Kansas And Puerto Rico Show How Trump’s Tax Cuts Will Hurt Us

The business-oriented media are loudly proclaiming that president-“elect” Donald Trump’s proposed tax cuts for the rich and corporations will “boost” the economy.

● WSJ: Trump’s Proposed Tax Cuts Could Boost U.S. and Global Growth, Says World Bank

● CNBC: Trump tax cuts could boost earnings by 20 percent next year: Yardeni

● Fortune: OECD Says Trump Tax and Spending Plans Will Boost Global Economy

● Fox Business Video: Why Trump’s tax cuts will boost the world economy

● Investors Business Daily: Here’s How Much Trump Tax Cuts Could Boost The Stock Market

The word filters down to the local media: (The exact word: “boost”…)

● Indianapolis Business Journal: Trump’s tax-cutting plan will boost economy

Really? Is THAT what happens when taxes are cut for the wealthy and their corporations?

Presidents Reagan and both Bushes cut taxes for the rich and their corporations, promising that the “benefits” would “trickle down’ to the rest of us. Kansas gave huge tax cuts to corporations and the wealthy to “boost” investment and jobs. For decades Puerto Rico offered tax breaks “attract businesses.” How’d that work out for them — and us?

Kansas, Oops

Sam Brownback took office as Governor of Kansas in 2011. With a Republican legislature Kansas conducted a “real live experiment” and dramatically cut tax rates on the wealthy and corporations. They said it would boost investment and create jobs. They said the “boost” in the economy would actually increase tax revenues.

How did that work out? Not so great. The LA Times reports, Hard times for Kansas and its schools as economic ‘experiment’ creates gaping budget hole,

In February 2015, three years into the supply-side economics experiment that would upend a once steady Midwestern economy, a hole appeared in Kansas’ finances.

To fill it, Gov. Sam Brownback took $45 million in public education funding. By April of this year, with the hole at $290 million, Brownback took highway money to plug it. A month later, state money for Medicaid coverage went into the hole, but the gap continued to grow.

Today, the state’s budget hole is $345 million and threatens the foundation of this state, which was supposed to be the setting for a grand economic expansion but now more closely resembles a battleground, with accusations and lawsuits flying over how to get the state’s finances in order.

The Center for Budget and Policy Priorities (CBPP) took a long look at the Kansas experiment and what happened, and reported in Kansas’ Tax Cut Experience Refutes Economic Growth Predictions of Trump Tax Advisors,

In fact, the tax cut failed to boost the Kansas economy:

● Since it took effect in January 2013, total employment in Kansas has risen only 2.6 percent, compared to 6.5 percent nationally. Private sector employment in Kansas has risen 3.5 percent, compared to 7.6 percent nationally.

● The state’s economy has grown less than half as fast as the national economy; Kansas’ gross domestic product (GDP) grew 4.8 percent from the end of 2012 through the first quarter of 2016, while national GDP rose 11.9 percent.

● Kansas’ share of newly opened business establishments in the United States has actually declined slightly rather than increased.

But wait, there’s more. According to CBPP, “Moreover, the Kansas tax cut package has had a deleterious impact on the state’s financial stability and the provision of critical services.” Tax revenues did not grow as promised, they continue to decline as the state’s economy collapses. The resulting reduction in infrastructure funding is hitting roads, etc., The state’s bond rating has been downgraded — twice — so the state has to pay higher interest rates. Economic growth and job growth is slower than much of the rest of the country.

More bluntly, Mother Jones, Trickle-Down Economics Has Ruined the Kansas Economy.

Puerto Rico, Oops

Puerto Rico offered “competitive tax rates” to corporations, in an effort to boost their economy. How did that turn out?

A Reuters Special Report from December, How dependence on tax breaks corroded Puerto Rico’s economy,

In trying to be attractive to U.S. firms, Puerto Rico instead

The industrialization push, dubbed Operation Bootstrap, rested on the premise that manufacturers lured by tax breaks would spur the development of a local economy because they would need local suppliers. The federal government supported the effort, viewing Puerto Rico as a vital capitalist outpost in the Caribbean.became indentured to them, pledging tax breaks and cheap labor for ultimately transient economic benefits.

… It turned out that the manufacturers were generally locked into global supply chains, and so they had limited impact on local business creation.

… Today, the U.S. territory has nearly $70 billion in debt, an unemployment rate 2.5 times the U.S. average, a 45 percent poverty rate, nearly insolvent pension systems and a chronically underfunded Medicaid insurance program for the poor.

The economic nosedive started in 2006, at the end of a 10-year phase-out by U.S. congress of tax breaks that had brought manufacturers to the island. Plant closures and job losses followed. Puerto Rico’s commonwealth government made things worse by taking on years of debt to replace the lost revenue.

Tax cuts didn’t work out so well for Puerto Rico, either.

Studies: Tax Cuts Do Not “Boost” The Economy

Republicans always argue that tax cuts for the rich and their corporations will “boost” the economy because “taxes take money out of the economy” and the promise that by cutting taxes at the top the “job creators” have more of an “incentive” to work “harder.” They even argue that cutting taxes actually increases tax revenue as a result of that “boost” in the economy.

So what’s the record?

In September 2012 the Congressional Research Service published a report that looked at 65 years of tax cuts and the economy, Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945. From that report,

Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%. There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.

What all those words say is as tax cuts took effect the economy slowed and longer term it slowed more. They didn’t conclude this was causal, but clearly tax cuts didn’t “boost” growth. The kicker: tax cuts were associated with wealth concentrating at the top.

So no, tax cuts didn’t “boost” growth at all and possibly cut growth while making income inequality worse.

David Leonhardt in the New York Times, also September 2012, Do Tax Cuts Lead to Economic Growth?

The defining economic policy of the last decade, of course, was the Bush tax cuts. President George W. Bush and Congress, including Mr. Ryan, passed a large tax cut in 2001, sped up its implementation in 2003 and predicted that prosperity would follow.

The economic growth that actually followed — indeed, the whole history of the last 20 years — offers one of the most serious challenges to modern conservatism. Bill Clinton and the elder George Bush both raised taxes in the early 1990s, and conservatives predicted disaster. Instead, the economy boomed, and incomes grew at their fastest pace since the 1960s. Then came the younger Mr. Bush, the tax cuts, the disappointing expansion and the worst downturn since the Depression.

From my December 2010 post, Do Tax Cuts Help The Economy,

It is obvious that the Reagan and Bush tax cuts for the wealthy have hurt us in many ways.

But this was the plan all along, wasn’t it?

The April, 2011 post, Conservative Tax Tricks – Did Tax Cuts Grow The Economy? is full of charts and figures, including this:

And this:

From my post Tax Cuts Are Theft,

A beneficial cycle: We invest in infrastructure and public structures that create the conditions for enterprise to form and prosper. We prepare the ground for business to thrive. When enterprise prospers we share the bounty, with good wages and benefits for the people who work in the businesses and taxes that provide for the general welfare and for reinvestment in the infrastructure and public structures that keep the system going.

Since the Reagan Revolution with its tax cuts for the rich, its anti-government policies, and its deregulation of the big corporations our democracy is increasingly defunded (and that was the plan), infrastructure is crumbling, our schools are falling behind, factories and supply chains are being dismantled, those still at work are working longer hours for fewer benefits and falling wages, our pensions are gone, wealth and income are increasingly concentrating at the very top, our country is declining.

Tax Cuts Hurt We the People

The record proves that tax cuts don’t “boost” the economy, they just make the rich even richer. So why do we keep getting told they will?

Tax cuts make the rich richer and hurt the rest of us because they force budget cuts in things that make our lives better and actually do grow the economy, like infrastructure and education. A prosperous economy with good businesses and good jobs and good wages result from good education and the business conditions created by good infrastructure, research, etc. These things take investment and regulation and those are the result of taxes and strong government.

If you cut taxes and wages to offer a “competitive environment” what happens is companies move from somewhere else, government there collects less in taxes, government in the new location collects less in taxes, the workers there get laid off and the new workers are always paid less — sometimes much less. If you do the math, you see that in the larger picture of an economy — one that includes the places the companies moved from and moved to — overall wages drop so the public in general is poorer, government is weakened so it can’t help and invest. In the end, the owners of the companies have a larger share of the pie.

Tax cuts are a scam to weaken democracy and our government’s ability to fight corporate power and concentrated wealth.

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This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.

Watch Out For The Coming Corporate Tax-Break Trickery

One of the biggest fights coming up in the newly elected Congress next year will be “corporate tax reform.”

If you follow policy news you’ve been hearing that Congress wants to “reform” corporate taxes (again). When you hear talk of “reform” from our corporate-captured Congress it means you need to run as fast as you can — and organize. The way they use the word, it always means give them more and We, the People get less.

Senator Schumer Talking About Massive Break On Taxes Corporations Already Owe

Senator Chuck Schumer (D-Wall Street) might be Senate Majority Leader after the election. In a Tuesday CNBC interview he said he is hoping to work with Republican House Speaker Paul “Gut the Government” Ryan on “some kind of international tax reform tied to a large infrastructure program.” In the interview Schumer said:

If you can get overseas money to come back here, even if it’s at a lower rate than the 35 it now comes back at, and you can use that money for a major constructive purpose such as infrastructure, if you did an infrastructure bank, for instance, you could get $100 billion in equity in the bank and get a trillion dollars of infrastructure.

When Schumer says “at a lower rate” he is talking about a “tax holiday” allowing corporations to pay less than the 35% tax rate they owe (minus deductions for taxes already paid overseas) on some $2.5 trillion of profits they have stashed in “overseas” tax havens. These corporations owe around $720 billion or so on those profits. So rewarding them for tax dodging with a lower tax rate means handing them up to hundreds of billions of dollars that the country needs for schools, health care and yes, infrastructure repair.

These tax-dodging, multinational corporations used schemes and tax havens to dodge paying taxes they owe. Meanwhile other corporations — usually smaller, domestic companies — paid their taxes. This gave the multinational corporations that used schemes and tax havens to dodge paying their taxes an advantage over the honest, domestic companies that did pay their taxes.

So why should Congress reward tax-dodging, multinational corporations by letting them keep some of the taxes they dodged, thereby punishing the domestic corporations that did the right thing for the country? See if you can guess why. (Hint: the tax-dodging corporations have “captured” Congress using a portion of that money.)

Revenue Neutral?

The corporations are also trying to sell “tax reform.” This “reform” is really just another huge corporate tax cut that is explained as a “revenue neutral” deal to “cut corporate tax loopholes” and use the resulting revenue to cut the corporate tax rate. The term “revenue neutral” means the tax revenue coming to the government stays the same. “Revenue neutral” sounds like a good deal but in reality it’s just a trick. It means taxes go up for some companies but way, way down for others. Guess which companies lose out. (Hint: it won’t be the giant multinational corporations that have captured Congress.)

The top corporate tax rate used to be 52 percent. Under Reagan it was 46 percent. Then Congress “reformed” taxes and dropped the rate to just 35 percent. Corporations used to shoulder 32 percent of the total tax burden. It has fallen to only 10 percent of the burden. That is a drop of two-thirds. See if you can guess who pays that two-thirds difference. (Hint: it isn’t corporations or their wealthy owners. It is cuts to schools, infrastructure, health care and all the things that used to make our lives better. This is one part of the economic squeeze everyone feels.)

On top of that they are also trying to sell a scheme that lets them off the hook for profits made outside of the country. See if you can guess how fast every corporation moves its profit centers and production out of the country if that passes. (Hint: every single corporation will move every job, factory, profit center etc out of the country if that passes.)

What Budget Deficit And Debt?

Our country has a budget deficit and a large debt caused by tax cuts and wars. The current hysteria over deficits is driven by corporate-and-billionaire-funded PR “think tanks” that pump out propaganda and hysteria 24/7/4/12. Can you guess what 24/7/4/12 means? (Hint: 24 hours, 7 days, 4 weeks, 12 months of the year.)

With a budget deficit and a large debt the fact is that a “revenue neutral” tax reform for corporations who have already had their tax rates cut and cut and cut is the very last thing the country needs to do. What we need to do instead is close that loophole that lets giant, multinational corporations hide $2.5 trillion in profits in “overseas” tax shelters, and make them pay the $720 billion or so of taxes they owe now, plus the $90-100 billion or so of taxes they will dodge every year after. Period.

Revenue neutral, Schumerutral. Just make these giant, tax-dodging, multinational corporations pay what they owe. Don’t reward them for tax-dodging. And restore the 52% corporate tax rate instead of cutting it even further.

PS Take a look at this Fact Sheet: Corporate Tax Rates from Americans for Tax Fairness.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progressive Breakfast.

Oregon Locals Take On Corporate Power With ‘Tax Corporations’ Measure 97

Much of Congress is captured by corporate money. So literally nothing gets through Congress if it interferes with the corporate/1% -boosting agenda. Many in the federal regulatory agencies are captured by promises of corporate payoffs after leaving government, so these agencies do almost nothing to crack down on corporate abuses of We the People.

At the state level, the corrupting power of corporate and billionaire money can have an even greater effect. For example, after the Republican-dominated Supreme Court opened up the floodgates of corporate money with the Citizens United decision, that money helped Republicans take over statehouse after statehouse.

In these states, taxes on corporations and the wealthy were cut, and schools, roads, healthcare and the rest of the things government does to make the lives of We the People better were gutted. In other states, corporate money blocks needed taxation and essential government programs.

With corporate and billionaire money determining the outcome of policy decisions at the national and state levels, people in the cities and states are using ballot initiatives to try locally to take back power. Around the country we’ve seen successful efforts to pass measures such as minimum wage increases, fracking bans and anti-tobacco initiatives.

Oregon’s Measure 97

Oregon’s Measure 97 ballot initiative is one example of We the People trying to take back control of government from the 1% and their powerful corporations.

Oregonians will vote soon on taxing larger corporations to protect programs that help Oregon’s people instead of just the wealthy and their corporations. Specifically, Measure 97 would increase the minimum tax for large and out-of-state corporations with more than $25 million in annual Oregon sales.

This is not a tax increase, this is requiring corporations that might otherwise dodge taxes to pay a minimum tax to generate money to cover the state’s budget needs.

The NY Times summed up the effect Measure 97 would have in September’s report, Measure 97, Seeking to Raise Corporate Taxes, Splits Oregon Voters,

If approved by the voters here in November, Measure 97 would create the biggest tide of new tax revenue in any state in the nation this year as a percentage of the budget, economists said — and one of the biggest anywhere in recent history. Oregon’s general fund would grow by almost a third, or about $3 billion a year, through a 2.5 percent tax on corporate gross receipts. The initiative language says the money would augment state spending on education, health care and senior services, but does not bind the Legislature to a specific plan.

Summary:

Make large corporations — many of which take the profits out of the state — pay at least minimal taxes.

With that money Oregon gets to maintain or increase programs like:

● special education,
● hire 7,500 teachers,
● provide PE & Arts classes and make sure there is a nurse at every school,
● add 2 weeks to the school year,
● fund a statewide, modern public health system
● maintain Oregon’s Cover All Kids, a Basic Health Program,
● expand health insurance subsidies for working families
● provide mental health and substance abuse care,
● providing in-home assistance to 15,180 more seniors, and
● fully fund Adult Abuse Prevention to investigate every case of possible abuse or neglect.

Supporters

That’s good trade-off, which brings out lots of supporters. The Vote Yes On 97 website says that, “6,000 volunteers, over 1,250 endorsements from community organizations, economists, parents and teachers, local leaders, and over 435 Oregon businesses.” Click here to see the list of businesses, educators, community groups, labor unions, elected officials, and community leaders

Supporters include People’s Action affiliates Unite Oregon and The Main Street Alliance of Oregon. OurRevolution also supports Measure 97.

Darlene Huntress, associate director of Unite Oregon, says of Measure 97,

“This is about corporations investing in communities. With the budget shortfall that we have this is about taxing corporations, many of which aren’t paying taxes now. what this could do for education, health care and senior services is a real gamechanger.

On top of that Unite Oregon works with communities of color, immigrants and refugees. Many of these corporations are the same corporations that have invested in private prisons and detention centers. We’d prefer this money was invested in our communities instead of invested in separating families.”

Opponents

The Times’ report also lays out who is for and against Measure 97, (hint: the usual suspects)

Labor unions, led by teachers, are leading the fight for passage, arguing that decades of erosion in education funding are the cause of the state’s dismal high school graduation rate, among the lowest in the nation. Opponents have raised about $8 million — four times as much as supporters — through contributions from large companies like Amazon, General Motors and the grocery chain Kroger/Fred Meyer.

Corporations are doing what they always do: pouring millions into the campaign, and extorting citizens by threatening to raise prices, cut jobs, or just leave the state.

CAN Corporation Raise Prices To Cover Taxes?

A short examination of just one of these arguments — can corporations really raise prices to “pass on taxes to customers?” — shows that the corporate arguments against taxation have little credibility.

● Companies try to price ‘optimally,” meaning they already charge as much as they can. If they could raise prices, they already would have.

● Taxes are determined long after a sale takes place and are not a cost to be added into the pricing of a product. There is no way to know what the taxes might be later.

● Companies have competitors. If “Company A” raised prices, competing “Company B” would get more business, which would mean that “Company A” loses sales, which would mean they have lower profits and therefore lower taxes, which would mean they would have to lower prices…

● Suppose a company could raise its prices regardless of competition. That would mean the profits would be even greater, which means the taxes on profits would be greater, which would mean they have to raise prices even more. But that would mean profits would be even greater, which means the taxes on profits would be greater, which would mean they have to raise prices even more. But that would mean profits would be even greater …

People in corporations know they can’t raise prices to “pass on taxes to customers,” yet they are making the argument anyway. Other corporate arguments against raising taxes have similarly low credibility.

If you live in Oregon, take a look at Measure 97. If you don’t live in Oregon, learn from Oregon’s amazing activists and organizers and organizations like the coalition behind Measure 97. You can how power in your state to take on corporate power and restore government of, by and FOR the people.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progressive Breakfast.

Small Businesses Speak Out Against Donald Trump’s Tax Plan

“Tax cuts skewed towards the wealthy elite starve our communities of much-needed resources while further tilting the scales towards large corporations and the rich.”
– Stephen Rouzer at Main Street Alliance

If you cut taxes for the rich and giant corporations, what happens to the rest of us? Tax cuts mean budget cuts, so what suffers is education, infrastructure and all kinds of things government does to make our lives better and our local businesses stronger.

Republicans argue that pushing wealth and income to the top few has a “trickle down” effect. They say wealthy people (like Paris Hilton) are “makers” who “create jobs” and therefore deserve to have heaps of money pushed their way for their benefit. They say that government spending on things that make the lives of We the People better really just makes us into “takers.”

But in reality, policies that push more and more of our country’s resources into the largest hands put our smaller hands at even more of a disadvantage. The giant corporations have huge advantages over small, local businesses just due to their size; huge tax breaks on top of their size-given advantages just make it that much harder for smaller businesses to compete. So the “WalMart business model” of undercutting and bankrupting a community’s small businesses and draining entire regions of wealth gains even more power. After decades of these “trickle down” policies, this is also known as “look around you.”

Trump’s Tax Plan Means Fewer Customers With Money To Spend At Local Businesses

The Main Street Alliance is a “is a national network of small business coalitions” that “works to provide small businesses a voice on the most pressing public policy issues across the nation.” (Donate here.)

A Main Street Alliance blog post by Stephen Rouzer, “Donald Trump’s Revised Tax Plan Won’t Work for Main Street,” begins,

The latest version of Donald Trump’s ever-changing tax plan is facing scrutiny from the Center on Budget and Policy Priorities and Main Street Alliance leaders. The plan, one that features across the board tax cuts, disproportionately benefits the highest-income earners, those grossing more than $1 million annually.

This description of Trump’s plans as a huge benefit to the wealthiest is based on a Center on Budget and Policy Priorities (CBPP) post explaining a Tax Policy Center (TPC) analysis of Donald Trump’s tax proposals. The CBPP post, “Revised Trump Tax Plan Heavily Tilted Toward Wealthiest, Tax Policy Center Analysis Shows” explains how the analysis shows that Trump’s tax cut raise the after-tax income of the already-wealthy by another 14% or more, while hardly benefiting the rest of us – or even cutting the take-home incomes of the poorest.

This would seriously affect small, local businesses. Rouzer explains how passing so much to the top few while starving the rest of us means local businesses have fewer customers with money to spend:

A 2015 report released by the Main Street Alliance, “Voices of Main Street,” surveyed over 1000 small business owners and found that 52 percent of respondents cited “more customers” as the most important key to increasing small business success. Doubling the number of respondents that said “lower taxes” and more than quadrupling the number that responded “fewer regulations.”

Tax cuts skewed towards the wealthy elite starve our communities of much-needed resources while further tilting the scales towards large corporations and the rich.

Rouzer concludes with some great comments from business owners:

“To level the playing field for Main Street businesses our tax code must no longer skew in favor of large corporations and their shareholders,” said Deborah Field, the owner of Paperjam Press in Portland, Oregon, and a former corporate tax accountant. “Without holding multinational corporations accountable to pay what they owe and first providing relief to low and middle-income earners we shouldn’t begin to consider tax cuts for the rich.”

[…]

“The vast majority of small business owners don’t support a tax system that augments their piece of the pie by cheating their fellow citizens out of theirs. When we contribute our fair share of taxes, those dollars get reinvested in our local communities,” said David Borris, the owner of Hel’s Kitchen Catering in Chicago and Main Street Alliance Executive Committee member. “Local communities that support tens of millions of small businesses nationally.”

Amanda Ballantyne, national director of the Main Street Alliance, says that “Mr. Trump’s tax breaks would deprive the government of badly needed funds for investments in infrastructure, transportation, education, and social services. The resulting budget cuts hinder the types of investments that drive local economies and put small businesses in a better position to succeed.”

The kind of tax policy that small businesses need is one that supports their customer base and their communities. “In that regard, Trump’s plan falls flat,” says Ballantyne.

Donald Trump wants to dramatically cut taxes for the already-wealthy and their giant corporations. This would starve local communities of resources like teachers and infrastructure, while stacking the deck further against smaller, local businesses.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progressive Breakfast.

New Corporate Tax “Shell Game” Report: $718 Billion Of Corporate Tax-Dodging

“Multinational corporations’ use of tax havens allows them to avoid an estimated $100 billion in federal income taxes each year,” says a new report just released by Citizens for Tax Justice (CTJ), Institute on Taxation and Economic Policy (ITEP) and U.S. Public Interest Research Group Education Fund (U.S. PIRG).

That report, “Offshore Shell Games 2016,” explains how “U.S.-based multinational corporations are allowed to play by a different set of rules” when it comes to paying taxes.

Congress – for obviou$ rea$on$ – refuses to stop this “deferral” loophole. And then these same companies fund “think tanks” and other propaganda mills that tell us we have a huge budget “deficit” and “debt” problem and therefore need to cut spending on things that make people’s lives better.

From the report’s executive summary:

Most of America’s largest corporations maintain subsidiaries in offshore tax havens. At least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014.

-All told, these 358 companies maintain at least 7,622 tax haven subsidiaries.

-The 30 companies with the most money officially booked offshore for tax purposes collectively operate 1,225 tax haven subsidiaries.

Some of the key findings from the report:

● Fortune 500 companies now hold nearly $2.5 trillion in earnings offshore and we estimate that they are avoiding $718 billion in taxes on these earnings.

● More than 73 percent of Fortune 500 companies maintain at least one subsidiary in a tax haven.

● Apple has booked $215 billion offshore on which it owes $65.4 billion in taxes.

The solution is for Congress to end the “deferral” loophole and make these companies just pay the taxes they owe.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progressive Breakfast.

EU Tells Giant Corporation It Is The Boss Of Them

Corporations are more and more in the habit of telling governments that they are the boss of them. If corporations get their way, “trade” agreements like the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) will formalize their dominance. But not quite yet.

The European Union (EU) just told Apple that it is the boss of them, and not the other way around. The EU has ruled that Apple’s tax-avoidance scheme with Ireland’s government is illegal, and Apple owes Ireland $14.5 billion — plus interest. The EU decided that Ireland’s tax deal with Apple, based on Apple demanding a tax break to “bring jobs” to Ireland instead of somewhere else, constitutes “state aid” to the company. The EU pointed out that other, smaller companies are hurt when giant corporations like Apple get special tax deals.

In other words, the EU has ruled that it is illegal for an EU government to give in to corporate extortion, because giving in and paying the extorting company a tax break ransom means the government is providing “state aid.”

In other other words, where last week Apple’s CEO told the US government that the giant corporations are the boss of government, this week the EU told Apple that, actually, government is still the boss of the giant corporations.

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CEO Of Giant Corporation Tells US Government He’s The Boss Of Them

Are We the People the boss of giant multinational corporations, or are they the boss of us?

Imagine, if you will, going to the IRS and saying, “I don’t think the tax rate is fair so I’m not going to pay it.” Regular Americans can’t do that. But Apple just did.

Apple’s CEO Tim Cook was interviewed by The Washington Post early this month. He was asked about the vast sums of profits that Apple has shifted into overseas tax havens thanks to a loophole in US tax law that lets them “defer” paying taxes on those profits as long as the money technically stays outside the country. Cook said (emphasis added, for emphasis):

And when we bring it back, we will pay 35 percent federal tax and then a weighted average across the states that we’re in, which is about 5 percent, so think of it as 40 percent. We’ve said at 40 percent, we’re not going to bring it back until there’s a fair rate. There’s no debate about it.

What would happen to any regular American if they did what Cook did, and said they they aren’t going to pay taxes because they don’t think the tax rate is “fair”? (Hint: Jail. And maybe 2 or 3 years added to the sentence for the contempt of saying, “There’s no debate about it.”)

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San Francisco Looks To Tax Tax-Dodging Tech Companies

All of us suffer consequences when corporations cheat. Silicon Valley’s tech companies make a lot of money, but many of them dodge paying taxes. San Francisco is going to try to do something about it. Three supervisors are proposing that the city tax tech companies to help pay the costs these companies impose on the city.

Silicon Valley housing costs have skyrocketed thanks to the high salaries and stock options tech companies pay to attract skilled workers. In San Francisco and much of the area, the median rent for a one-bedroom apartment is over $3,500. The median home sells for over $1 million. This has pushed many long-term residents to the edge of or even into, homelessness.

San Francisco is a mecca for young, affluent tech workers. In some areas of San Francisco the streets are lines with sidewalk restaurants, brewpubs, great shops, all the things that make an urban environment a fun place to be. In other parts of the city the streets are literally lined with homeless people, many pushed out by the lack of housing that people making only double or triple the national median income can afford.

The Tax

Three supervisors have proposed a ballot proposal to approve a 1.5 percent payroll tax on “tech companies” with more than one million dollars in gross revenue. This would raise around $115 million annually for the city, which would go to homelessness programs and affordable housing projects. Also in the proposal as many as 75,000 small businesses would have their business registration fee cut in half.

Thomas Fuller Reports in The New York Times, in “San Francisco Considers Tax on Tech Companies to Pay for Boom’s Downside“:

Eric Mar, a member of the city’s Board of Supervisors, announced the proposal last week for a 1.5 percent payroll tax that would serve as a form of indemnification for what he described as the downside of the technology boom.

Tech companies have been “a tremendous benefit to the city in many ways,” Mr. Mar said. “But I don’t think they’ve been paying their fair share.”

The proposal for what has become known as the tech tax comes as officials struggle to fill growing gaps in the city budget. Money from the tech tax would go toward paying for programs for the homeless and the housing “affordability crisis,” Mr. Mar said.

Opponents say it is hard to define what a “tech company” is. But according to SFGate’s Emily Green:

The measure identifies tech companies by the type of tax code they use under the Internal Revenue Service’s North American Industry Classification System. Companies classify themselves. They may face penalties if a government audit finds they are misidentifying themselves.

Community Groups Back Tax

The community groups backing the tax include:

Causa Justa/Just Cause, “a multiracial, grassroots organization building community leadership to achieve justice for low-income San Francisco and Oakland residents. … [W]e are a force for justice and unity among Black and Brown communities. … We provide tenant rights advocacy and information to tenants through our Housing Committee/Tenants’ Rights Clinic. We build our membership through recruitment in the tenants’ rights clinics and through neighborhood door knocking and outreach. We fight grassroots campaigns to win immigrant rights and housing rights and work toward building a larger movement for social transformation.

San Francisco Rising, which organizes “in African-American, Latino and Asian/Pacific Islander communities in San Francisco. … [T]he members of SFR seek to build a new, community-based political infrastructure and to make lasting change on a broad set of issues impacting their communities.”

Jobs with Justice, which “believes that all workers should have collective bargaining rights, employment security and a decent standard of living within an economy that works for everyone. We bring together labor, community, student, and faith voices at the national and local levels to win improvements in people’s lives and shape the public discourse on workers’ rights and the economy.”

The Coalition on Homelessness “brings together homeless folks, front-line service providers, and their allies to build a San Francisco that everyone can call home. We are working every day to expand access to housing in one of the richest cities in the country, protect the rights of the poorest people on our streets, and to address the root causes of homelessness and poverty.”

Tax-Dodging And Extortion

Many of the giant tech companies use various schemes to dodge paying their taxes. Apple, for example, pretends that an Irish subsidiary owns the “intellectual property” behind the company’s products, and this subsidiary charges high fees, so Apple’s profits are in Ireland. This enables Apple to dodge paying U.S. taxes. Apple also pretends that it is based in a mailbox in Nevada to avoid paying corporate taxes in California. Google, for example, notoriously makes billions of dollars of profits in low-population Bermuda.

On top of tax dodging, tech (and other) companies often extort local tax breaks. Twitter, for example, extorted millions in tax breaks from San Francisco by threatening to leave the city. SFGate explains Twitter’s tax break, in “Companies avoid $34M in city taxes thanks to ‘Twitter tax break’,”

Businesses in San Francisco’s Mid-Market district skirted nearly $34 million in city payroll taxes last year thanks to a controversial incentive program known as the “Twitter tax break” intended to keep tech firms from fleeing for Silicon Valley.

That sum, published in a report released Monday by the San Francisco Controller’s Office, increased by about $30 million from 2013 and is five times greater than the amount of taxes companies avoided in the two previous years combined.

The aforementioned New York Times report explained what Twitter did to get this: “Twitter received the tax breaks after threatening to leave the city, creating resentment among tech companies in other parts of the city that did not get such incentives.”

Opponents are also using extortion to fight the proposed “tech tax,” calling it a “job-killer.” They say the small payroll tax will cause companies to pack up and leave the city so the city has to give in (a.k.a extortion). But the reality is these companies are desperate to bring in tech-skilled employees. So tech companies offer many perks to attract tech-trained employees. Aside from very high pay, employees get free lunches, snacks and beverages. At many companies even dinner is free. They get child care. They get stock options and generous benefit packages. Some even offer backrubs and yoga classes.

One of the biggest perks a tech company can offer is being located in San Francisco itself, instead of having to use their private bus network to bring employees from San Francisco.

Private bus networks? What? The February 2015 post, “Tax Scams, Google Buses Mean Silicon Valley Is #StuckInTraffic” explained:

The traffic in Silicon Valley is absolutely terrible. We the People sit in traffic, with few alternatives. The Caltrain line that runs between San Jose and San Francisco is standing room only during the hours people are trying to get to work. The Bay Area Rapid Transit (BART) rail system doesn’t go where it needs to go, and its parking lots are full where there are stations further north. Light rail is limited. The bus system is a few buses on a few of the main roads.

… But companies like Google, Facebook, Apple and others have built their own private bus lines. These are mostly shiny, white luxury buses that bring employees to work and take them home. Locally, we call them all “Google Buses.” There have even been protests because these buses bring affluent tech employees up to San Francisco neighborhoods, causing rents to soar.

There’s a relationship between those “Google Buses” and the rest of us sitting still, stuck in traffic.

Why can’t we afford to maintain our 1970s-level public transportation system? (Never mind bringing it into the 21st century.) Where did the money go? You’ve heard about companies like Apple using schemes and scams like the “Double-Irish With a Dutch Sandwich” to dodge paying taxes. Remember when an Apple executive said to The New York Times that these tax scams are just fine, because giant multinationals “don’t have an obligation to solve America’s problems.”

Commuters sit in traffic jams because tax-dodging corporations are not helping pay for transportation options. Meanwhile those companies use their tax-dodger money for beautiful, modern private transportation “Google bus” systems for themselves. They extort tax breaks. They externalize problems onto communities and offer little help – because giant multinationals “don’t have an obligation to solve America’s problems.”

Warning Shot

This proposal needs six of the eleven members of the Board of Supervisors to get on the November ballot, which is unlikely. The measure singles out “tech” companies and not others, and only those based in San Francisco. Giant companies like Facebook, Google, Apple and others are not based in San Francisco, but they deliver their high-paid employees to San Francisco’s housing market in their private bus networks.

This modest, local tax is not likely to pass, but should serve as a warning shot to giant companies – whether defined as tech companies or not – that people and communities are more than fed up with their tax dodging and their ducking responsibility for their practices.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progressive Breakfast.

Panama Papers Expose Another Way Our Trade Agreements Fail Us

Global Witness recently presented this TED talk on “how exposing anonymous companies could cut down on crime.”

Should our own government help oligarchs, billionaires and their corporations, criminals and terrorists hide their loot, launder their funds, and drain countries and their governments of needed revenue? Or should our government try to help stop this?

So far our government has too often been on the side of the bad guys.

Criminals, drug cartels, human traffickers, arms dealers, tax evaders, corrupt politicians, terrorists, oligarchs and plutocrats can use anonymous, secret shell corporations in tax-haven countries to stash, launder and hide their money. There are trillions of dollars of hidden wealth, much of it accumulated through crime and corruption. The secrecy is draining governments around the world of badly needed tax revenue, and it is enhancing and accelerating poverty and inequality.

Frederick E. Allen explains at Forbes, in “Super Rich Hide $21 Trillion Offshore, Study Says“:

A new report finds that around the world the extremely wealthy have accumulated at least $21 trillion in secretive offshore accounts. That’s a sum equal to the gross domestic products of the United States and Japan added together. The number may sound unbelievable, but the study was conducted by James Henry, former chief economist at the consultancy McKinsey, an expert on tax havens and offshoring. It was commissioned by Tax Justice Network, a British activist group.

The Panama Papers

The Panama Papers exposé by The International Consortium of Investigative Journalists has helped expose how certain countries enable the world’s plutocrats, outlaws, corrupt leaders, terrorists, warmongers, and the rest of the worst to use tax havens and anonymous shell corporations to hide their wealth, dodge taxes, dodge sanctions and even drain the wealth of countries. The reporting so far shows that just one Panama company had created up to 215,000 offshore shell companies for 14,153 clients. The reports link 143 politicians (or their families and close associates) to the use of tax havens to shield huge amounts of money. Again, this is from just one company in just one tax-haven, anonymous shell corporation-enabling country.

This also exposes how our own government is sometimes a party to enabling, even encouraging this activity. Our own government allows anonymous shell corporations here at home, and does not fight countries that enable them abroad when it negotiates so-called “trade” agreements that are supposed to lay down rules for financial interaction.

So-Called “Trade” Agreements, For Example

Our government negotiates what are called “trade” agreements with other countries. These negotiations are an opportunity to set up the rules for financial interactions between countries.

The 2012 U.S.- Panama Trade Promotion Agreement is promoted by our own U.S. Trade Representative’s office as “a comprehensive free trade agreement that provides elimination of tariffs and removes barriers to U.S. services, including financial services.” This agreement was an opportunity to fight global tax evasion, shell-corporation secrecy and other results of Panama’s bank and corporate secrecy. We could have negotiated to require an end to bank secrecy and shell corporations. But bank and corporate secrecy were not even part of the negotiations.

This demonstrates how the warped priorities of our “trade” process are hurting not just U.S. citizens and government but all citizens and governments.

Repeated Warnings

Before the Panama trade agreement was approved, individuals, organizations and even politicians warned repeatedly that the agreement would enhance the ability of corporations and individuals to hide wealth and taxable income from governments and criminal investigators.

In 2011, Vermont Senator Bernie Sanders, for example, gave a speech on the Senate floor opposing the trade agreement, warning that Panama’s entire economic output at the time was obviously too low to be of any benefit to American workers. “Then why would we be considering a stand-alone free-trade agreement with Panama?” Sanders said the real reason for the agreement is that “Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade taxes.” He said it “will make this bad situation much worse.”

To show how Panama enables people and corporations to hide behind corporate secrecy, an intern at Public Citizens set up her own personal Panama shell corporation. Here’s what The Huffington Post’s Arthur Delaney wrote about this:

It’s so easy for U.S. corporations to set up an offshore tax haven in Panama, an intern could do it. Really! To make this point, Public Citizen’s Global Trade Watch division had one of its interns call up some Panamanian law firms for advice on starting up a shell company.

“Panamanian corporations basically pay no taxes on foreign-derived income,” one man explained to the intern, Jessica. Another said: “You’re protected by the strictest banking secrecy laws in the world,” thereby “totally removing you from the legal trail.”

Public Citizen was warning that the Panama Free Trade Agreement (FTA) did not fight and in fact further enabled the secrecy:

“It would give investors registered in Panama new rights to challenge U.S. anti-tax haven regulations and other initiatives for taxpayer-funded compensation,” said Todd Tucker, research director for Public Citizen’s Global Trade Watch division, in an interview with The Huffington Post.

… Tucker said that the Panama FTA would compromise the Obama administration’s recently-announced crackdown on tax havens, which the president said would save $210 billion over the next decade. (A 2008 Senate report estimated that the U.S. loses $100 billion to tax havens every year.)

With so many groups and individuals warning that the Panama agreement would boost the ability of people and corporations to dodge U.S. taxes using subsidiary shell corporations and secret bank accounts, the Obama administration announced in 2010 a “Tax Information Exchange Agreement with Panama.” This agreement had a loophole letting Panama to set aside tax transparency provisions if Panama decides they are “contrary to the public policy” of Panama. Of course, Panama invoked the loophole because so much of Panama’s income comes from bank secrecy, tax-free status and the ability to set up anonymous Panama shell corporations.

This week Public Citizen’s Lori Wallach issued a statement on the revelations in The Panama Papers:

“Nearly five years after the U.S.-Panama Free Trade Agreement (FTA) vote, the Panama Paper leak proves once again how entirely cynical and meaningless are the American presidents’ and corporate boosters’ lavish promises of economic benefits and policy reforms from trade agreements. The top promise about the benefit of the U.S.-Panama FTA was that it would end Panama’s financial crime secrecy protections and tax haven and money laundering activities, but what this leak shows is that, if anything, Panama’s outrageous financial crime facilitation has intensified while the FTA’s investor protections and official U.S. stamp of approval have increased inflows of dirty money to Panama.

Our Isaiah J. Poole writes, in “Panama Papers Controversy Offers An Opportunity To Push For Transparency“:

The silver lining in the Panama Papers scandal is that the world’s attention is being focused on a global problem in which the wealthy and powerful act beyond the reach of law, playing by a different set of rules from the rest of us. The United States does not have to go it alone in addressing this problem. But our elected officials, and the people running to be our next president, should lead. Supporting legislation that supports more transparency would be a start.

Countries that allow banking secrecy, the formation of anonymous shell corporations and tax-haven status should be considered rogue, outlaw countries. There should be international sanctions against individuals and corporations that do any business with such countries. There certainly should not be “free trade” agreements with such countries.

Harmonizing international tax law and prohibiting anonymous shell corporations should be at the center of our trade negotiations. Unfortunately, our corporate/billionaire-dominated trade process appears to have worked toward just the opposite. We the People and all of trade’s stakeholders – labor, consumer, human rights, environmental, democracy and other such groups – need to have seats alongside our businesses and government representatives at the trade negotiating table.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

The Latest Tax-Scam Corporate ‘Inversion’ – Who Pays Instead?

Johnson Controls Inc. and Tyco International PLC have announced a $14 billion merger, with the resulting company pretending to be “Irish.” This is called an “inversion” and is all about dodging taxes.

Johnson Controls is actually based in Milwaukee. Tyco is based in Princeton, N.J. but became “Irish” through its own prior tax-dodging inversion(s). The Washington Post explains this, in “Manufacturing giants Tyco and Johnson Controls agree to merge“:

This is not the first time Tyco, which started as a New Jersey-based research laboratory for the U.S. government in the 1960s before growing into a global behemoth with workers in about 50 countries, has made use of tax-avoidance measures. In 1997, it merged with a Bermuda-based company in another corporate inversion before moving its headquarters to Switzerland in 2008. It moved to Ireland in 2013.

Tyco is also remembered for its former President Dennis Kozlowski, who was convicted in 2005 of various crimes related to looting shareholders and using the money for things like a 2001 $2.2 million party on the island of Sardinia.

The Inversion Tax Scam Game

An inversion allows corporations to pretend to be non-U.S. companies and dodge taxes while still getting the full benefits of our country’s taxes: roads and other physical infrastructure, advanced legal system, educated workforce, police and other protections, military protection, and so on.

November’s post, “Pfizer Buying Allergan So It Can Pretend To Be Irish In Tax Scam” explained how this works: “In other words, the resulting merged company will make and sell products in the same places it makes and sells them now. The same executives will occupy the same buildings. It will receive the same taxpayer-funded U.S. services, infrastructure, courts and military protection that it receives now. But the company will now claim it is “based” in tax-haven Ireland and thereby dodge U.S. taxation.”

The thing is, corporations and shareholders already pay lower tax rates than regular people do. They also get special privileges including “limited liability.” People who make money trading corporate shares get a special, lower “capital gains” tax rate. (This capital gains tax rate is lower because the wealthiest make most of their income from capital gains, and the wealthiest make most of their income from capital gains because the capital gains tax rate is lower.)

But they want more. They want it all. And they’re getting it.

Who Pays Instead?

The billionaires and other shareholders already enjoy special lower tax rates than the rest of us (low capital gains tax rates, the Social Security “cap,” the carried interest loophole, multitudes of other breaks…) This is just one more tax break they utilize as their wealth builds and builds. And that massive accumulated wealth buys more and more privileges and breaks.

We the People of the United States, through our elected Representatives in Congress, allow this. Or, to put it in today’s reality: Billionaires and their corporations pay handsomely for a Congress that allows this.

But when these giant corporations and the billionaires behind them don’t pay their taxes, guess who has to either make up the difference or suffer the cutbacks in the things government does to make our lives and economy better? (Hint: Register to vote today and be absolutely sure to show up and VOTE this time. Don’t be misdirected, demoralized, suppressed or otherwise tricked into not voting. Talk to other people about registering and voting, too.)

The Candidates

The Republican candidates generally propose stopping corporate inversions to avoid U.S. corporate taxes by reducing or even ending U.S. taxation of corporations.

Presidential candidates Bernie Sanders and Hillary Clinton have similar proposals for limiting these “inversions.”

Here’s Hillary Clinton’s statement on the Johnson Controls-Tyco inversion deal:

“It is outrageous when large multinational corporations game the tax code and shelter money overseas to avoid paying their fair share, including through maneuvers like inversions. As I have said throughout my campaign, these efforts to shirk U.S. tax obligations leave American taxpayers holding the bag while corporations juice more revenues and profits.”

Clinton’s “detailed and targeted plan to immediately put a stop to inversions and invest in the U.S.” includes:
● A 50 percent threshold for foreign company shareholder ownership after a merger before an American company can give up its U.S. identity.
● An “exit tax” to ensure multinational companies that change their identity pay a fair share of the U.S. taxes they owe on earnings stashed overseas.
● A crackdown on “earnings stripping,” one of the key benefits of inversions.

Sanders released a statement condemning “corporate deserters”:

“The potential Johnson-Tyco merger would be a disaster for American taxpayers,” Sanders said. “Profitable companies that have received corporate welfare from American taxpayers should not be allowed to renounce their U.S. citizenship to avoid paying U.S. taxes. These corporate inversions must stop.

“My message to these corporate deserters is simple: You can’t be an American company only when you want corporate welfare from American taxpayers or you want lucrative contracts from the federal government,” Sanders continued. “If you want the advantages of being an American company then you can’t run away from America to avoid paying taxes.”

The Sanders Corporate Tax Reform Plan involves:
● Ending the rule allowing American corporations to defer paying federal income taxes on profits of their offshore subsidiaries.
● Closing loopholes allowing American corporations to artificially inflate or accelerate their foreign tax credits.
● Preventing American corporations from claiming to be foreign by using a tax-haven post office box as their address.
● Preventing American corporations from avoiding U.S. taxes by “inverting.” Under Sanders’ bill the U.S. would continue to tax such a company as an American corporation so long as it is still majority owned by the owners of the American party to the merger or acquisition.
● Prevent foreign-owned corporations from stripping earnings out of the U.S. by manipulating debt expenses.
● Preventing large oil companies from disguising royalty payments to foreign governments as foreign taxes.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Budget Deal: Republicans In Service To Oil Companies, Never The Public

The “omnibus” budget for the next year is out. Here are some of the winners and losers.

With a Republican Congress, every budget battle is about ratcheting down the things our government does to make our lives better. Every budget battle is a defensive action, with Democrats fighting to keep things that help the public for another year or two. Republicans fight for tax cuts for the rich and corporations to defund government. Then they can claim that government doesn’t have any money, so we need to cut budgets. (Note that almost all corporate shareholders are largely the same rich people, so corporate tax cuts are really just tax cuts for the rich.)

What We The People Get

This time We the People “get to keep” tax incentives for wind and solar for another five years. The Earned Income Tax Credit (EITC) (for low income people with income from work), Child Tax Credit (CTC) (for people who have children), American Opportunity Tax Credit (AOTC) (for sending kids to college) were actually made permanent. We get to keep providing health care for 9/11 responders who got sick from helping at the World Trade Center site after the 2001 terrorist attack — all of which Republicans tried to strip out.

Making those tax credits permanent is a big win. These help lift 24 million working-class families.

The “Cadillac Tax” that was set up as a disincentive to employers to offer high-quality health insurance coverage is delayed for two years. This means people will be able to get better health insurance with lower co-pays and deductibles. (See the post “What Is This ‘Cadillac Tax’ Health Insurance Thingy?” for details.)

Because of all the tax cuts, the country’s public schools are generally underfunded to the point where teachers are using their own money to buy books for the students and supplies for the classrooms. The budget lets teachers forced to do this at least have a tax deduction from their income.

What We The People Stopped

Republicans were fighting to block the “fiduciary rule” that requires financial advisers to give advice that is in the interest of their clients, instead of tricking their customers just to make money for themselves — or at least disclose to customers if they have a conflict of interest. They didn’t get that rule blocked, so financial advisors cannot continue their fraud-based business model.

Republicans were trying to chip away at the Dodd-Frank bank-regulating rules, so Wall Street can expand its fraud-based business model. They were trying to strip power from the Consumer Financial Protection Bureau, and cut the ability of the Financial Stability Oversight Council to do its job. They didn’t get those.

Republicans Got Tax Cuts To Further Defund Government And Enrich Billionaires

Republicans fought for more corporate tax cuts and got $650 billion, including the “active finance exception” for multinational financial corporations and what Citizens for Tax Justice (CTJ) calls “the much-abused research credit.” CTJ says these “are nothing but ineffective giveaways to the nation’s wealthiest corporations.” CTJ concludes, “As a whole, this tax package is mostly a lobbyist-wrapped Christmas present for our nation’s biggest corporations.”

Republicans also won tax breaks for special interests including NASCAR, horse racing and film and television productions.

Having won another $650 billion of government defunding while handing $650 billion to big corporations, Republicans will soon come back and complain about “deficits” and demand a new round of cuts in the things our government does for us.

Oil Companies Get The Oil Export Ban Lifted

But Republicans especially fought for lifting the ban on exporting U.S. oil. This was their highest priority.

This is a typical news reports on the budget deal: “By far the biggest win for Republicans, besides the extended tax cuts, is a measure that would lift a four-decade-long ban on exporting crude oil.”

Why is this a “win” for “Republicans?” Because oil companies wanted it, period. The Republican Party is nothing if not always, always in service to oil companies. A political party placed ending the oil export ban as their highest, highest, do-or-die priority. It does nothing for the public, the country, the climate, jobs or anyone or anything else except for the oil companies, and this is what the Republican Party laid itself down to get done.

This puts more oil on world markets, just after the Paris climate talks. The reasons oil companies wanted this so much are:

1) In the short term, this gets some of the glut of oil out of the U.S., thereby raising gas and other prices within the U.S. (This was the real goal of the Keystone pipeline. Canadian oil is already coming into the U.S., the pipeline would take it to Gulf ports so it can be gotten out of the U.S., thereby reducing the glut and raising U.S. gas and other prices.)

2) The Paris climate agreement is a signal that the era of fossil fuel is ending. A lot of the oil that is still in the ground is going to have to stay there. The question is whose oil will have to stay in the ground, and producers are trying to get their oil out of the ground as fast as they can. Producers are now fighting with other producers to dump their oil before they are forced to stop. Saudi Arabia and OPEC are pumping oil as fast as they can. Lifting the U.S. oil export ban lets U.S. producers fight directly with them to get their own oil out of the ground first.

Democrats traded this in exchange for keeping tax incentives for wind and solar for another five years, and some of those other things We the People got to keep for a while longer.

P.S.: This Was Not Cool At All

By the way, the budget bill repeals a law requiring Country Of Origin Labels (COOL) on meats, because a corporate court decided We the People should not be allowed to know where the meat we purchase comes from. This cuts into the profits of giant meat producing corporations that are not U.S.-based.

For background on this see “Corporate Court Overrules U.S. Congress, Public.”

Sanders’ Corporate Tax Reform Plan Pays For His Infrastructure Plan

In the recent post, “How The Clinton and Sanders Infrastructure Plans Measure Up,” I mistakenly wrote that candidate Bernie Sanders does not yet have a corporate tax proposal:

Clinton’s infrastructure plan says only that it will be paid for through “business tax reform.” It does not detail the nature of the reforms that would pay for this spending. Similarly, Sanders does not yet have a specific individual and corporate tax proposal, but he has proposed a financial transaction tax and says he will close loopholes.

Oops. It turns out that Sanders does have a detailed corporate tax plan to pay for his infrastructure plan. He introduced the plan as a Senate bill shortly before announcing his run for the Democratic nomination for President. It is called the Corporate Tax Dodging Prevention Act. So let’s take a look at it.

Elizabeth Warren’s Principles For Corporate Tax Reform

First, though, that infrastructure post references Elizabeth Warren’s speech in which she laid out some criteria for evaluating the candidates’ plans. Summarizing:

1) Increase the share of revenue that corporations pay. … any “revenue neutral” plan leaves the country with too little money to fund basic services.

2) Level the playing field between small and big businesses. The business tax code is rigged against small businesses, making it harder for them to compete.

3) Promote investment and jobs in the U.S. Lower tax rates and loopholes for hiding profits overseas encourages more outsourcing of jobs and investment.

Also, there is the question of how the candidates treat the huge stash — more than $2.1 trillion — of corporate profits being hoarded in tax havens. Do they propose that these corporations pay the taxes they owe? Or do they offer these companies cash reward for having dodged taxes, if only they would please let We the People have some of the revenue we are owed?

Sanders’ “Corporate Tax Dodging Prevention Act”

Senator Bernie Sanders Corporate Tax Dodging Prevention Act is summarized in an April 14 Senate Budget Committee blog post, (Sanders is the ranking member of that committee.)

1) Ending the rule allowing American corporations to defer paying federal income taxes on profits of their offshore subsidiaries.

This would immediately bring in up to $620 billion of federal tax revenue currently owed on “offshore” profits but deferred. (It would also make available in the US more than $2 trillion of corporate profits that have been kept offshore, which could be reinvested or distributed to shareholders.)

Additionally, this would increase federal tax revenue by as much as $90+ billion each year thereafter.

These amounts are based on a report from Citizens for Tax Justice (CTJ) and the U.S. PIRG Education Fund, titled “Offshore Shell Games.”

A second look at the amounts owed by these companies , detailed in a letter to Congress titled, 24 International Tax Experts Address Current Tax Reform Efforts in Congress sets the amount this would bring in at ” about $900 billion over 10 years.”

2) Closing loopholes allowing American corporations to artificially inflate or accelerate their foreign tax credits.

A current loophole allows corporations to claim foreign tax credits for taxes paid on foreign income even if that income is not subject to current U.S. tax. This closes that loophole.

3) Preventing American corporations from claiming to be foreign by using a tax-haven post office box as their address.

This would stop American corporations from avoiding U.S. taxes by claiming to be a foreign company because they have a post office box in a tax haven country. Sanders’ bill says a corporation could not claim to be from another country if their management and control operations are primarily located in the U.S. (See last month’s post, “Pfizer Buying Allergan So It Can Pretend To Be Irish In Tax Scam.” The resulting company would still be based in NY/NJ.)

4) Preventing American corporations from avoiding U.S. taxes by “inverting.”

In an inversion, an American corporation acquires or merges with a (usually much smaller) foreign company and then claims that the newly merged company is a foreign one for tax purposes — even though the majority of the ownership is unchanged and little or no personnel or operations have actually moved offshore.

Under Sanders’ bill the U.S. would continue to tax such a company as an American corporation so long as it is still majority owned by the owners of the American party to the merger or acquisition.

5) Prevent foreign-owned corporations from stripping earnings out of the U.S. by manipulating debt expenses.

This stops multinational corporations from loading up their U.S.-based corporation with debt to companies they own outside of the US as a way to shift profits out of the U.S. company. They make interest payments to the foreign companies, deduct it, and this reduces or wipes out their U.S. income for tax purposes.

6) Preventing large oil companies from disguising royalty payments to foreign governments as foreign taxes.

U.S. oil and gas companies have been disguising royalty payments to foreign governments as foreign taxes in order to claim foreign tax credits. Sanders’ bill would stop this.

Does Sanders’ Plan Pay For His Infrastructure Proposal?

Sanders has proposed a detailed plan for addressing the country’s infrastructure needs, with an investment of $1 trillion. His plan to close several corporate tax loopholes appears to raise the necessary funds to cover this. Ending deferral alone would bring in $620 billion, and another $90+ billion each year following. This would raise the necessary funds.

On top of this the Senate’s Joint Committee on Taxation took a look at Sanders’ bill and a “partial score” concluded that items 2-6 would bring in an additional $133 billion.

The Washington Post fact checker looked at Sanders’ plan to fund infrastructure by closing these corporate tax loopholes and concluded that “What matters most is that Sanders’s claim of raising $1 trillion is at least credible — assuming the money is not also earmarked for other spending projects.”

Does Sanders’ Plan Measure Up To Warren’s Principles?

● Sanders’ plan closes loopholes and raises substantial revenue for use by We the People. It meets Warren’s principle #1.

● Sanders’ plan end the advantage that multinational corporations gain over corporations that want to keep their production and profit centers in the US. It meets Warren’s principle #2.

● Sanders’ plan ends incentives to shift jobs jobs, production and profit centers out of the US. It meets Warren’s principle #3.

● Finally Sanders’ plan tells companies to bring profits back from tax havens to the US and pay all of the taxes due. It does not reward them in any way for having dodged taxes. It meets the requirement that companies not be offered a “repatriation” tax break.

So Sanders has indeed met all of the criteria in a detailed, specific way.

Candidate Hillary Clinton has proposed spending a modest $250 billion directly on infrastructure, and another $25 billion to establish a National Infrastructure Bank for loans to cities and states for infrastructure projects that would be repaid through user fees, etc.

Clinton has said this will be paid for through corporate tax reform, but has not yet provided a detailed plan. Will her plan meet Warren’s three principles, as Sanders’ does? Will it require tax-dodging companies to pay-in-full the taxes they owe on that huge overseas stash of profits? We will see.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.