A regulator from the S&L crisis – when almost 2,000 people went to jail — talks about the difference between then and now. You MUST watch this!
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Conservatives claim that income from corporate dividends is “taxed twice” — first when the corporation pays its taxes (if it does pay taxes), and then when the recipient of dividends pays taxes on that income.
They don’t claim, however, that when you pay your plumber the plumber shouldn’t have to pay taxes because you already paid taxes on your income. That’s different, I guess, because you and your plumber both have to work. Income from working has no such considerations of favor.
This “taxed twice” argument was used by George W. Bush as a reason to reduce the tax rates on income received from corporate dividends. (He also said that taxing dividends is a tax on retired people. Heh.) This “taxing twice” is unfair, they say, even though owners of corporations receive many special advantages under our laws. One such advantage is limited liability, meaning that the owners are not liable to pay the company’s debts, fines if the company violates rules or laws or court judgments if the company harms anyone. But Congress fell for it, possibly because of the amazing power of alliteration, and reduced taxes on the income from corporate dividends to no more than 15%. Fortunately this tax cut — which mostly applies to the very rich — expires soon.
Meanwhile the income that regular people receive from actually working is taxed at the rate of regular old income taxes. That’s right, income from working is taxed at a higher rate than income from not working, with conservatives arguing that it shouldn’t be taxed at all! In fact, in some areas they have completely succeeded; if your income comes from inheriting money in 2010 you won’t pay any income tax at all!
Another huge tax break that is mostly just for rich people is the capital gains tax rate. The claim is that income that comes from selling an investment (rather than from working) should have a vastly lower rate as an incentive to invest. That rate currently tops out at 15%. There is no explanation why 15% is optimal for providing such an incentive, and not some other rate lower than regular income taxes, like maybe 5% less than your regular income tax. Apparently the reasoning is that only getting a 5% tax break if you make a fortune from an investment isn’t enough to make the investment worthwhile. Of course potential huge profits from a successful investment are not sufficient reason to invest so the rich must be bribed further to open their wallets. (I guess the rich really are different from you and me.)
Tax breaks like these — once again, only on income that is received for not working — free the rich from concern and worry that they might be asked to pitch in and pay for the infrastructure that enabled their wealth — and give them more energy to complain about the terrible budget deficits caused by people who worked for a living collecting the Social Security they paid into all of their working lives once they retire.
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Republicans are accusing the Obama administration and the SEC of having a political agenda behind going after the financial companies that wrecked the economy, and are trying to warn them off from going after any more Wall Street firms.
Of course they have a political agenda. Fairly enforcing laws and regulations is good politics. Bringing Wall Street to justice is good politics. In a democracy it is the JOB of politicians to do the bidding of the public, which is to enforce the laws and protect consumers from fraud. Wall Street and Republicans don’t like that one bit, and are doing what they can to stop the Obama administration from bringing Wall Street to justice.
See GOP seeks SEC records on Goldman, GOP probes whether Goldman charges were politically timed, Is the White House, SEC, and DNC Colluding to Destroy Goldman Sachs to Pass Financial Reform?, Hatch: Timing Of Goldman Lawsuit Is ‘Very Suspect’,
“This whole Goldman Sachs thing, isn’t that a little odd that all of a sudden, right at the height of this legislative period, we suddenly have the SEC filing suit against Goldman Sachs?” Hatch asked.
“I think the timing is very suspect,” he said
Bush ordered the SEC not to enforce regulations, not even against Bernie Madoff. It has taken time but the SEC has been rebuilt sufficiently to begin regulating again. Soon the Justice Department – ordered by Bush not to enforce any white collar laws at all — will be back up to snuff and will be prosecuting as well.
The public wants these laws enforced, Wall Street doesn’t and is paying the Republicans to front for them.
Please visit Campaign for America’s Future’s Virtual Summit On Fiscal & Economic Responsibility By People Who Did Not Wreck the Economy.
The Peterson Foundation is holding a summit on how to cut the deficit, and then comes the Obama Deficit Commission. But military spending is off the table, they aren’t going to raise taxes on the rich and the direct target is Social Security. So Campaign for America’s Future is holding an online counter-summit.
Start here: Lectured On Fiscal Responsibility By The Irresponsible By Dean Baker,
To kick off his deficit commission, President Obama is planning a big show on April 27 that will include a number of experts talking about the need to reduce the deficit. Not one person among this group saw the housing bubble and the risks that it posed to the economy.
The next day, billionaire Wall Street investment banker Peter Peterson is sponsoring a day-long deficit-fest. Peterson not only excluded all of the economists who had warned of the bubble, but his show actually features the leading villains in this story. Peterson has invited former Federal Reserve Board Chairman Alan Greenspan and former Treasury Secretary and Citigroup top honcho Robert Rubin to lecture the country on the need to tighten our belts.
Then take a look at Top 5 Things Deficit Hawks Don’t Want You To Know About Social Security — click through for video.
Also, Bill Scher’s “Deficit Reduction Blindness” Syndrome Plaguing New York Times,
There’s a strange affliction impairing several New York Times reporters, Deficit Reduction Blindness. The syndrome blocks your ability to see a government reduce a budget deficit without also seeing massive pain inflicted upon its people.
Reporters with DRB can easily spot deficit reduction when it involves shredding Social Security and slashing Medicare.
And, finally, reprinted here in full is my own Dear Deficit Commission, It’s Not Hard:
Dear Deficit Commission,
It’s not hard to figure out why we have a huge deficit. It’s so easy I don’t have to use words. Here are some pictures:
Bill Clinton raised taxes on the rich. Bush cut them.
Now, about that huge national debt…
The second chart kind of explains itself. The third chart can help you find a place to get some money:
(Note: There is no more Soviet Union.)
In case that isn’t clear enough, try this:
Let me know if you still have any questions.
So go take a look. Any questions?
Here comes the corporate money and it is as bad as you can imagine. Lies, smears… Money is flooding in from Wall Street, smearing members of Congress who want to regulate Wall Street, accusing them of … being on Wall Street’s side.
The Bankers’ Latest Scam,
In January and February she began tracking deceptive ads targeting Democrats in ten states that tie bank reform legislation to “Wall Street bailouts.”
One such television ad in Montana urges voters to contact Senator Jon Tester and tell him to oppose a “$4 trillion bailout” for Wall Street.
The ad, paid for by a group called the Committee for Truth in Politics, begins with ominous music as words appear on a black screen:
“Fat cat lobbyists. Special interests. Lining their pockets at our expense. HR 4173 already passed in the U.S. House.” Photos of House Democrats Nancy Pelosi and Barney Frank flash past. More words appear: “Soon to be considered in the Senate.” Photos of Harry Reid and Chris Dodd standing beside Frank and Pelosi pop up, followed by pictures that move almost too fast to follow: Wall Street, wads of cash, a man smoking a cigar and two men in suits shaking hands in front of the White House, scenes of people out of work, the word “foreclosure” and the figure $4,000,000,000,000. Then more words appear: “The Big Bank Bailout Bill. Lobbyists and Bureaucrats. They play. We pay.” (Photos of ordinary Americans.) “More taxes. Spending. Debt.” (A beleaguered-looking citizen in reading glasses, apparently doing his taxes.) “Call Your Senators” (phone numbers for Senators Max Baucus and Jon Tester). “We won’t be fooled again. EVER.”
HOW do we fight this?
Hey, that could be a good blog name, like Seeing the Forest, Smelling the Coffee and Growing the Garden.
A Pew Poll says Distrust in Government Skyrockets.
If you look at the poll you find that trust in government tends to drop through Republican administrations, and then rises through Democratic ones.
Also, there is a huge, well-funded anti-government effort out there with dozens of corporate-funded think tanks, an entire TV network, and all of talk radio. All the time, 20 hours a day, telling the public that government and democracy are bad, and corporations should run things. Marketing works, so I’m not surprised by these results.
One last point. Reading the poll – 142 pages – one thing runs through it. People don’t see what government does for them anymore, and thinks that interests – especially the banks right now – are who the government is representing. I think some of that is people taking much of what the government does for granted, like roads, bridges, police, etc. I think some of it is that a huge amount of the spending is on things like military — currently more than a $trillion for everything related to the military budget — and interest on the Reagan/Bush debt.
It’s American Idiot Week! over at Brilliant at Breakfast. First up is Bobby Jindal:
Our first Idiot, as Blue Girl reminds us, is Louisiana Governor Bobby Jindal, who just over a year ago, scoffed at the idea of volcano monitoring:
Still think volcano monitoring is something to be mocked, there, Bobby? Here’s something around which your greedy little Republican mind can perhaps wrap itself.
The figures below show the top 10% controlling nearly 70% of wealth. The bottom 50% of US citizens control just a little over 2% of the wealth.
Then click through from there to this slide show of 16 slides about how much of our country’s wealth has concentrated into just a few hands since Reagan.
50% of us together control just over 2% of all of the wealth in this country. A few at the very top control almost all of the country’s wealth. They are at the top of the food chain and we are the food.
Now that the government has taken action against Goldman Sachs, maybe this case can be next? Stephen Friedman was Chair of the Federal Reserve Bank of New York as well as a Director at Goldman Sachs and made a killing on Goldman Sachs stock, while the NY Fed was involved in regulating the company, including the infamous AIG pass-through. And everyone knew it. Fed Had ‘Misgivings’ About Friedman’s Goldman Stock, Towns Says
The Oversight Committee will schedule a hearing “to learn more from Mr. Friedman and senior Fed officials about how he was permitted to make windfall profits by trading stock in a company he had a role in regulating,” the lawmakers said.
The Federal Reserve Bank of New York shaped Washington’s response to the financial crisis late last year, which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after.
During that time, the New York Fed’s chairman, Stephen Friedman, sat on Goldman’s board and had a large holding in Goldman stock, which because of Goldman’s new status as a bank holding company was a violation of Federal Reserve policy.
. . . Mr. Friedman also was overseeing the search for a new president of the New York Fed, an officer who has a critical role in setting monetary policy at the Federal Reserve. The choice was a former Goldman executive.
. . . Mr. Friedman, who once ran Goldman, says none of these events involved any conflicts. He says his job as chairman of the New York Fed isn’t a policy-making one, that he didn’t consider his purchases of more Goldman shares to conflict with Fed policy, and bought shares because they were very cheap.
He says he bought the shares because they were “very cheap.” I guess everyone involved with the entire stock market was wrong because that is how shares are priced. It’s called the “market price” which is the price, period, not too cheap, not too expensive. But this guy, who knew what moves the Fed was be making, knew something that no one else knew, and that is that they were too cheap. That is the very definition of insider trading and the very reason such things are considered a conflict of interest. And a crime.
See this, Friedmanism at the Fed,
… Stephen Friedman, the former chairman of the board of the New York Federal Reserve Bank and a member of the board of directors of Goldman Sachs. Through those two posts, Friedman may have had access to privileged information about the extent of Goldman’s exposure to AIG and the opportunity to profit from the Fed’s bailout of the beleaguered insurance giant. While he was serving on both boards, Friedman purchased 52,600 shares of Goldman stock, more than doubling the number of shares he owned. These purchases have since risen millions of dollars in value–and raised allegations of insider trading.
. . . Despite demands from Congress and the media, neither the Fed nor AIG disclosed the names of the banks or the amount of money each had received through the bailout until March 15, 2009, when AIG finally did so. While the public was left in the dark, Friedman nearly doubled his Goldman holdings by purchasing 37,300 shares for about $3 million. Friedman made that purchase on December 17, 2008, just over a month after the Fed decided to pay Goldman and the other banks full value for the insurance on mortgage-backed securities.
Insider trading is a criminal offense. The public deserves to know if that is what was going on here, and Mr. Friedman should be prosecuted if it was.
Here is a tax trick you hear all the time: we shouldn’t tax corporations because they just “pass the taxes along to customers.” Go to any of the usual anti-tax, anti-government sites and you’ll see them trying to trick people with this.
First of all, if companies really did “pass taxes along to consumers,” so what? Is that a reason not to pay for the roads, bridges, schools, courts etc., that enable the company to be profitable enough to pay taxes? But actually they don’t — because they can’t.
This tax trick is based on a popular assumption that businesses can just raise prices whenever they want to. But a well-run business is already charging what they should charge for their product or service. If they have room to raise prices they should already have done so. But of course doing so this will cause them to lose sales to competitors.
Taxes are on profits, and profits are calculated at the end of a tax year by adding up all the revenue and subtracting all the costs. When a product or service is sold the company doesn’t really know yet how much profit, if any, it will have at the end of the year, so it doesn’t know what the tax will be, so how can it adjust prices? But if a company was able to just raise prices based on anticipation of profits, then the result would be that profits would be higher because of the higher price charged, which means taxes would be even higher, so the company should have raised prices even more, but that means the profit would be even higher, so they have to go back and charge more, but then … I think you are starting to see how silly this idea of raising prices to cover taxes can get.
About those competitors – if one company is doing well and therefore making a profit, and another company is not doing so well, and therefore not making as much profit, and the first company raises prices to cover the taxes on the profit, then the second company has a price advantage so the first company loses sales and isn’t going to have a profit after all so they really should put the prices back down, but then the other company’s price advantage goes away and they are making a profit again so they should raise prices but … Hey, this just gets silly, too!
Companies do not pass on taxes to their customers. So don’t fall for this tax trick, it’s just silly.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF. Sign up here for the CAF daily summary.
Note that the date on this is Saturday, April 17, one or two days after the New Orleans police said that much of what is in this never happened: Republican Officials Attacked and Injured in New Orleans – Townhall.com,
On the night of Friday April 9th, a petite female political operative and her boyfriend were attacked and seriously injured in New Orleans by a vicious group of crazed cowards who shrieked political insults while pouncing. After the pummeling, the petite female and her boyfriend were left, collectively, with a compound leg fracture, a concussion, a broken nose and broken jaw. No robbery occurred.
But wait!….Don’t waste your time–if you’re Googling for this item on CNN, New York Times, Wa-Po, MSNBC, Huff-Po, ABC, Salon, CBS, etc. –that is.
This story builds on the conservative resentment narrative – all those elites pick on people like me. It is very important for conservatives to feel they are victimized. The problem is that this is starting to incite actual violence.