly getting a tax refund. But what we don’t think about enough is whether our tax system is fair. The richest 1 percent of Americans are now getting the largest percent of total national income in almost a century. So you might think they’d pay a much higher tax rate than everyone else.

But you’d be wrong. Many millionaires pay a lower federal tax rate than many middle-class Americans.

Some don’t pay any federal taxes at all. That’s because they‘re allowed to deduct from their taxable income such things as large interest payments on mortgages for huge homes, also the costs of business entertainment and conferences (aka vacations at golf resorts), and gold plated health care plans.

Some also take advantage of tax loopholes that let them park some of their earnings in offshore tax havens like the Bahamas or the Netherlands Antilles.

And other loopholes that allow them to treat some income as capital gains – subject to a much lower tax rate than ordinary income. If you happen to be a hedge-fund or private-equity manager, there’s a capital gains loophole designed especially for you.

Consider the Social Security payroll tax and the situation is even more lopsided. That tax applies to every dollar of income up to a cap — which this year is $117,000. Anything earned above the cap is not subject to Social Security taxes at all – meaning anyone with a high income pays a much smaller percentage of it in Social Security taxes than most people do.

Put these all together and you see why Warren Buffet, the second richest person in America, pays a lower tax rate than his secretary, as he readily admits.

State and local taxes are even more regressive. The poorest fifth of Americans pay an average state and local tax rate of over 11 percent, while the richest fifth pay only 5.6 percent. This isn’t small change. State and local taxes account for about 40 percent of all government revenues.

Believe it or not, Republicans want to make all this worse by cutting taxes on the wealthy even more. Paul Ryan’s new budget doesn’t just slice Medicare, education, and food stamps. It also lowers the top federal tax rate to 25 percent.

When the rich are let off the hook in all these ways, the rest of America has to pay more in taxes to make up the difference – or have services cut because government doesn’t have the funds.

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FOCUS | Perception and Reality and the Death of Journalism Print
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=11104"><span class="small">Charles Pierce, Esquire</span></a>   
Tuesday, 15 April 2014 10:36

Pierce writes: "Of all the sins against the craft of journalism, the one I find the most mortal is the acceptance by journalists as axiomatic the notion that 'Perception is reality.'"

The Washington Post's Chris Cillizza. (photo: The Fix)
The Washington Post's Chris Cillizza. (photo: The Fix)


Perception and Reality and the Death of Journalism

By Charles Pierce, Esquire

15 April 14

 

f all the sins against the craft of journalism, the one I find the most mortal is the acceptance by journalists as axiomatic the notion that "Perception is reality." This is a fine thing for ad men, and for consultants, and for the other witches and warlocks that make up the tangle of fauna infesting our political system. It is death to actual journalism. Perception is perception and reality is reality and, if they don't match up, then it is the job of journalism not to accept the perception as the reality, but to hammer home the reality until the perception conforms to this. If you want to see someone who has tumbled all the way down the rabbit hole on this issue, check out the quotes collected here at Salon from The Washington Post's Chris Cillizza.

After it was pointed out to Cillizza that his piece got a number of things wrong (the CBO said Obamacare would reduce workforce participation by the equivalent of 2 million workers, not that it would cost 2 million jobs) he nonetheless stuck to his original analysis. "The CBO report means political trouble for Democrats this fall," Cillizza wrote the following day, arguing that the guts of the matter are secondary to how people perceive the law. "My job is to assess not the rightness of each argument but to deal in the real world of campaign politics in which perception often (if not always) trumps reality. I deal in the world as voters believe it is, not as I (or anyone else) thinks it should be. And, I'm far from the only one."

So it is the journalist's job to accept that which sells, no matter how dishonest it is, simply because it is sold well? Truth, as someone wrote in a book once, is defined as that which enough people believe? Dear Jesus, what a mess. Note to my old boss Marty Baron: congratulations on yet another gutsy Pulitzer on yet another risky story. (In his first year at The Boston Globe, Baron went after the Catholic Church, and won. This past year, his first at the Post, he went after the NSA, and won. Say what you will about him, the man does not aim small.) Now, please take young Mr. Cillizza in hand before he hurts himself badly.

As a matter of fact, the Affordable Care Act is a case study in the damage that adopting this axiom can do. There was yet another Congressional Budget Office report released yesterday that was yet again chock-full of yet more good news about the Act's implementation. The Affordable Care Act is making health-care more, well, affordable.

The most expensive provisions of Obamacare will cost taxpayers about $100 billion less than expected, the Congressional Budget Office said Monday CBO also said it doesn't expect big premium increases next year for insurance plans sold through the health care law's exchanges. In its latest analysis, CBO said the law's coverage provisions-a narrow part of the law that includes only certain policies-will cost the government $36 billion this year, which is $5 billion less than CBO's previous estimate. Over the next decade, the provisions will cost about $1.4 trillion-roughly $104 billion less than CBO last estimated. The analysis covers only a part of the Affordable Care Act. The costs outlined in Monday's report, including the Medicaid expansion and subsidies to private insurance, are offset by other provisions that raise taxes or cut spending. On balance, CBO says, the law will reduce the federal deficit.

(Eric Boehlert argues that the ACA may serve in this year's midterms the way impeachment did in the 1998 midterms -- as a campaign device that looked unstoppable a year out, but that bounced back and injured severely the people wielding it. I'm less sanguine than that, but I do think the Republicans should be getting a little nervous and looking to Plan B, especially as regards the Senate.)

This puts the perception-is-reality people in something of a bind. Nobody can deny that the Republicans have done a fine job spending millions of dollars on meretricious advertising to scare people into hating a law that those same people simultaneously love piecemeal. Nobody can deny that the Republicans have done a fine job spending millions of dollars on meretricious politics in order to define the entire ACA by its shoddy launch -- which was, I keep pointing out, almost nine months ago. Nobody can deny that they are staking their entire midterm election strategy on saddling the Democrats with a law that is working, relying on the perception that their meretricious advertising and meretricious politicking have created to convince people is not. Well done, consultants and ad people. Have another round on me.

However, it is not the primary job of journalism to point out how effective the sales job has been. The primary job of journalism is to point out, again and again, that the Act is largely working the way it is supposed to work, and to point this out over and over until the perception yields to the reality in the public mind. This is what makes the job particularly thankless. Nobody wants to be told that they're wrong, over and over again. That is not the way to be popular. That will crimp your social schedule. But nobody ever should get into this racket to be popular anyway. That is another modern heresy that needs desperately to be stamped out.


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The Outrageous Trial of Cecily McMillan Print
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=28803"><span class="small">Michelle Goldberg, The Nation</span></a>   
Tuesday, 15 April 2014 08:51

Goldberg writes: "In a just world, she would be getting restitution from the City. Instead, in a grotesque act of prosecutorial overreach, she's currently on trial for assault and facing up to seven years in prison."

Occupy Wall Street protesters Eric Linkser, left, and Cecily McMillan, right, take turns shouting information to protesters on November 15, 2011. (photo: Bebeto Matthews/AP)
Occupy Wall Street protesters Eric Linkser, left, and Cecily McMillan, right, take turns shouting information to protesters on November 15, 2011. (photo: Bebeto Matthews/AP)


The Outrageous Trial of Cecily McMillan

By Michelle Goldberg, The Nation

15 April 14

 

wo years ago, a young activist named Cecily McMillan attended a protest at Zuccotti Park marking the six-month anniversary of Occupy Wall Street. When police moved in to clear the demonstrators, a cop roughly grabbed her breast—photos show an ugly bruise—and she ended up being injured so badly that she had a seizure and ended up in the hospital. In a just world, she would be getting restitution from the City. Instead, in a grotesque act of prosecutorial overreach, she’s currently on trial for assault and facing up to seven years in prison.

According to prosecutors, McMillan, now 25, intentionally attacked her arresting officer, Grantley Bovel, by elbowing him in the face, and was then hurt when he tried to subdue her. She says that she instinctively struck out when she felt his hand on her breast, not knowing that he was a cop, and was then further assaulted.

Her story is more convincing for a number of reasons. McMillan, a veteran of the anti–Scott Walker protests in Wisconsin, was a dedicated pacifist; in Dissent, her masters thesis adviser Maurice Isserman writes about the “many and long discussions Cecily and I have had about nonviolence.” Her injuries, which you can see in this Democracy Now! piece, are indisputable, particularly the hand-shaped bruise on her right breast.

Meanwhile, The Guardian, which has covered McMillan’s case closely, reports that Bovel has twice been investigated by Internal Affairs, including for one incident in which he and his partner were alleged to have run down a 17-year-old on a dirt bike. He received a “command discipline” for failing to radio that they were in pursuit. In another case, he was filmed kicking a suspect on the floor of a Bronx bodega. (Unfortunately, the judge in McMillan’s case has ruled against turning Bovel’s internal disciplinary file over to the defense.) Austin Guest, a protester who was arrested the same day as McMillan, is currently suing him, claiming that Bovel purposefully bashed his head into the seats of a police bus as he was dragged down the aisle.

In her opening argument last week, assistant district attorney Erin Choi tried to use McMillan’s outcry during the arrest against her. Choi quoted McMillan asking onlookers, “Are you filming this? Are you filming this?” Choi’s implication was that McMillan didn’t want her premeditated attack on tape. But anyone who has ever covered a protest knows that this is what demonstrators say when they feel they’re being mistreated—it’s a call for documentation, not for turning the cameras off.

Now, with the trial entering its second week, McMillan and her supporters are once again asking for people to witness an unfolding injustice. “It is important that the jury see that Cecily is not some isolated kook, but has a community behind her,” writes Isserman, noting that the trial runs daily at the New York Criminal Court at 100 Centre Street. “I urge anyone concerned with Cecily’s case, and the broader issues it raises about civil liberties and police violence, to attend for a day, or even just for an hour or two.”


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Three Ways That Nevada Rancher and His Right-Wing Militia Supporters Could Wind Up Behind Bars Print
Tuesday, 15 April 2014 08:39

Millhiser writes: "Nevada rancher Cliven Bundy speaks like a man from another century. In an interview with conservative radio host Dana Loesch, Bundy claims that 'this is a sovereign state of Nevada.' Though he swears that he will 'abide by all of Nevada state laws,' he adds that 'I don't recognize [the] United States Government as even existing.'"

Cliven Bundy (right with cowboy hat) won round 1, but it isn't over yet. (photo: Cascadia Wildlands)
Cliven Bundy (right with cowboy hat) won round 1, but it isn't over yet. (photo: Cascadia Wildlands)


Three Ways That Nevada Rancher and His Right-Wing Militia Supporters Could Wind Up Behind Bars

By Ian Millhiser, ThinkProgress

15 April 14

 

evada rancher Cliven Bundy speaks like a man from another century. In an interview with conservative radio host Dana Loesch, Bundy claims that “this is a sovereign state of Nevada.” Though he swears that he will “abide by all of Nevada state laws,” he adds that “I don’t recognize [the] United States Government as even existing.”

Last week, that idiosyncratic belief nearly triggered a violent conflict with federal officials. For two decades, those officials have tried and failed to keep Bundy from illegally grazing his cattle on federal land. They’ve obtained three court orders — one of them as long ago as 1998 — requiring Bundy to remove his cattle from federal land. The more recent orders, both from 2013, gave Bundy 45 days to comply or else “the United States is entitled to seize and remove to impound any of Bundy’s cattle that remain in trespass.” Bundy did not comply, and government-hired wranglers began rounding up Bundy’s livestock last Saturday.

Egged on by media figures like Fox News’ Sean Hannity and Tea Party groups like the Koch-funded Americans for Prosperity, Bundy quickly became a conservative celebrity — including among right-wing fringe groups. By Wednesday, right-wing militia members began to arrive in Nevada to “provide armed response” to federal officials seeking to enforce the court order.

As the potential for violence escalated, the feds decided to back down. This Saturday, the Bureau of Land Management stopped rounding up Bundy’s cattle and returned hundreds of animals they had already rounded up to the open range. “Due to escalating tensions,” the BLM explained in a statement, “the cattle have been released from the enclosures in order to avoid violence and help restore order.”

Given Bundy’s rather unusual understanding of the law (at one point, he demanded that the local sheriff disarm all National Park Service employees and bring their firearms to him), the presence of his armed supporters, and the willingness of major conservative outlets to serve as his public relations agents, BLM’s decision to avoid a violent conflict is understandable. Nevertheless, there is an obvious danger to allowing Bundy to get away with two decades of illegal action merely because he was able to muster armed supporters to his cause. If Bundy escapes from this incident without consequence, that sends a pretty clear message that federal law is optional so long as you have enough people with guns backing you up.

Here are three ways that the federal government might ensure that Bundy and at least some of his armed supporters are brought to justice:

1) Contempt of Court:

The normal sanction when a person subject to a court order refuses to comply with it is contempt of court. Contempt, according to a manual provided to federal prosecutors, is “an act of disobedience or disrespect towards the judicial branch of the government, or an interference with its orderly process.” By law, federal courts may “punish by fine or imprisonment, or both” when someone engages in “[d]isobedience or resistance to its lawful writ, process, order, rule, decree, or command.”

As a general rule, courts must “exercise the least possible power to obtain the desired result,” meaning that a federal judge should not issue a sweeping contempt sanction when lesser sanction will suffice to ensure that the person subject to contempt proceedings complies with the court’s order. Nevertheless, the fact that Bundy was willing to defy a court order for 20 years — and that he could rally supporters willing to put up armed resistance to federal law enforcement to his cause — suggests that he would simply ignore any fines that a court imposed on him. A judge may decide that the best way to convince Bundy that the federal government exists is to jail him until he agrees to comply with the court’s order.

2) Criminal Charges for Threats To Federal Officers

Federal law provides that anyone who “threatens to assault, kidnap, or murder, a United States official, a United States judge [or] a Federal law enforcement officer . . . with intent to impede, intimidate, or interfere with such official, judge, or law enforcement officer while engaged in the performance of official duties, or with intent to retaliate against such official, judge, or law enforcement officer on account of the performance of official duties” may be fined or imprisoned for up to 10 years (although a threat to assault carries a maximum sentence of only 6 years). So, if Bundy or his supporters threatened federal officials or law enforcement officers who were enforcing the court order against him, they could have committed a serious crime.

There is one big caveat to this approach, however. Although the First Amendment permits some laws banning threatening language, under the “True Threat” Doctrine, these bans are only permitted when they target “those statements where the speaker means to communicate a serious expression of an intent to commit an act of unlawful violence to a particular individual or group of individuals.” Moreover, at least one older Supreme Court case suggests that threatening language is not a “true threat” when it is made using conditional language. Thus, for example, if Bundy said something like “if you Feds don’t get off this land in two days, I will kill every last one of you,” that may not constitute a true threat because he placed a condition on what the federal officials would have to do before he killed them.

Among legal scholars, the current state of the True Threat Doctrine is widely viewed as incoherent, so there is some uncertainty about which kinds of threatening statements could form the basis of a prosecution against Bundy and his supporters.

3) Criminal Charges Against Militia Members Who Brought Guns To Nevada

Another federal law provides that “[w]hoever transports or manufactures for transportation in commerce any firearm, or explosive or incendiary device, knowing or having reason to know or intending that the same will be used unlawfully in furtherance of a civil disorder” may be fined or imprisoned for up to five years. This statute could potentially form the basis for criminal charges against some of the militia members who traveled to Nevada with their guns in order to support Bundy. In order to convict someone charged under this law, federal prosecutors would need to prove that the militia member transported their gun with reason to know that it would be used “unlawfully in furtherance of a civil disorder,” so this statute could not be used against someone who had no reason to suspect that they were traveling towards anything other than a peaceful protest. A civil disorder is defined as “any public disturbance involving acts of violence by assemblages of three or more persons, which causes an immediate danger of or results in damage or injury to the property or person of any other individual.”

At least some of Bundy’s supporters made statements to the press suggesting that they fully intended to use their weapons to further such a disorder. One militia member, for example, said that he was at the ranch to provide “armed response,” adding that “[w]e need guns to protect ourselves from the tyrannical government.” Similarly, a message purporting to be from one militia organization that was published on several right-wing websites announced that “[w]e have made the decision to mobilize to Nevada” and concluded with a fairly explicit statement suggesting that the purpose of this mobilization was to spark a deadly conflict: “All men are mortal, most pass simply because it is their time, a few however are blessed with the opportunity to chose their time in performance of duty.”


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Four Ways Our Tax Dollars Pay for Rich People's Toys Print
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=7118"><span class="small">Carl Gibson, Reader Supported News</span></a>   
Monday, 14 April 2014 13:52

Gibson writes: "While going through all the deductions I could claim, I was forced to leave blank all the slots available for purchasing a second home, buying a boat, drilling for oil, selling stocks, borrowing money to buy stocks, inheriting wealth, or having money in foreign bank accounts. People scraping by to make a living don't have the money to purchase a second home or buy a few thousand shares of stock, and pay about a third of their income in taxes."

Mitt and Ann Romney. (photo: Getty Images)
Mitt and Ann Romney. (photo: Getty Images)


Four Ways Our Tax Dollars Pay for Rich People's Toys

By Carl Gibson, Reader Supported News

14 April 14

 

fter losing all of my belongings in a fire, I still ended up owing the IRS a few hundred dollars. In the grand scheme of all taxes paid, that’s barely a drop in the Olympic-size swimming pool of tax revenue, yet it’s a significant cost to people in my situation.

While going through all the deductions I could claim, I was forced to leave blank all the slots available for purchasing a second home, buying a boat, drilling for oil, selling stocks, borrowing money to buy stocks, inheriting wealth, or having money in foreign bank accounts. People scraping by to make a living don’t have the money to purchase a second home or buy a few thousand shares of stock, and pay about a third of their income in taxes.

1. Frivolous Hobbies

While self-employed freelancers have to pony up nickels and dimes to pay the man, a multi-millionaire was able to write off $77,000 in deductions for a dancing horse in 2010. Romney classified his horse, Rafalca, as a "business," allowing the cost of the horse's training, stable fees, and grooming to be charged to the government. To compare, 256.6 freelancers who made $22,000 and had to write a $300 check to the Treasury Department would all pay for one extremely rich individual’s dancing horse.

2. Lavish Homes

The IRS allows people who buy million-dollar homes to qualify for the mortgage interest deduction, to where if someone borrows $1.3 million to buy a $1.5 million home, $1.1 million in interest can be deducted. As of 2009, 137,670 people qualified under those circumstances, saving $3,000 apiece. This means $410 million in taxpayer money was spent helping 0.03 percent of the population buy a million-dollar house. If ten people like me who made $22,000 a year and had to write a $300 check to the Treasury Department combined our tax payments, all those checks would pay for one tax break for one person who bought a luxury home.

3. Inherited Fortunes

Our tax system is actually set up so people who earn their money are being bled dry so someone doesn’t have to pay a dime of tax on a gift in excess of $5 million. And the IRS is rapidly changing rules that will make taxes even more cushy on people who inherited their wealth rather than earning it through labor. While the Bush tax cuts of 2001 exempted from estate tax all estates worth $1 million and less, the exemption cutoff has steadily grown over the last decade.

In 2010, there was no estate tax at all. When billionaire New York Yankees owner George Steinbrenner died, his heirs paid no taxes on that wealth when they inherited it, which saved them $600 million in estate taxes. This means that when 600,000 working-class households each wrote a $1,000 check to the Treasury Department for the taxes owed on income earned from a year’s worth of hard work in 2010, all of that revenue was cancelled out so a few wealthy heirs could avoid taxes on money they never worked for.

In 2014, estates are now exempt from paying taxes on gifts of less than $5,340,000. This is a $90,000 increase from the 2013 cutoff of $5,250,000. This means 300 people like me, who had to write a check to the Treasury Department for $300, are all paying for one heir’s tax break this year.

The Congressional Budget Office found that if the estate tax were restored to pre-Bush levels, we would rake in an additional $500 billion in ten years. This means we’re currently hemorrhaging $50 billion a year so a few rich brats don’t have to pay taxes on wealth they didn’t earn. To compare that with the rest of America, when 50 million working people write a $1,000 check to the Treasury Department, after showing up to work every day, stressing over rising grocery and heating costs, and worrying about how to put their kids through college, all of those taxes paid are cancelled out so the nation’s wealthiest heirs don’t have to pay taxes on the tremendous wealth that they didn’t have to work one minute for.

4. Corporate Welfare

The most unjust part of our tax system is seen in the tremendous exemptions given to billion-dollar corporations. Twenty-six highly-profitable corporations in the Fortune 500 paid $0 in federal income taxes between 2008 and 2012. Just five companies – AT&T, Verizon, Wells Fargo, IBM, and General Electric – all enjoyed $77 billion in tax breaks during that time period. This means if 10 million Americans all wrote a check to the Treasury Department for $1,540 on taxes owed for a year of hard work, every year, for five years, all of that revenue would be cancelled out by just five extremely wealthy global corporations too greedy to pay for the services they use and depend on every day.

The income tax was set up to be an equitable redistribution of wealth. People would ideally pay a portion of their income to the government, which would then redistribute it so society can function. But as our tax structure is currently working, the masses of working poor who have been working longer hours for less pay over the last several decades are redistributing their income upward, to the people who already have more than they can spend. Working people are being pinched for pennies and threatened by audits, all so the nation’s richest one percent and most profitable corporations can have even more money than they already have.

Imagine all of the good we could do in society if corporations like Verizon and GE no longer had offshore tax havens in which to stash the profits they made in the US. Imagine if hard work was taxed at a preferential rate, investment income was taxed at a higher rate, and inherited wealth was taxed at the highest rate. We would have all the revenue we need to create millions of good-paying jobs, high-quality education for all those who wish to learn, and a strong social safety net to support those on hard times.

America’s wealthiest parasites have been sucking on the public’s teat for long enough. It’s time we vote out their servants in November and have the equitable tax system we deserve.



Carl Gibson, 26, is co-founder of US Uncut, a nationwide creative direct-action movement that mobilized tens of thousands of activists against corporate tax avoidance and budget cuts in the months leading up to the Occupy Wall Street movement. Carl and other US Uncut activists are featured in the documentary "We're Not Broke," which premiered at the 2012 Sundance Film Festival. He currently lives in Madison, Wisconsin. You can contact him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , and follow him on twitter at @uncutCG.

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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