The Rich Are Different from You and Me – They Pay Less Taxes

by Bill Moyers and Michael Winship

Benjamin Franklin, who used his many talents to become a wealthy man, famously said that the only things certain in life are death and taxes. But if you’re a corporate CEO in America today, even they can be put on the back burner – death held at bay by the best medical care money can buy and the latest in surgical and life extension techniques, taxes conveniently shunted aside courtesy of loopholes, overseas investment and governments that conveniently look the other way.

In a story headlined, “For Big Companies, Life Is Good,” The Wall Street Journal reports that big American companies have emerged from the deepest recession since World War II more profitable than ever: flush with cash, less burdened by debt, and with a greater share of the country’s income. But, the paper notes, “Many of the 1.1 million jobs the big companies added since 2007 were outside the U.S. So, too, was much of the $1.2 trillion added to corporate treasuries.”

To add to this embarrassment of riches, the consumer group Citizens for Tax Justice reports that more than two dozen major corporations – including GE, Boeing, Mattel and Verizon -- paid no federal taxes between 2008 and 2011. They got a corporate tax break that was broadly supported by Republicans and Democrats alike.

Corporate taxes today are at a 40-year-low -- even as the executive suites at big corporations have become throne rooms where the crown jewels wind up in the personal vault of the CEO.

Then look at this report in The New York Times: Last year, among the 100 best-paid CEOs, the median income was more than $14 million, compared with the average annual American salary of $45,230. Combined, this happy hundred executives pulled down more than two billion dollars.

What’s more, according to the Times “… these CEO’s might seem like pikers. Top hedge fund managers collectively earned $14.4 billion last year.” No wonder some of them are fighting to kill a provision in the recent Dodd-Frank reform law that would require disclosing the ratio of CEO pay to the median pay of their employees. One never wishes to upset the help, you know. It can lead to unrest.

That’s Wall Street -- the metaphorical bestiary of the financial universe. But there’s nothing metaphorical about the earnings of hedge fund tigers, private equity lions, and the top dogs at those big banks that were bailed out by tax dollars after they helped chase our economy off a cliff.

So what do these big moneyed nabobs have to complain about? Why are they whining about reform? And why are they funneling cash to super PACs aimed at bringing down Barack Obama, who many of them supported four years ago?

Because, writes Alec MacGillis in The New Republic -- the President wants to raise their taxes. That’s right -- while ordinary Americans are taxed at a top rate of 35% on their income, Congress allows hedge fund and private equity tycoons to pay only pay 15% of their compensation. The President wants them to pay more; still at a rate below what you might pay, and for that he’s being accused of – hold onto your combat helmets -- “class warfare.” One Wall Street Midas, once an Obama fan, now his foe, told MacGillis that by making the rich a primary target, Obama is “[expletive deleted] on people who are successful.”

And can you believe this? Two years ago, when President Obama first tried to close that gaping loophole in our tax code, Stephen Schwarzman, who runs the Blackstone Group, the world’s largest private equity fund, compared the President’s action to Hitler’s invasion of Poland.

That’s the same Stephen Schwarzman whose agents in 2006 launched a predatory raid on a travel company in Colorado. His fund bought it, laid off 841 employees, and recouped its entire investment in just seven months – one of the quickest returns on capital ever for such a deal.

To celebrate his 60th birthday Mr. Schwarzman rented the Park Avenue Armory here in New York at a cost of $3 million, including a gospel choir led by Patti LaBelle that serenaded him with “He’s Got the Whole World in His Hands.” Does he ever -- his net worth is estimated at nearly $5 billion. Last year alone Schwarzman took home over $213 million in pay and dividends, a third more than 2010. Now he’s fundraising for Mitt Romney, who, like him, made his bundle on leveraged buyouts that left many American workers up the creek.

To add insult to injury, average taxpayers even help subsidize the private jet travel of the rich. On the Times’ DealBook blog, mergers and acquisitions expert Steven Davidoff writes, “If an outside security consultant determines that executives need a private jet and other services for their safety, the Internal Revenue Service cuts corporate chieftains a break. In such cases, the chief executive will pay a reduced tax bill or sometimes no tax at all.”

Are the CEOs really in danger? No, says Davidoff, “It’s a common corporate tax trick.”

Talk about your friendly skies. No wonder the people with money and influence don’t feel connected to the rest of the population. It’s as if they live in a foreign country at the top of the world, like their own private Switzerland, at heights so rarified they can’t imagine life down below.

http://www.billmoyers.com/

Journalist Bill Moyers is the host of the new show Moyers & Company, a weekly series of smart talk and new ideas aimed at helping viewers make sense of our tumultuous times through the insight of America’s strongest thinkers.. His previous shows on PBS included NOW with Bill Moyers and Bill Moyers Journal. Over the past three decades he has become an icon of American journalism and is the author of many books, including Bill Moyers Journal: The Conversation Continues, Moyers on Democracy, and Bill Moyers: On Faith & Reason. He was one of the organizers of the Peace Corps, a special assistant for Lyndon B. Johnson, a publisher of Newsday, senior correspondent for CBS News and a producer of many groundbreaking series on public television. He is the winner of more than 30 Emmys, nine Peabodys, three George Polk awards and is the author of three best-selling books.

Michael Winship, senior writing fellow at Demos and president of the Writers Guild of America, East, is senior writer of the new public television series Moyers & Company, premiering in January 2012.

A Tax Day without The Tea Party

by Mark Engler

Over the past several years, few annual occasions have been more symbolic of the direction of political discussion in our country than Tax Day. This year, the IRS due date bears witness to the impact of the Occupy movement in American politics.

Back in 2009 and 2010, Tax Day protests were a high-water mark for the Tea Party; they were the mass actions that really put the right-wing movement on the map. But by 2011, as I wrote at the time, that was already changing. The Tea Party still had plenty to be happy about: it was coming off of midterm elections that gave Republicans control of the House, with a rabidly reactionary class of congressional freshmen. And through the summer the supposed imperative to cut back government spending—never mind the country’s ongoing crisis of joblessness—would dominate Washington debate.

Yet by Tax Day 2011, a shift had started. Tea Party leading light Glenn Beck was on his way out at Fox News, having been the subject of a boycott from the left. A group called US Uncut, modeled on a British counterpart, was getting great press by going after corporate tax cheats and businesses that had managed to avoid taxes altogether. (GE, in particular, was having a very bad PR month.) Protests taking place that April were as likely to be against draconian social service cuts as against “big government” tyranny.

All of this presaged the emergence of the Occupy movement in the fall, which went much, much further in shifting the debate. As New York Times columnist Paul Krugman commented on the transformation:

[S]ix weeks ago, before [Occupy Wall Street] started, we were basically having an insane national discussion. Here we were with 14 million people unemployed, and with the government able to borrow at the lowest interest rates in history and with enormous increase in inequality—with a few people at the very top prospering immensely, and most people having made no headway, even before the crisis hit. And yet—what were we talking about? Deficits, austerity, ‘Let’s cut Medicare and Social Security.’

And the whole issue of, ‘What about jobs? What about doing something for the vast majority of Americans?’ was completely ruled out of the discussion. And now some of us—you know, I tried to write about it, other people have tried to write about—but somehow, that was not making a dent in the conversation. And then a group of people started camping out in Zuccotti Park, and all of a sudden the conversation has changed significantly towards being about the right things. It’s kind of a miracle.

This year, if you say “Tax Day” and “social movement,” the Tea Party isn’t necessarily the first thing that comes to mind. And if you go looking for a protest, you’ll likely find folks protesting against the tax evaders of the top 1 percent. As one example, members of Stand Up Chicago (http://standupchicago.org/) have been delivering faux tax bills to corporations including Boeing, Exelon, and Bank of America. A release from the group reported:

Despite making $3.3 BILLION in profits in 2010, Boeing paid no taxes for the year and even received a tax refund of $1.56 BILLION. Since 2008, Boeing has received $6 billion in total tax subsidies.

Under CEO Brian Moynihan’s leadership, Bank of America paid NOTHING in taxes the past three years, despite hauling in $5.5 BILLION in profits. Bank of America didn’t just dodge taxes, they received a $5 BILLION tax refund for the year 2009. Moynihan has been amply rewarded, receiving a $10 MILLION salary in compensation.

Despite making $2.5 BILLION in profits in 2010, Exelon received a tax refund of $914 MILLION for the year. Exelon received $2.24 BILLION in tax breaks between 2008 and 2010, placing it among the 25 companies with the largest total tax subsidies (otherwise known as corporate welfare) during that period.

In the Senate, Democrats will be voting this week in favor of the “Buffett Rule” to raise taxes on the wealthy. The measure won’t go anywhere (having no chance of passing in the House), and it hardly makes up for the abhorrent so-called “JOBS Act” that President Obama signed into law last week. (“Boss Tweed himself couldn’t have done any worse,” wrote Matt Taibbi in the first of two powerful denunciations.) But it’s at least good to know that when the Dems decide to posture, they’re now doing it by advocating a more progressive tax system. For just last summer they were rallying behind the inspiring motto of “let’s cut a little less than the Republicans want to.”

As for politics beyond posturing, the Tax Day protests have more potential. Let’s hope that they will be the start of a fine Occupy Spring (http://wagingnonviolence.org/column/occupy-spring/).

© 2012 Dissent
http://dissentmagazine.org/atw.php

Mark Engler is a senior analyst with Foreign Policy In Focus and author of How to Rule the World: The Coming Battle Over the Global Economy (Nation Books, 2008). He can be reached via the website http://www.DemocracyUprising.com

Through State Tax Breaks, Employers Pilfer Workers’ Earnings

by Michelle Chen

As you file your taxes this week, before complaining about how much you’re forking over to Uncle Sam, bear in mind that the tax man might not be the only one you’re writing a check to: Your boss might be getting a big cut, too.

Thanks to arcane state tax subsidies, thousands of companies have fattened their profit margins by poaching from workers’ paychecks. According to a report by the watchdog group Good Jobs First (http://www.goodjobsfirst.org/taxestotheboss), nearly $700 million in taxpayer money was siphoned off by corporations through clever deals with state governments that are supposedly aimed at “job creation.”

According to the report, the tax breaks allow companies to effectively skim money from workers’ state income tax withholdings “to provide lavish subsidies to corporations rather than paying for vital public services.” The beneficiaries include “more than 2,700 companies, including major firms such as Sears, Goldman Sachs and General Electric.”

These programs feature glowingly euphemistic names: Indiana’s Economic Development for a Growing Economy (EDGE) Tax Credit, the Mississippi Advantage Jobs Incentive Program, and, to emphasize that these aren’t just any old jobs we’re talking about, New Mexico’s High Wage Jobs Tax Credit.

A more fitting title, according to Good Jobs First, would be “job blackmail.” Tax breaks are the trophy state lawmakers offer while trying to pull businesses into their states, or keep businesses from moving out. But while tax breaks are often painted as a mechanism for attracting jobs, they’re actually more aimed at attracting bosses. The researchers explain that in this interstate “economic war,” shuffling businesses geographically does not amount to genuine development:

For example, Kansas gave AMC Entertainment $47 million in PEAK subsidies last year to get the movie theatre chain to move its headquarters from downtown Kansas City, Missouri about 10 miles across the state line to suburban Leawood. In Illinois, Motorola Mobility (now part of Google) last year got state officials to provide $100 million in EDGE tax credits over ten years to keep its headquarters in the Chicago suburb of Libertyville.

And yet at the local level, the wealth tends to trickle upward, not down. Good Jobs First has documented that nationwide, numerous state corporate subsidy programs have failed to foster sustainable, living wage jobs.

According to the report, which covers 16 states, the creative accounting can take many forms: some companies can simply pocket the money that would otherwise be remitted to the state in the form of workers’ income tax. Some programs dish out "incentives" in the form of grants, or credits against corporate income taxes, that effectively offset what workers pay in withholding taxes. The basic principle is that the company gets extra cash, the politicians get some publicity for “job creation,” and the public gets a perilously vague promise of local development, all the while wondering why their state can’t seem to keep schools and hospitals running.

The backdrop to these political theatrics is the yawning economic and fiscal crisis facing states across the country. Joblessness continues to plague states that are showering tax breaks on corporations. (With its recent unemployment rate of 9.5 percent, Mississippi’s “Advantage Jobs” apparently haven't fully materialized.)

Adding insult to injury, while states spoonfeed tax breaks to big corporations, they are forcing struggling workers to bear a very heavy tax burden. According to the Center on Budget and Policy Priorities, though some states have moved in recent years to provide some tax relief to low-income households, “No new states exempted working-poor families of four from income taxes in 2011, and in almost all of the 15 states where such families still pay income taxes, they saw their income taxes increase.”

On the federal level, the Obama administration too has sought to dangle various tax breaks before employers, supposedly to stimulate hiring. Good politics, bad math: critics say a tax giveaway is simply that—free money that doesn’t directly address a structural jobs deficit.

Maybe the shadiest part of these schemes is the lack of transparency. Companies are generally under no obligation to tell workers that their tax burden is tied to their bosses’ tax break. Good Jobs First Research Director Philip Mattera told In These Times, “We could find no subsidy program that requires workers to be notified on their pay stub or W-2, but Kentucky used to require employers to tell workers about the diversion after the company was approved for the subsidy.”

So on this tax day, if you’re grumpy about how much you owe the taxman, just think about how much workers have ended up paying to the boss man instead.

© 2012 In These Times
http://inthesetimes.com/working/entry/13049/through_state_tax_breaks_bos...

Michelle Chen is a contributing editor at In These Times. She is a regular contributor to the labor rights blog Working In These Times, Colorlines.com, and Pacifica's WBAI. Her work has also appeared in Common Dreams, Alternet, Ms. Magazine, Newsday, and her old zine, cain.

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