Big companies have discovered a loophole that lets them avoid paying their taxes. These tax-dodgers are holding $2 trillion-plus of taxable profits outside of the US, on which they could owe as much as $700 billion in taxes. What could our country do with this $700 billion it is owed? Why won’t Congress just make them pay what they owe?
These companies discovered that they can move jobs, factories, labs, call centers and profit centers out of the country and by doing that they can avoid paying U.S. corporate taxes. Instead of figuring out how to get these companies to pay the taxes they owe, Congress is considering proposals to reward them and encourage more companies to do this.
The Loophole That Lets Companies Avoid Paying Taxes
Current tax laws let companies defer paying the taxes they owe on profits made outside the country until they “bring the money back.” The reason for this is that some companies want to use this money to expand, leading to increased future profits. This is good for these companies and our country because they expand profits and the country gets additional tax revenue later.
But more and more companies have been cheating, using this “deferral” to avoid paying taxes at all. They are holding profits outside of the country simply to avoid taxes and not to invest and expand, even though this is not the intent of this tax rule. Some companies are even inventing ways to make it look like their US profits were made outside of the US so they can take advantage of this mistake in the tax laws. Other companies actually move jobs, factories, call centers and profit centers out of the country to take advantage of this loophole.
It has gotten so bad that U.S. companies are holding as much as $2 trillion or more outside of the country. If this were taxed at the top tax rate of 35 percent, that would mean $700 billion in taxes is already owed, but is being kept away from being used to fix bridges, improve schools, pay judges and the other things We the People (government) do to make our lives better. Also those profits are being kept away from use investing in the US, as well as from shareholders.
Meanwhile companies that keep jobs and production inside the U.S. and don’t cheat on their taxes are at a clear disadvantage. They have to compete with companies that lay off U.S. workers and close U.S. factories, and get to not pay their taxes because they did that. And, of course, they have less money to use for
bribes lobbying to get what they want.
Here are the proposals currently being discussed in Congress to address this:
- Make these companies just pay the taxes they owe and stop moving jobs and factories, etc. out of the country. (No one is actually suggesting this, these companies are very powerful and spread a lot of
bribelobbying and campaign money around.)
- Let them just keep doing what they have been doing, which encourages more companies to move jobs, factories, etc. out of the country. This is the current status quo.
- Let them off the hook and have a “tax holiday” that lets off the hook for some or all of the taxes they owe. There are proposals before the Congress to do this. (Too bad for those companies that actually paid their taxes.)
- Change the tax laws so companies that move jobs, factories, call centers and profit centers out of the country don’t have to pay taxes. This is called a “Territorial Tax System” and there are proposals before Congress to do this. (Too bad for companies that don’t want to move jobs, factories etc out of the country, they won’t be able to compete.)
Two of the proposal in front of the Congress include,
- Republican Rep. Dave Camp’s House Ways & Means proposal gives a tax holiday to companies that owe taxes (#3), and then cuts taxes on profits made from moving jobs and production out of the U.S. by 90 percent (#4). Finally it would cut top U.S. corporate tax rates from 35 percent to 25 percent.
- The Partnership to Build America Act (sponsored by Sen. Michael Bennet (D-Colo.) and Rep. John Delaney (D-Md.)) would let companies that owe taxes bring home offshore profits tax-free (#3) if they use some of the money to buy bonds in an “infrastructure bank.” This would be a loan, so the companies get even this money back, with interest.
Call your member of Congress and ask them to just make these companies bring those profits home and pay their taxes, period. Tell them no “tax holidays” and no “territorial tax.” Just make them pay their taxes.
Before I tell you what the subject is, just click this to listen to the first five minutes of Sunday night’s Virtually Speaking: (Actually skip in about 1:35 and then listen to five minutes.)
If you are like me (and who isn’t?) you’ll be hooked. Now that you’re into it, how about the first five minutes of this press call yesterday:
OK, now that the cat is out of the bag, these audio tracks are about one of the most interesting, exciting subjects there is: trade agreements and trade deficits.
Here’s the thing. We have a trade deficit of up to $500 billion each year. That’s upwards of $500 billion worth of orders that should be going to businesses that make or do things inside the U.S. That’s up to $500 billion worth of hiring and businesses and factories (re)opening, and all their suppliers booming, and the stores around those businesses and factories and suppliers booming, too.
So call and ask your member of Congress and your senators what they are going to do about this enormous, humongous trade deficit. This is the deficit that people should be worried about, not the budget deficit. And especially ask candidates this fall. Get this on the agenda, because getting it on the agenda will bring back jobs and businesses and factories and higher wages and all the things that go with that.
Now, for something totally unrelated, “Between Two Ferns with Zach Galifianakis: President Barack Obama.”
Republicans won in Florida’s 13th district special congressional election on Tuesday. What does this mean?
Here is the key point about why the Republican candidate: More Republican voters went to the polls and voted than Democrat voters. The Republican won by about 3,400 votes out of about 183,000 votes cast. Turnout was 58 percent in precincts Romney won in 2012, and 48.5 percent in precincts Obama won in 2012. There were 49,000 fewer people who voted in this election than in the 2010 general mid-term election (down 21 percent), and 158,500 fewer than in the 2012 Presidential (down 46 percent). So it was the failure to get Democratic voters to show up that lost them the election.
The obvious conclusion is that the Democratic candidate did not give Democratic voters sufficient reason and motivation to show up and vote. If just a few more Democrats – 3,400 – had decided to show up and vote the election would have gone the other way.
Factors and Non-Factors
Obamacare? Maybe not. According to David Weigel at Slate, “both rejected the national “narrative” that the race was a clear referendum on Obamacare.”
It wasn’t spending. Outside groups showed up and helped the Democrat, balancing out the usually enormous Republican spending advantage.
Medicare counted. Republicans accused Democrats of “$716 in Medicare Cuts.” This was the same theme that shifted the 2010 election to Republicans, and it helped again.
The Democrats fell short in getting their absentee voters to mail in their ballots. According to Sean Sullivan at The Washington Post, the Democratic candidate “did not build a big enough lead in absentee voting to prevail on election day.”
It’s The Base
Republican strategy is to feed red meat to “the base” to whip them up and get them to show up, (and do what they can to suppress Democratic turnout). In this race the Republican candidate ran to the right. Kartik Krishnaiyer of The Florida Squeeze, in a great analysis of the election, wrote that “this is the furthest right a GOP candidate had run in the area” in 60 years.
The Republican appeared on and was promoted by FOX News.
Apparently the Democratic candidate tried to “appeal to the middle,” thinking this would bring in “moderate” and “independent” voters who are thought to be “between” the left and the right. Her website emphasized “breaking the gridlock in Congress,” and offers, “I’ve proven again and again that Republicans and Democrats can work together to get things done.”
The website also emphasizes “cutting wasteful government spending” and “introducing performance metrics to hold government accountable for waste and abuse and creating the right fiscal environment for businesses to create jobs.”
So the Democratic candidate decided not to appeal to base Democratic voters, instead hoping to “reach across the aisle” to bring in “centrist” and “moderate” voters instead. One way or another this “appeal to the middle” failed to bring enough “moderate” voters to the polls to overcome the left-leaning voters it repelled.
Democrats Let It Happen
Thomas Frank summed up the problem in “The matter with Kansas now: The Tea Party, the 1 percent and delusional Democrats” at Salon. The subhead is “Democrats believe demographics alone will defeat the Tea Party. It’s a smug fantasy: Economic populism’s the answer.”
Even more alarming for Democrats were the stark implications of “Kansas” for their grand strategy of “centrism.” As I tried to make plain back in 2004, the big political change of the last 40 years didn’t happen solely because conservatives invented catchy conspiracy theories, but also because Democrats let it happen. Democrats essentially did nothing while their pals in organized labor were clubbed to the ground; they leaped enthusiastically into action, however, when it was time to pass NAFTA and repeal Glass-Steagall. Working-class voters had nowhere else to go, they seem to have calculated, and — whoops! — they were wrong. The Kansas story represented all their decades of moderating and capitulating and triangulating coming back to haunt them.
If Democrats don’t give regular, working people – the Democratic base – a reason to vote, then they won’t. In Florida’s 13th District, 3,400 of them decided there was not enough reason to bother.
The President’s 2015 budget proposal “pivots” away from the 2010 “pivot” to austerity, pushes modestly for jobs and prioritizes infrastructure repair. Republicans will obstruct this – just like they have obstructed every jobs plan since the stimulus. But the public fully supports what the President is trying to do.
Away From Austerity
This budget finally moves us away from the constant job-killing and economy-cutting “austerity” idea that taking money out of the economy will grow the economy. It proposes a whopping (that’s a joke, son) $56 billion in new spending, split between military and actual job-boosting programs.
This Huffington Post headline summarizes the President’s new budget: “Obama Sends Congress $3.9 Trillion Budget Focused On Economy, Job Creation“. Other headlines tell a similar story:
- Richard Eskow: “The Next Obama Budget, Part 2: Is the “Era of Austerity” Really Over?”
- The Washington Post: “With 2015 budget request, Obama will call for an end to era of austerity”
- Center for American Progress: “President Obama’s Budget Resets the Fiscal Debate.”
“Stimulus” In President Obama’s Budget
In summary the budget proposal contains the following proposals that will help boost jobs:
- $56 billion in new, added spending. This is above the discretionary spending cap that is in place for next year. This is split between added military spending and added funding for basic research, elementary education, manufacturing initiatives, jobs training, climate change preparation and restoring cuts to the Internal Revenue Service.
- $302 billion in infrastructure spending over four years to maintain our highways, rail projects and mass transit (prioritizing those most in need of repair). This is a request for reauthorization of existing (underfunded) transportation programs. Note that the American Society of Civil Engineers (ASCE) “Infrastructure Report Card” says we need to spend $3.6 trillion on infrastructure by 2020 just to get things to where they should be.
- A series of tax breaks for lower-income workers, such as an expansion of the earned-income tax credit (EITC) by adding 5.8 million people and increasing it for 7.7 million people who currently qualify.
The budget proposal says these are “paid for” by closing tax loopholes on corporations and wealthy individuals. This includes proposals to reign in the way companies are moving jobs, factories, production and profit centers out of the country to take advantage of the “deferral” loophole that lets them avoid paying their taxes until profits are “repatriated.”
Again and again President Obama has proposed similar programs to help the economy and create jobs. Again and again these proposals have been obstructed by Republican filibusters in the Senate and/or Republican House refusing to allow members to vote.
Look at what happened to previous job and infrastructure proposals (note this is just a sample):
- Oct, 2011, PBS: Senate Blocks State Aid for Teachers, First Responders — “blocks” means Republicans filibustered it.
- Nov, 2011, Washington Post: Senate blocks $60 billion infrastructure plan, another part of Obama jobs bill — Note – the Senate didn’t “block” it, it was filibustered by Republicans.
- Nov, 2011, Washington Times: Third Obama jobs bill blocked in Senate
- March, 2012, LA Times: Senate Republicans block advancement of transportation bill
- June, 2012, Think Progress: With Deadline Approaching, House GOP Still Holding 1.9 Million Transportation Jobs Hostage
- July, 2012, CNN: GOP senators block top Obama jobs initiative – “…refusing to allow a vote on a bill that would give tax breaks for companies that “insource” jobs to the U.S. from overseas while eliminating tax deductions for companies that move jobs abroad.”
- July, 2012, The Hill: Senate fails to end debate on small-business bill – “fails to end debate” means “Republican filibuster.” This bill would give small businesses a tax credit if their 2012 payrolls were higher than their 2011 payrolls.
- Sept, 2012, NY Times: Veterans’ Jobs Bill Blocked in the Senate
- Sept, 2012, Think Progress: Unhappy Anniversary: Republicans Have Blocked The American Jobs Act For One Year
- March, 2013, Obama calls on lawmakers to approve $21 billion infrastructure bill
- July, 2013, Rep. Frederica Wilson at HuffPo: The American Jobs Act Still Deserves a Vote, “Congressional leaders allowed the bill to expire at the end of the year without bringing it to the floor for a vote.”
- Aug, 2013, ABC: Senate Blocks $54 Billion Transportation, Housing Bill – I’m getting tired of pointing out that “Senate blocked” means that a Republican minority filibustered a bill that the Senate majority would have passed…
And on and on…
What The Public Wants
Poll after poll shows that public is solidly behind the President, except wanting more government help to boost the economy and less focus on “deficit reduction.”
Here are a few examples, which you can find at the website Populist Majority:
- Alliance for American Manufacturing/The Mellman Group (01/09/2014): 71% support increasing government investment to build and repair roads, bridges, high-speed rail, smart electric grid technology and other infrastructure needs. 65% say job creation should be a top priority, not deficit reduction. 82% support federal and state worker training programs.
- Gallup (02/09/2014): 23% say the most important problem facing the country is jobs and unemployment. The economy ranks No. 2, with 20% saying it’s the biggest problem. Only 8% say the federal deficit.
- Americans for Tax Fairness/Hart Research (10/30/2013): Nine out of 10 believe that any revenue generated by closing corporate loopholes or limiting tax deductions for the wealthy should be used for public investment and deficit reduction (82%), not to lower tax rates on corporations or the wealthy (9).
- Washington Post-Miller Center (09/12/2013): 58% believe government investment in roads, water systems, the energy grid and other services is most/very important to help America compete with other countries economically.
- Bloomberg News/Selzer & Co. (02/18/2013): 49% prefer proposals to invest in infrastructure, education and alternative energy to create jobs, compared to 44% who believe tax cuts will generate business.
These are just a few of the polls you can find at PopulistMajority.org.
The National Priorities Project (NPP) issued a statement on the President’s budget:
“The new budget contains initiatives that would be widely popular with the American people based on opinion polling. With an emphasis on job training and job creation, new funding for education, and a reduction in corporate tax loopholes, the president has released a budget that reflects many of the people’s priorities.”
Here is a simple economic truth: Austerity – cuts that take money out of the economy – generally hurts economies and has held our economy back, government spending generally helps economies (and is what Reagan and Bush used to fight downturns).
Here is another simple economic truth: Our enormous, humongous trade deficit hurts our economy, our budget deficit doesn’t. (Click that link!) Why isn’t Washington talking about that? (Disclaimer: huge, bloated, astronomical military spending hurts economies. Budget deficits should be brought into line during economic good times.)
The following chart is from the post, “It’s the Fifth Anniversary Of The Stimulus. See What It Did“:
P.S. Please visit Populist Majority, “Exposing the gulf between American opinion and conventional wisdom.”
People are writing about the just-released transcripts for Federal Reserve deliberations during the 2008 financial crash, and who knew what and when. No one at the Fed knew, didn’t get it even after it started, and still say no one could have known.
The first “Today’s Housing Bubble Post” on this blog appeared on April 5, 2005. Yes, I was already writing about the housing bubble and its dangers so often that I started giving the post a “Here we go, again” title…
I was not alone. Bloggers all across the country were screaming that a crash had to come from this.
The warning signs are everywhere that a mortgage/housing fiasco is unfolding and the silence is deafening. Except for newcomers like Cramer, the media isn’t covering this debacle or the Doral matter. The home builders having their head handed to them after record existing and new sales, plus record earnings, should put the media on notice that we have a problem.
Perhaps asking the media to quit cheerleading and look at the housing crisis objectively is too much. What of our representatives in Washington? The congress had better be meeting to figure out what the heck they are going to do instead of debating who is more responsible for Fannie.
It was heartbreaking because I happened to see this comment today, which is dated 2005 – 9 years ago:
Our economy is awash with problems right now:
- lack of jobs
- manufacturing moved offshore
- pending health care crisis
- pending social security crisis
- housing bubble
- foreign investors fleeing the dollar.
Do you hear the media or government discussing any of this in great detail ? Instead they focus the publics attention on trivia personal interest stories.
… If the media started focussing on the real above mentioned issues, maybe the general public would start making better life decisions…
The post I linked to is titled, “Media, Congress Need To Wake Up.” Inflation is not a problem today, potential deflation is. (In fact inflation hurts bankers but helps working people…) The health care crisis will be helped a lot by Obamacare. There is and was no “pending social security crisis.” Foreign investors are fleein to the dollar. But “lack of jobs” and “manufacturing moved offshore” are worse, and the housing bubble is back in some areas.
Yeah, well, fat chance with that, it’s much worse 9 years later. The media and Congress have their heads even further up their asses.
Explained at Political Carnival in The simplest– and funniest– explanation of Obamacare I’ve ever seen. Watch below and then go there and read.
And send this video to everyone, family, friends, and especially apathetic or Republican people.
I wrote this for AlterNet: Meet the Billionaires Using Their Immense Wealth to Make Life Miserable for Ordinary Americans: 5 examples of billionaires pushing a right-wing economic agenda.
Here is how it works these days: You start hearing about a big, national problem and then it becomes a drumbeat. First there are a few articles and columns mentioning that such-and-such is a problem. Then a number of articles appear, then a “study” from a “think tank” confirms the problem and sounds the alarm about how terrible it is, and then just as the issue seems to be the only thing you are hearing about a solution is presented. Of course, the solution always involves taking something away from you and giving it to some company or industry standing in front of a billionaire or three. The right question to start asking when you hear about these “problems” is which billionaire is driving this.
Here are five-plus examples of billionaires who use their money to try to get us to think what they want us to think in order to enact a right-wing economic agenda.
The big corporations and the Obama administration are trying to push through a giant new trade treaty that gives corporations even more power, and which will send even more jobs, factories, industries and money out of the country. This is the Trans-Pacific Partnership (TPP) and they are pushing something called “fast track” in Congress to help push it through.
We have to stop this, and we should take the momentum we have generated in our push-back on this to demand Congress and President Obama instead fix NAFTA first. Then fix all of our trade relationships to help working people on all sides of our borders.
TPP, Fast Track And NAFTA
There has been a lot of news about the upcoming TPP trade agreement. The agreement is being negotiated in extreme secrecy in a corporate-dominated process that appears to be leading to an agreement that would give corporations even more power than they already have. Now there is a push to pass a process called fast track through Congress in order to enable the large corporations to strong-arm TPP into law mobilized organizations around the country to sound the alarm.
A crowd declared by organizers to exceed 80,000 showed up to march to protest Republican policies in Raleigh, N.C. Saturday. But you wouldn’t know it if you live outside the area.
Saturday’s big march, organized by the North Carolina NAACP along with more than 160 partner organizations, was called “the Historic Thousands on Jones Street (HKonJ) People’s Coalition.” Rev. Dr. William J. Barber II, president of the N.C. NAACP and convener of HKonJ, said at the march,
“We are black, white, Latino, Native American. We are Democrat, Republican, independent. We are people of all faiths, and people not of faith but who believe in a moral universe. We are natives and immigrants, business leaders and workers and unemployed, doctors and the uninsured, gay and straight, students and parents and retirees. We stand here – a quilt of many colors, faiths, and creeds.”
Local News Reports
Today’s false-equivalence award goes to the New York Times for Fight Over Minimum Wage Illustrates Web of Industry Ties.
After exposing how a supposed “think tank” set up by a PR firm working for the restaurant industry puts out dishonest “reports” claiming that raising the minimum wage is bad policy, the Times writes this:
The campaign illustrates how groups — conservative and liberal — are again working in opaque ways to shape hot-button political debates, like the one surrounding minimum wage, through organizations with benign-sounding names that can mask the intentions of their deep-pocketed patrons.
Because “liberal” groups take in millions of corporate cash and set up phony “think tanks” to spread propaganda about how we should pay people less to enrich the billionaires and their giant corporations, too. Right?
You’ve heard about that new budget Congress passed that cuts Food Stamps another $8 billion? Here’s another brilliant cut Democrats agreed to: cutting funding for tax collection.
Citizens for Tax Justice: The Dumbest Spending Cut in the New Budget Deal,
The newly passed $1.1 trillion bipartisan budget appropriations bill includes myriad spending cuts, but the $526 million cut to the Internal Revenue Service (IRS) has to be the most foolish. Under the new budget, the IRS’s 2014 budget will be $11.3 billion, which is $1.7 billion less than the administration requested and about $2.5 billion higher than the radical 25 percent cut proposed by some House Republicans earlier this year.
… The newly passed $1.1 trillion bipartisan budget appropriations bill includes myriad spending cuts, but the $526 million cut to the Internal Revenue Service (IRS) has to be the most foolish. Under the new budget, the IRS’s 2014 budget will be $11.3 billion, which is $1.7 billion less than the administration requested and about $2.5 billion higher than the radical 25 percent cut proposed by some House Republicans earlier this year.
Thaysay they are worried about “deficits?” Bullshit. That’s not what the austerity is about at all.