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Why Biden Won |
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Friday, 12 October 2012 14:45 |
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Reich writes: "He not only trounced Ryan, but also, in the process, trounced Romney. Joe Biden is an average Joe solidly grounded in America's working middle class - nothing pretentious or devious about him - in contrast to the plutocrat who heads the Republican ticket, and the billionaires who are backing him."
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
Why Biden Won
By Robert Reich, Robert Reich's Blog
12 October 12
 thought Biden won last night's debate because he came off as genuine, passionate, and brimming with conviction. Ryan, by contrast, seemed like a wooden marionette, a kid out of his depth relative to someone who not only knew the facts but lived them.
On taxes, Ryan couldn't come up with any details about what loopholes he and Romney would close, or how their magic arithmetic (giant tax cut for the wealthy plus $2 trillion more for the military than the Joint Chiefs of Staff want) can possibly be paid for without socking it to the middle class.
By contrast, Biden made the case for average working people whose wages have barely risen in thirty years but who are bearing a higher total tax burden (payroll, sales, property, income) on a higher percent of their income than high rollers like Romney — and why the well off should do more.
On Medicare, Ryan couldn't explain why his plan wasn't a voucher program that "saved" money only by shifting the costs on to seniors who would end up holding the bag as medical costs rose. Biden effectively defended the President's plan to save Medicare by cutting excessive payments to providers.
Biden also pointed out that Ryan and his allies had tried to privatize Social Security. Score another one for Joe.
On abortion, Ryan had to admit he and Romney would work to prevent women from having the right to choose an abortion if they needed and wanted one. Biden made it clear his religious beliefs about when life began should not, in his view, force anyone who didn't share them to follow them.
I thought Biden's closing could have been tougher, drawing a sharper contrast between the Romney-Ryan "you're on your own" worldview, and the "we're in it all together" belief that has built America — and which Obama and Biden represent.
But overall it was Biden's night. He not only trounced Ryan, but also, in the process, trounced Romney. Joe Biden is an average Joe solidly grounded in America's working middle class — nothing pretentious or devious about him — in contrast to the plutocrat who heads the Republican ticket, and the billionaires who are backing him.
Robert B. Reich, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
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Mitt Romney's Tax Dodge |
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Friday, 12 October 2012 14:25 |
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Dickinson writes: "Are Romney's tax dodges legal? It's impossible to say for sure, given how little he has disclosed."
Has Mitt Romney been forthcoming on his taxes? (photo: Getty Images)
Mitt Romney's Tax Dodge
By Tim Dickinson, Rolling Stone
12 October 12
A guide to how the multimillionaire twists the law to hide his massive fortune - and avoid paying his fair share in taxes
 ow does a private-equity kingpin worth at least $250 million pay a lower tax rate - just 14 percent - than many teachers and firemen? By exploiting tax loopholes that favor the rich and hiding his money in the world's most notorious havens for tax cheats. That's what Mitt Romney has done, according to his 2010 and 2011 tax returns, a trove of secret Bain Capital documents unearthed by Gawker, and exposés by Bloomberg and Vanity Fair. "The bottom line," says Rebecca Wilkins, senior counsel at Citizens for Tax Justice, "is that these are ways to reduce your taxes that are only available to rich people."
Are Romney's tax dodges legal? It's impossible to say for sure, given how little he has disclosed. But tax experts note that there are plenty of red flags, including an investigation by New York prosecutors into tax abuses at Bain Capital that began on Romney's watch. "He aggressively exploits every loophole he can find," says Victor Fleischer, a professor of tax law at the University of Colorado. "He's pushing the limits of tax law beyond what many think is reasonable." Indeed, a look at Romney's finances reveals just how skilled he is at hiding his wealth - and paying a fraction of his fair share in taxes.
Swiss Secrecy
On his 2010 tax return, Romney disclosed that his wife Ann's trust held $3 million in a Swiss bank account at UBS, which had just been busted by the IRS for abetting criminal tax evasion by U.S. citizens. As part of a $780 million settlement, UBS was forced to turn over the names of thousands of its long-secret clients, who were then offered a partial amnesty: disclose their hidden assets, pay penalties and avoid prosecution. Romney - who had omitted the Swiss account on previous financial disclosures - suddenly came clean. Did he reveal his secret account to avoid prosecution for tax evasion? "He's not quite denied that," says Daniel Shaviro, a professor of tax law at NYU. The record of paying an IRS penalty on the Swiss account could explain why Romney has been so determined to keep his 2009 tax return under wraps.
Greed and Debt: The True Story of Mitt Romney and Bain Capital
Bermuda Shell Game
Romney has buried an unknown, and perhaps significant, chunk of his wealth in what SEC filings describe as "a Bermuda corporation wholly owned by W. Mitt Romney" - driving speculation that the candidate is worth far more than he has disclosed publicly. Wealthy Americans frequently launder investments through such offshore shell companies, passing themselves off as foreign investors - a scam that makes them exempt from paying U.S. taxes, even on profits from American deals. Romney created his shell company, Sankaty High Yield Asset Investors, in 1997 and reportedly involved it in many of Bain's biggest deals, including the takeover of Domino's Pizza. Yet he failed to report its existence on any financial disclosures prior to his 2010 tax return, even though it is under his control. "What is this corporation? What does it do? Why was it set up in a tax haven?" asks Wilkins. "There's a reason why it's in Bermuda."
Luxembourg Shelter
In 2000, when Romney was CEO of Bain, the firm hit the jackpot: A $40 million investment in the Italian yellow pages during the tech boom returned an astonishing $1 billion. Romney himself reportedly ended up with $50 million - a cut larger than Bain's initial investment. To evade taxes on the gains, Romney steered the profits through Bain subsidiaries in Luxembourg, Europe's most notorious tax shelter, where the money would be exempt from foreign taxes. In 2009, as a board member for Marriott, Romney also helped the hotel chain use the same tax tricks to shelter more than $200 million in Luxembourg. Marriott wound up paying less than half the corporate tax rate - just 16.9 percent.
Mitt Romney's Real Agenda
Cayman Cash
Romney has nearly $30 million stashed in at least a dozen Bain funds in the Cayman Islands, where, as one filing boasts, investments are free from "income, estate, transfer, sales, or other Cayman Islands taxes." But because some of those funds are directly invested in U.S. companies, they likely disclose their investors to the IRS, making them unattractive to tax cheats. So Bain also raises capital for its deals by selling shares in "feeder funds" - intermediary entities that invest in Bain's official funds, but don't have to make disclosures to the IRS. "If you want to cheat, they've rolled out the red carpet for you," says Wilkins.
Has Romney paid all his taxes on the shady funds? Only he and the IRS know for sure. But even if Romney never cheated personally, the feeder funds he appears to have invested in cater to tax criminals, making it easier for him and his Bain partners to raise capital and rake in big management fees.
Romney is profiting from one form of tax evasion in the Caymans: equity swaps. Under this racket run by top Wall Street banks, American firms pay out their profits - tax-free - to investment funds based in the Caymans. According to a Senate investigation, the purpose of these complex instruments is "to dodge payment of U.S. taxes on U.S. stock dividends." Romney has more than $1.25 million invested in four funds that profit from equity swaps - including two managed by Goldman Sachs.
Retirement Tricks
Romney has stockpiled as much as $87 million in his IRA - even though contributions to such retirement accounts are limited to just $30,000 a year. "Congress never intended IRAs to be used to accumulate that kind of wealth," says Wilkins. To get around the limits, Romney appears to have directed his IRA to invest in a special class of Bain stock. By assigning an artificially low value to the shares, Bain ensured that any returns would be wildly inflated - as much as 30 times the initial investment. By buying rigged stock with his limited IRA dollars, Romney got to reap the bonanza tax-free.
Romney also padded his IRA by investing in "blocker funds" that Bain has set up in the Caymans. Such funds attract tax-exempt investors - like college endowments or Romney's IRA - that want to avoid paying the Unrelated Business Income Tax, a 35 percent penalty designed to prevent tax-exempt investors from having an unfair advantage over for-profit businesses in private-equity deals. But by buying shares in offshore blocker funds that then invest in Bain and other takeover artists, investors like Romney bilk the Treasury out of $100 million a year. "It's an absurdly easy escape," says Shaviro.
A Big Loophole
For political purposes, Romney claims his investments are held in a blind trust that he doesn't actively manage. (In fact, the trust sees just fine: It's managed by a close friend and is invested heavily in his son Tagg's hedge fund.) But if Romney told the IRS he were merely a passive investor, he wouldn't qualify for his most notorious tax break: the loophole for carried interest.
Here's how it works: Bain partners earn a cut of the profits from the investments they manage - usually 30 percent. This "carried-interest" is not a return on any personal investment they made - it's just another form of compensation, like an ordinary paycheck. Yet under the carried-interest loophole, the earnings are taxed at the capital gains rate of 15 percent, rather than the income-tax rate of 35 percent. (They're also completely exempt from payroll taxes, which support Social Security and Medicare.) "When Romney says, 'I have a low tax rate because most of my income comes from investments,' that's not really true," says Fleischer. "He's receiving carried interest in exchange for past services."
Indeed, more than a decade after he left Bain, Romney is still booking carried interest as though he were actively leading the firm. Ann Romney's blind trust also claims carried interest, for allegedly "performing services" for a Bain fund in the Caymans. In the past two years alone, the loophole has allowed the Romneys to dodge $2.6 million in taxes.
Fee Fakery
Not content with the carried-interest boondoggle, Bain also uses a scheme known as fee conversion to transform smaller management fees - which are supposed to be taxed as regular earnings - into investment income taxed at only 15 percent. A Bain manager simply "waives" his right to his fee and is instead staked an investment of equal value in the private equity fund. Because the manager can then cherry-pick from the fund's investments, he is virtually guaranteed a rich return - flouting the spirit of the lower tax rate on capital gains, which is designed to reward investors who take risks with their money. "Because they didn't receive the cash, they claim that it's not a taxable event," says Fleischer. "It's not legal." New York's attorney general has launched a criminal investigation into the practice.
Romney denies he took part in such waivers, which may have robbed the Treasury of up to $220 million. But according to Fleischer, Romney's financial records suggest he "benefited personally from fee conversion." He also served as the sole shareholder in the firm that set up the deals, making him legally responsible for determining how Bain structured them.
Tax-free Trust
Romney has shifted enormous wealth - as much as $100 million - into a family trust, a fortune he doesn't include in the $250 million estimate of his net worth. His campaign admits he paid no gift taxes in transferring assets to the trust, even though individual gifts above $13,000 are subject to taxation. A direct gift of $100 million would have incurred a tax hit of at least $29 million, according to Michael Graetz, a former Treasury official under George H.W. Bush.
How did Romney skirt the limits on gifts? Tax experts believe that he made his contributions to the trust in the form of the carried interest he received from his Bain funds. For income-tax purposes, the assets were technically valued at zero, because the gains would not be taxed until the fund's investments were cashed out years later. In reality, though, Romney could have sold his carried interest to a third party for millions - making it absurd for him to pretend that his gift had no market value. Yet even if the move was illegal, Romney has nothing to fear: Tax returns on gifts are almost never audited, and they can't be challenged at all after three years.
Romney also used a scheme called an "intentionally defective grantor trust" to dodge the gift tax. Instead of having the trust pay taxes on its profits, Romney pays the tax bill himself. That keeps more money in the trust - amounting to another massive transfer of wealth that evades the gift tax. Even worse, the trust is exempt from the estate tax - meaning Romney's heirs will eventually pocket some $31 million they would have owed in taxes had he not siphoned off his fortune into the trust, tax-free.
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Dear Presidential Candidates, We're Not All Middle-Class |
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Friday, 12 October 2012 14:21 |
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Petrella writes: "The terms 'middle-income' and 'middle-class' were mentioned 34 times over the course of the first 90-minute so-called presidential 'debate.'"
Iconic image of a women waiting for assistance after Katrina. (photo: Eric Gay/AP)
Dear Presidential Candidates, We're Not All Middle-Class
By Christopher Petrella, Nation of Change
12 October 12
 ast Wednesday night the terms "middle-income" and "middle-class" were mentioned 34 times over the course of the first 90-minute so-called presidential "debate." The phrases rolled jauntily off the tongues of both candidates as they attempted to make impassioned appeals to what is often seen as the most important voting bloc.
Applying a term without first defining it, however, is the hallmark of ideology. Marx's "Sie wissen das nicht, aber sie tun es" ("they do not know it, but they are doing it") expression from Das Capital represents the most incisive definition of ideology to date. Ideology in its most elemental form entails unwittingly maintaining the taken-for-granted categorical presuppositions and omissions around which we choose to organize the world. And our collective presumption of "middle-classness" is one such ideological ruse.
Unfortunately, we Americans know troublingly little about income distribution and our relative position in it. We all seem to think we're part of the ubiquitous "middle class" because, well, we've rarely bothered to hazard a definition. For instance, according to an April 2007 poll by CBS News only 2 percent of the 994 adults surveyed said they were "upper class." 7 percent said they were "lower class."
Class, of course, is as much a cultural concept as it is an economic one. There needn't necessarily be any natural correlation between cultural habits and remuneration, and as such the relationship between class and income is often mystified. For example, the perceived high cultural class standing of, say, an adjunct professor, doesn't necessary reflect her low income or job insecurity. For this reason it seems sensible to sidestep a theoretical discussion pertaining to the ideological convergences and divergences between class and wage for the sake of underscoring what's at stake politically in the term "middle-income."
Although all concepts have limitations, perhaps the most compelling way to capture the essence of what it means to be "middle income" is to consider the U.S. Census Bureau's income distribution data by quintile. According to this categorization, households earning from $38,521-$62,434 annually inhabit the middle (3rd) quintile and represent those with incomes between 40-60 percent of the total U.S. income distribution. Want to know where you stand? See table below:
The term "middle-income," of course, is highly contested and therefore always remains subject to redefinition in service of the status quo. For instance, there are many politicians like President Obama and Governor Romney, who, wishing to maintain myth that "we're all middle class," will argue that those in the 2nd quintile - $20,263-$38,520 - also constitute middle-income earners. Their claim is easy enough to discredit. The U.S. government, in fact, tacitly admits that the 2nd quintile is decidedly low-income. Here's how.
The Centers for Medicare and Medicaid Services - an federal agency under the aegis of the Department of Health and Human Services - classifies those living at 133 percent or below the federal poverty line (FPL) as "low-income" for the purposes of Medicaid eligibility. Today, a family of four living at 133 percent of the FPL earns $30,657 annually and accounts for over half of those in the Census Bureau's 2nd quintile classification.
Further, when household income levels are disaggregated by race it turns out that the median household income for Black ($32,229) and Latino ($38,624) families effectively falls below the Census Bureau's middle quintile designation. In other words, the average Black and/or Latino family in 2012 cannot be classified as middle-income.
Data like these have determinative implications for campaign discourse and beg a simple question: why isn't any major party candidate speaking candidly about low-income people, the working poor, or the indigent? With a full 15 percent of Americans living below the poverty line - 7 percent of which live below half of the poverty line - and another 30 percent between the FPL and double it, all this talk of the middle-class seems misplaced and misguided. It's pure ideology.
So as the campaign season trundles on we must as ourselves the following question: am I truly a middle-income American or is that what I've come to believe because a wealthy politician told me so? And moreover, are my interests being legitimately represented on the campaign trail?
We must demand that presidential candidates, including third party candidates, address issues disproportionately affecting low-income families and propose policy solutions in consultation with our communities. Perhaps the first step necessary for tackling the seemingly insoluble challenges associated with poverty is to shed the ruinous illusion that we're all middle-income people, that we're all middle-class.
Poverty is rampant.
Food insecurity is widespread.
Involuntary homelessness is pervasive.
And until we're willing to acknowledge these realities squarely then we'll continue to magnify the "middle" while minimizing an already underrepresented majority.
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FOCUS | Free Education and More Jobs in 400 Words |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=7118"><span class="small">Carl Gibson, Reader Supported News</span></a>
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Friday, 12 October 2012 13:34 |
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Gibson writes: "We're doomed to have never-ending deficits and wars until we allow alternative ideas into the mainstream conversation."
U.S. President Barack Obama speaks at the National Association of Latino Elected and Appointed Officials conference, 06/22/12. (photo: Reuters)
Free Education and More Jobs in 400 Words
By Carl Gibson, Reader Supported News
12 October 12
Reader Supported News | Perspective
 t Hofstra University on Tuesday night, you won't hear either presidential candidate or any of their pre-approved debate moderators talk about why the richest nation in the world ranks #2 in child poverty, why our schools leave so many kids unprepared for the world, or why Afghanistan is falling apart despite our spending more there in one year ($113 billion) than we do for one year of food stamps ($75 billion).
Today's DoD budget is $737 billion, which is more than the next 10 biggest military spenders, combined. Obama's proposed budget is a whopping $755 billion. By cutting the Pentagon budget in half, which would mean we'd still be spending way more on our military than any other country in the world, we could easily afford the $30 billion cost for a free K-thru-college education for all Americans, and use the other $300 billion-plus for green energy investments that would create millions of new jobs and drastically improve the deteriorating environment.
These are easy budget cuts that wouldn't endanger anyone's safety. We could start with the F-35 Joint Strike Fighter program, which could cost up to $1 trillion between now and the project's projected finishing point. Even John McCain calls it a "scandal and a tragedy." The rest of the cuts could come from closing overseas military bases and ending all foreign occupations like the one in Afghanistan. The costly Afghan war was largely started to help the corporate entities looking to profit from a natural gas pipeline called the New Silk Road, which goes from the Caspian Sea to the Indian Ocean. The Taliban have steadfastly refused the pipeline's route through Afghanistan ever since President Bill Clinton tried to woo them at the White House in 1996. Aside from the $574 billion in tax dollars, this is a continuously fruitless effort that's cost 3,200 Americans their lives.
Obama wants us in Afghanistan until at least 2024. Romney wants us there, and possibly Iran, another huge natural gas pocket that Romney's donors in the gas industry are likely salivating over. Currently, Green Party nominee Jill Stein is the only candidate seriously talking about making long-term investments in education and green energy with a 50% cut to the military budget. And that's likely one of the reasons she and other third party candidates are blocked from having a voice at the upcoming debate at Hofstra. We're doomed to have never-ending deficits and wars until we allow alternative ideas into the mainstream conversation.
Carl Gibson, 25, 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 Manchester, New Hampshire. You can contact Carl at
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
, and listen to his online radio talk show, Swag The Dog, at blogtalkradio.com/swag-the-dog.
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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