Monday, October 29, 2012

12 Tax-Dodging Corporations Spent $1 Billion To Influence Washington Over The Last Decade

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By Zaid Jilani 

As ThinkProgress has been reporting, while Main Street Americans are having their services gutted and public investment is being slashed, some of the country’s most profitable corporations are getting away with paying little to nothing in taxes.

A new report by Public Campaign examines how these major corporations have influenced Congress to craft a tax code that lets them get away with making so much money and paying so little taxes in return. In its report, “The Artful Dodgers,” Public Campaign juxtaposes the limited tax liability of dozen major corporations with the companies’ campaign contributions and lobbying expenditures, which amount to more than a billion dollars over the last decade:
EXXON MOBIL: The oil giant that was the world’s most profitable corporation in 2008 has spent $5.7 million in campaign contributions over the last ten years and $138 million in lobbying expenditures. Its federal corporate income tax liabilities for 2009? Absolutely nothing. Not only did it pay nothing, but it also received a tax rebate the same year of $156 million.
CHEVRON: Chevron spent $4.4 million in campaign contributions and $91 million in lobbying expenditures over the last decade. It received a tax refund of $19 million in 2009 while making $10 billion in profits and $324 million in government contracts in 2008.
CONOCOPHILLIPS: The Texas-based gasoline giant spent $2.5 million in campaign contributions and $63 million in lobbying expenditures over the last decade. It received “$451 million through the oil and gas manufacturing deduction,” a special tax break, between 2007 and 2009, despite $16 billion in profits over the same period of time.
VALERO ENERGY: Valero spent $4.1 million in campaign contributions and $4.8 million in lobbying expenditures from 2001 to 2010. It received a $157 million tax rebate in 2009 despite $68 billion in sales during the same year. It received “$134 million through the oil and gas manufacturing deduction” over the last three years.
BANK OF AMERICA: Bank of America employees contributed $11 million to federal political campaigns from 2001 to 2010 and spent $24 million lobbying over the same period of time. It made $4.4 billion in profits in 2010 while receiving a tax refund of $1.9 billion.
CITIGROUP: Citigroup employees contributed $15 million to federal political campaigns from 2001 to 2010 and spent $62 million lobbying over the same period of time. It made $4 billion in profits in 2010 while paying absolutely nothing in federal corporate income taxes. It also received a $1.9 billion tax refund.
GOLDMAN SACHS: The mega-bank Goldman Sachs, which is often called “Government Sachs” in insider circles because of its clout over Washington, spent $22 million in campaign contributions and $21 million in lobbying over the last decade. It paid an ultra-low tax rate of 1.1 percent in 2008, while also receiving $800 billion in governmentloans to help weather the financial crisis.
BOEING: The aviation and defense contractor giant gave $10 million in contributions and $115 million in lobbying expenditures over the last decade. It paid a grand total of nothing in federal corporate income taxes in 2010 and received a $124 million tax refund.
FEDEX: FedEx spent $8.7 million in campaign contributions and $71 million in lobbying expenditures from 2001 to 2010. It paid a .0005 percent effective tax rate recently, actually spending 42 times as much on lobbying Congress as it did paying taxes. To do this it utilizes 21 tax havens.
CARNIVAL: The cruise line paid $1.7 million in campaign contributions and $1.6 million in lobbying over the past ten years. Despite the relatively low amount of money it spent influencing Washington, it has gotten away with a super-low tax rate. Over the past five years, its federal corporate income tax rate has been an effective 1.1 percent.
VERIZON: Verizon spent $12 million in campaign contributions and $131 million in lobbying expenditures over the past decade. It paid absolutely nothing in federal corporate income taxes over the past two years and $488 million in government contracts in 2008; in 2010, it made $12 billion in profits.
GENERAL ELECTRIC: General Electric spent $13 million in campaign contributions and $205 million in lobbying expenditures over the last decade while netting a tax refund of $4.1 billion over the past five years. It made $26 billion in profits over the same time period.
The amount of money that taxpayers are losing from the tax dodging by these major corporations is enormous. For example, if five of the nation’s biggest banks paid their taxes at the full rate, we could re-hire every single one of the 132,000 teachers laid off during the recession — twice.

Saturday, October 27, 2012

American Crossroads Final Efforts Heavily Funded By Swift Boat Donors

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Karl Rove's American Crossroads, the second-largest super PAC, burned through cash fast in October. The group raised $11.6 million in the first half of the month and spent $21 million, leaving it with $6.4 million cash.

The super PAC has been spending big to attack President Barack Obama on the economy, including one advertisement featuring Oscar-winning actor and director Clint Eastwood. These ads are helping Mitt Romney swamp the airwaves with anti-Obama ads in campaign's final few weeks.

The pro-Mitt Romney effort is being funded by a familiar cast of donors. In October, American Crossroads finally reassembled the entire cast of top donors to the infamous Swift Boat Veterans for Truth to fund its final run of television advertisements aimed at defeating President Barack Obama.
The Swift Boat group ran a series of damaging ads against 2004 Democratic presidential candidate Sen. John Kerry. Questions were raised about the connections between the campaign of then-President George W. Bush and the independent group, particularly between the donors, which gave to both efforts.

The last of the top three donors from the Swift Boat group to give to American Crossroads, T. Boone Pickens, gave $1 million in the first few weeks of October. He was joined by Bob Perry, the largest donor to the Swift Boat efforts, who gave $1 million in October, bringing his total giving to American Crossroads to $7.5 million. Harold Simmons, the second-largest Swift Boat donor and the second largest super PAC donor in 2012, gave $4 million to American Crossroads this month, bringing his total giving to the group to $19.5 million.

These three former Swift Boat donors accounted for more than half of American Crossroads' $11.6 million raised in the first 17 days of October.

The group has raised a total of $99 million for the 2012 election and has spent $68 million on independent expenditures to defeat Democrats from the White House on down.
American Crossroads raked in donations from some of its own stash of big donors beyond those previously linked to Rove's electoral efforts. Robert Rowling and his TRT Holding Co. gave $1 million to the super PAC. Weaver Popcorn gave $500,000, Univision founder Jerry Perenchio gave $500,000, Ed Bosarge gave $100,000 and Richard Gilliam gave $250,000.

Sunday, October 21, 2012

Five Ways Deregulation Is Ripping America Apart

Original Link:

By Paul Buchheit

Conservatives believe that enriching individuals will eventually enrich society, and that government should not get in the way of the process. This is what happens as a result:

1. The tax loss from one scheming businessman could have paid the salaries of 30,000 nurses

The lack of regulation in the financial industry allowed hedge fund manager John Paulson to conspire with Goldman Sachs in a plan to create packages of risky subprime mortgages and then short-sell (bet against) the sure-to-fail financial instruments. The ploy paid him $3.7 billion. Deregulation in the tax code allowed him to call his income "carried interest," which is taxed at a 15% rate. More deregulation allowed him to defer his profits indefinitely.

The lost taxes of $1.3 billion (35% of $3.7 billion) could have paid the salaries of 30,000 LPNs, 10 nurses for every county in the United States. Instead, one clever businessman took it all.

2. The 10 richest Americans made enough money last year to feed every hungry person on earth for a year

The richest 10 Americans increased their wealth by over $50 billion in one year. That's enough, according to 2008 estimates by the Food and Agriculture Organization and the UN's World Food Program, to feed the 870 million people in the world who are lacking sufficient food.

But should anyone be blamed for this imbalance? Didn't the rich people EARN their money through hard work and innovation? No, they didn't. 60 percent of the income for the Forbes 400 came from capital gains. A lot more of it came from other forms of deregulatory subterfuge. CEOs have used carried interest, performance-related pay, stock options, and deferred compensation to make off with extra money that is only available to the beneficiaries of diminishing government.

3. Avoided taxes could pay off the deficit -- or pay for 20 million jobs

The backlash against government regulation has led to tax abuses that cost us almost a trillion dollars a year.

Corporations doubled their profits to $1.9 trillion in less than ten years, but since 2008 they've reduced their tax payments from a twenty-year average of 22% to just 10%. That's a dropoff of over $225 billion.

Next, the Tax Justice Network estimated that up to $32 trillion is hidden offshore, untaxed. With Americans making up 40% of the world's Ultra High Net Worth Individuals, and with a historical stock market return of 6%, $750 billion of income is lost to the U.S. every year, resulting in a tax loss of about $260 billion.

Finally, the IRS estimates that 17 percent of taxes owed were not paid, leaving an underpayment of $450 billion.

Add it up, and it's almost the size of the U.S. deficit. All because of lax or non-existing regulations that allow wealthy individuals and corporations to avoid their tax responsibilities.

4. An unregulated trading industry costs us another $350 billion a year in taxes

For a $10.00 purchase of children's clothing, mothers pay up to a dollar in sales tax.

For a $10.00 purchase of financial instruments, investors refuse to pay one cent.

We had a financial transaction tax from 1914 to 1966, but it was repealed in an early surge of Congressional deregulation. Now, it is estimated that $350 billion could be generated every year, enough for almost ten million teachers or nurses or firefighters or medical technicians.

5. Redistribution is destroying entrepreneurship in America

Largely because of financial deregulation, our country's income and wealth keep moving to the top while the middle class shrinks. Entrepreneurship is going down with it.

Studies reveal that relatively few business startups are initiated by the very wealthy. Only 3 percent of the CEOs, upper management, and financial professionals were entrepreneurs in 2005, even though they made up about 60 percent of the richest .1% of Americans. Instead, they invest over 90% of their assets in a combination of low-risk investments (bonds and cash), the stock market, and real estate.

Entrepreneurs come from risk-takers in the middle class. But with financial deregulation causing a redistribution toward the top, the money has been taken out of the hands of middle-class innovators, resulting in a 53% decrease in the number of entrepreneurs per capita since 1977.

We're at the mercy of the deregulators. But they have no mercy. The once-muscular entrepreneurial fiber of our country is being ripped apart, stretched to the limit, thinning in the middle until it eventually snaps in two.

Koch Social Media Policy May Be Unlawful; Employers Still Have Broad Leeway to Limit Employee Speech

Original Link:

By Brendan Fischer

The Koch Industries policy limiting employee speech on social media may be unlawful in light of recent decisions by the National Labor Relations Board, but employers still have broad leeway to impose their political views on workers and punish those who disagree.

On October 14, Mike Elk at In These Times reported on how Koch Industries sent a mailer to 45,000 employees of its Georgia-Pacific subsidiary urging them to vote for Mitt Romney and other Republicans, warning that if they don't, they "may suffer the consequences." At the same time, the Kochs were limiting employees' speech through a social media policy that threatened Georgia Pacific workers with disciplinary action or termination if their Facebook posts or tweets "reflect negatively" on the company's reputation or are "disparaging." The policy applies even to social media usage outside of working hours, and Elk reports that the policy has deterred some employees from speaking freely in their online posts.

Since the U.S. Supreme Court's 2010 decision in Citizens United v. FEC, the Kochs and other employers can now make partisan political communications directly to their employees. As a private employer the Kochs can even limit their employees' speech, since the First Amendment only protects against government infringement on free speech and expression. Employers are also afforded wide latitude to fire workers for their political activities.

Despite this, on September 7, 2012 the National Labor Relations Board (NLRB) issued a ruling that will likely deem the Kochs' social media policy unlawful.

Social Media Policy Likely Unlawful

"Currently, the legal protections for [the workplace speech of] private sector employees are slim, to say the least," said Paul Secunda, an associate professor at Marquette Law School who specializes in labor and employment law.

Private sector employees find no protection under the federal constitution and almost no protection under state laws for workplace speech. One of the few protections comes from the National Labor Relations Act, a federal law protecting worker rights enforced by the NLRB. Among other things, the Act prohibits employer practices that restrain workers from taking concerted action -- including communications -- related to the terms or conditions of their employment.

On September 7, the NLRB in Costco Wholesale Corp. and United Food and Commercial Workers Union, Local 371 found unlawful Costco's social media policy, which was similar to the Koch Industries' policy prohibiting postings that could damage the company's reputation, because it was overly broad and could prohibit protected employee activity under the Act.
The NLRB found that the Costco social media policy could deter employees from engaging in protected communications like web postings that are critical of how the company treats its employees.

"It is fairly clear that the Koch / Georgia Pacific social media code of conduct would fall under a similar analysis" as the Costco case, Secunda told the Center for Media and Democracy. "If an employee were to file a complaint, the [Koch / Georgia Pacific] policy clearly seems to be an over-broad social media code of conduct," he said, and thus unlawful.

The U.S. Supreme Court has held that communications protected under the Act include not only those directly related to the workplace, but also broader employment issues such as opposition to "Right to Work" laws and support for increasing the minimum wage. Thus, Secunda said, an employee's Facebook postings or tweets opposing Koch support for the American Legislative Exchange Council (ALEC) because the organization promotes anti-worker legislation would likely be protected under the Act -- and a social media policy limiting that sort of speech would be unlawful.

Kochs, Other Employers Retain Broad Latitude to Impose Views

Koch Industries' lawyers can likely rewrite the social media policy to pass muster under the National Labor Relations Act. And under the broad definition of corporate political speech in Citizens United, the Kochs and other employers can use their position of economic power to engage in various other forms of political intimidation or coercion.

This includes mailers like those sent by the Kochs or Westgate Resorts CEO David Siegel, as well as mandatory political meetings where workers must listen to their employer's political views under the threat of termination. It also includes events like the Romney campaign rally in Ohio last August, where miners employed by Murray Energy were required to attend without pay. Murray Energy CEO Bob Murray is a major Republican benefactor who has also reportedly compelled employees to contribute to his favored political candidates.

"Workplaces are suffused with an unequal power dynamic," Secunda says, and these forms of communications and requirements are often coercive.

Finding solutions to these issues that don't run afoul of the First Amendment is difficult, particularly under the broader corporate free speech rights established in Citizens United. Secunda has offered a partial solution: a national law similar to Oregon's Worker Freedom Act, which gives private employees the right to sue if they are terminated for refusing to attend mandatory political, anti-union, or religious meetings.

Talking Points in Favor of ALEC also Distributed

The Kochs are not just telling their employees who to vote for, they are also instructing them how to feel about ALEC. In addition to the list of the Kochs' preferred political candidates, the 67-page packet sent to Koch Industries employees included a letter from Charles Koch defending ALEC and criticizing the growing number of corporations that have cut ties with the organization for a "lack of courage."

A Koch Industries representative has long sat on ALEC's governing private enterprise board, its lobbyists are members of several ALEC task forces, and tens of thousands of Koch Industries funds have gone toward sponsoring ALEC meetings. The Koch brothers have also contributed hundreds of thousands to ALEC over the years through the charitable foundations they control.

Charles Koch's letter applauds the courage of himself and his brother David ("It is difficult to underestimate the value of courage, especially during challenging times like these, when we are being attacked by powerful politicians and irresponsible media"), while criticizing the corporations that have listened to the concerns of their customers and left ALEC. To date, 41 major American companies have dropped their ALEC memberships, including America's largest corporation, Wal-Mart. According to Koch, "several corporations couldn't throw in the towel fast enough."

Wealthy Presidential Campaign Donors Driving The Election

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Individual donors to U.S. presidential candidates can contribute up to $2,500 for the state-by-state party nominating contests and another $2,500 for the general election. But independent groups called Super PACs have no limits on what they can raise from individuals, corporations or labor unions.

Here is a look at wealthy individuals who have contributed at least $1 million to the major "super" political action committees as disclosed to the Federal Election Commission.


Total raised as of Sept. 30: $110.5 million

(Supports Republican presidential candidate Mitt Romney)

* Bob Perry - Houston builder who was a major donor to Swift Boat Veterans for Truth, a group that helped undermine 2004 Democratic presidential nominee John Kerry by attacking his Vietnam War record. Total donations: $10 million

* Sheldon Adelson - billionaire Las Vegas casino magnate who built the Venetian hotel and casino. Donation: $5 million

* Miriam Adelson - Sheldon's wife. Donation: $5 million

* Bill Koch - brother of conservative financiers David and Charles Koch. He runs Oxbow Carbon, a Florida-based firm that is also a donor and shares its address with another contributor, Huron Carbon. Total donations, including through firms: $4 million

* Steven Lund - runs Nu Skin, a Utah skin care and cosmetics company whose former executives have been linked to two other firms that share an address in Provo, Utah, and donated to the Super PAC: F8 LLC and Eli Publishing. Lund's wife Kalleen is also a donor. Total donations from the Lunds and firms: $3 million

* Julian Robertson - hedge fund industry legend at Tiger Management. Total donations: $1.3 million

* Crow Holdings - Dallas-based investment firm managing the wealth of the family of the late Dallas real estate mogul Trammell Crow, whose sons Harlan and Trammell S. Crow are also donors. Total Crow Holdings and Crow donations: $1.3 million

* Harold Simmons - billionaire Dallas banker and CEO of Contran Corp who has contributed to PACs supporting Rick Perry and Newt Gingrich. Donations: $1.3 million

* Frank VanderSloot - Idaho businessman who runs the nutritional and cosmetics company Melaleuca. The firm and its subsidiaries have also donated. Total donations: $1.1 million

* The Villages of Lake Sumter - a community in Florida run by billionaire Gary Morse, who is also a donor alongside his wife Renee and their several children. Along with the Morse family, thirteen companies controlled wholly or partially by Morse that share an address in The Villages have also contributed. Total donations of all: $1.7 million.

* Kenneth Griffin - Chicago-based hedge fund manager and CEO of Citadel LLC. Total donations: $1.1 million

* Bob Parsons - billionaire founder of web hosting giant Go Daddy. Donation: $1 million

* Jim Davis - chairman of New Balance Athletic Shoes Inc. Donations: $1 million

* Stanley Herzog - CEO of Missouri-based Herzon Contracting Corp. Donation: $1 million

* Bruce Kovner - billonaire hedge fund manager at Caxton Alternative Management. Donation: $1 million

* Rocco Ortenzio - Pennsylvania healthcare executive and founder of Select Medical Corp. Total donations: $1 million

* John Childs - founder of private equity firm J.W. Childs Associates LP in Florida. Donation: $1 million

* Edward Conard - a New York investor and former executive at Bain Capital, a private equity firm co-founded by Romney. Donation: $1 million

* John Kleinheinz - Texas hedge fund manager for Kleinheinz Capital Partners Inc. Donation: $1 million

* J.W. Marriott Jr. - chairman and CEO of Marriott International, brother of Richard. Total donations: $1 million

* Richard Marriott - chairman of Host Marriott International. Total donations: $1 million

* Robert McNair - owner of the Houston Texans football team. Donation: $1 million.

* Robert Mercer - New York hedge fund manager at Renaissance Technologies. Donation: $1 million

* John Paulson - a prominent New York hedge fund manager at Paulson and Co. Donation: $1 million

* Rooney Holdings Inc - private investment firm formed in 1980s to acquire the Manhattan Construction Co. and has since expanded into many areas. Total donations: $1 million

* Paul Singer - hedge fund manager who helped fund efforts to legalize gay marriage in New York. Donation: $1 million

* Paul and Sandra Edgerly - Paul Edgerly of Brookline, Massachusetts, is an executive at Bain. The Edgerlys each have given $500,000. Total donations: $1 million

* Steven Webster - private equity executive at Avista Capital in Houston. Total donations: $1 million

* Robert Brockman - executive at Reynolds and Reynolds, a Dayton, Ohio-based car dealership support company that shares a P.O. Box with CRC Information Systems Inc, Fairbanks Properties LLC and Waterbury Properties LLC, which split the donation three ways. Total donations: $1 million

* Miguel Fernandez - chairman of MBF Healthcare Partners, a private equity firm. MBF Family Investments also donated to the Super PAC. Total donations: $1 million

* Renco Group Inc. - owned by New York billionaire Ira Rennert, another frequent contributor to Republicans this year. Donation: $1 million

* OdysseyRe Holdings Corp - reinsurance underwriting company in Stamford, Connecticut that is a U.S. subsidiary of Toronto-based Fairfax Financial. Donation: $1 million


Total raised as of Sept. 30: $50.1 million

(Supports Democratic President Barack Obama)

* James Simons - billionaire hedge fund manager, founder of Renaissance Technologies Corp. Donation: $3.5 million

* Fred Eychaner - founder of Newsweb Corp. Donation: $3.5 million

* Jeff Katzenberg - chief executive of DreamWorks Animation. Donation: $3 million

* Steve Mostyn - Houston attorney. Donation: $2 million

* Irwin Mark Jacobs - former CEO of Qualcomm Inc. Donation: $2 million

* Jon Stryker - billionaire activist and heir to the medical supply company fortune of his grandfather. Donation: $2 million

* Anne Cox Chambers - billionaire daughter of James M. Cox, founder of Cox Enterprises. Total donations: $1.5 million

* National Air Traffic Controllers Association - union representing more than 16,000 workers. Donation: $1.3 million

* S. Daniel Abraham - billionaire creator of Slim-Fast brand, chairman of S. Daniel Abraham Center for Middle East Peace. Donation: $1.2 million

* Barbara Stiefel - retiree in Coral Gables, Florida. Donation: $1.1 million

* United Auto Workers - Donations through various funds: $1.1 million

* Kareem Ahmed - chief executive at Landmark Medical Management in California. Donation: $1 million

* David Boies, Jr - New York lawyer. Donation: $1 million

* Morgan Freeman - Hollywood actor. Donation: $1 million

* Amy Goldman - writer and heiress to the New York real estate fortune of Sol Goldman. Donation: $1 million

* Franklin Haney - owner and CEO of FLH Company, a Washington-based real estate company. Donation: $1 million

* Bill Maher - stand-up comedian. Donation: $1 million

* Mel Heifetz - real estate developer and gay activist. Donation: $1 million

* Michael Snow - Minnesota lawyer. Donation: $1 million.

* Steven Spielberg - film director. Donation: $1 million.

* Ann Wyckoff - Seattle philanthropist. $1 million.

* Service Employees International Union Committee on Political Education - union representing more than 2 million workers. Donation: $1 million.

* United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry - union representing some 340,000 workers. Total donations: $1 million


Total raised as of Sept. 30: $68 million

(Supports Republican candidates for federal offices)

* Harold Simmons - Total donations together with Contran Corp: $15.5 million

* Bob Perry - Total donations: $6.5 million

* Robert Rowling - an Irving, Texas, businessman and a conservative and active Republican donor. His company, TRT Holdings Inc, which runs Omni Hotel and Gold's Gym chains, is also a donor. Total donations: $4 million

* Joe Craft - billionaire coal executive from Tulsa, Oklahoma, and CEO of Alliance Holdings, which is also a donor. Total donations: $2.1 million

* Jerry Perenchio Living Trust - a trust of billionaire television tycoon A. Jerrold Perenchio, who is a former chairman of Spanish-language broadcaster Univision. Donation: $2 million

* Crow Holdings - Dallas-based real estate investment firm. Total donations: $1.5 million

* Weaver Holdings and Weaver Popcorn - Indiana-based company specializing in popcorn. Total contributions: $1.9 million

* Stephens Inc - a Little Rock, Arkansas, broker dealer. Total donations: $1.3 million

* Armstrong Group - telecommunications conglomerate in Pennsylvania. Donation: $1.3 million

* JWC III Revocable Trust - Donatoin: $1.3 million

* Robert Brockman - executive at Ohio-based Reynolds and Reynolds. Similarly to Restore Our Future, three firms sharing a P.O. Box - CRC Information Systems Inc, Fairbanks Properties LLC and Waterbury Properties LLC - split the donation three ways. Total donations: $1 million

* Whiteco Industries - Indiana-based company involved in advertising, construction, entertainment and hotels. Donation: $1 million

* The Mercury Trust - entity linked to California private equity firm of Saul Fox. Donation: $1 million

* Clayton Williams Energy Inc - Midland, Texas-based drilling company. Donation: $1 million

* Jay Bergman - of PETCO Petroleum Corporation. Donation: $1 million

* Kenneth Griffin - Citadel Investment Group chief executive. Total donations: $1 million

* Wayne Hughes - Founder of Public Storage. Total donations: $1 million

* John Childs - Chairman and CEO of Boston-based JW Childs Associates. Total donations: $1 million

* Philip Geier - New York executive. Total donations: $1 million

* Irving Moskowitz - a Florida bingo magnate who runs a charity in California and is known for his support of Jewish settlers in East Jerusalem. Donation: $1 million

* Robert Mercer - co-CEO of hedge fund Renaissance Technologies. Donation: $1 million (Reporting by Patrick Temple-West, Alexander Cohen and Alina Selyukh; editing by Todd Eastham)

Friday, October 19, 2012

On NFIB Conference Call, Romney Urges Employers to Tell Employees How to Vote, Just Like the Kochs

Original Link:

By Brendan Fischer

GOP presidential candidate Mitt Romney suggested to business owners they tell their employees how to vote on a June conference call organized by the National Federation for Independent Business (NFIB), an organization the Center for Media and Democracy has recently exposed as a partisan lobbying group advancing big business interests.

The audio, obtained by Mike Elk at In These Times, shows Romney telling participants in the conference call to “pass… along to your employees” their opinions on the November presidential election:

"I hope you make it very clear to your employees what you believe is in the best interest of your enterprise and therefore their job and their future in the upcoming elections. And whether you agree with me or you agree with President Obama, or whatever your political view, I hope — I hope you pass those along to your employees. Nothing illegal about you talking to your employees about what you believe is best for the business, because I think that will figure into their election decision, their voting decision and of course doing that with your family and your kids as well" (listen starting at 26:44 in the recording).

Citizens United Opened Door to Business Telling Employees How to Vote

The reason it is no longer illegal for corporations to make direct partisan political communications to their employees is because the U.S. Supreme Court decided in Citizens United v. FEC that the government could not limit corporate political speech, at least as long as that speech is not coordinated with a candidate.

In the wake of that decision, a growing number of business owners have apparently been taking advantage of this newfound "freedom" to dictate to their employees how to vote. For example, Elk reported at In These Times this week that Charles and David Koch had sent around 45,000 employees a packet instructing them to support Romney and other Republicans, and warning that employees "may suffer the consequences" if the Kochs' preferred candidates are not elected. Westgate Resorts CEO David Siegel sent a similar email suggesting an Obama victory would lead to layoffs, and ASG Software Solutions CEO Arthur Allen warned employees that electing Obama would cause job losses.

On the June NFIB call, Romney not only reminded business owners that there was "nothing illegal" about telling employees how to vote, but he also acknowledged the power of coercion inherent in the employer-employee relationship. He encouraged business owners to tell their employees "about what you believe is best for the business, because I think that will figure into their election decision, their voting decision." These types of communications were largely prohibited pre-Citizens United.

NFIB Bankrolled by Big Money

The conference call was hosted by the National Federation of Independent Business, or NFIB, a group that purports to represent small business but receives its funding from deep-pocketed interest groups and appears to advance a partisan big business agenda, which the Center for Media and Democracy has recently documented in its NFIBexposed project.

The NFIB gained notoriety in recent years as the plaintiff in the challenge to President Obama's health care reform law, despite polls showing many small business owners supporting "Obamacare." It has partnered with groups like the U.S. Chamber of Commerce in opposing mandatory paid sick leave laws, minimum wage increases, and collective bargaining rights, and in the last two years, has received a $3.7 million donation from Karl Rove's dark money group Crossroads GPS and millions in six figure donations -- suggesting the group's political activities are bankrolled by big business or special interests, not the small businesses it claims to represent. Its leadership is populated by right-wing veterans and big business lobbyists (rather than individuals with a small business background), and all of its spending on political ads this year has gone to benefit Republicans, as have almost all of its campaign contributions. It is also a longtime member and sponsor of the American Legislative Exchange Council, or ALEC.

Romney Cited NFIB Study in First Debate

Romney's comments on the NFIB conference call were not the only time he has tied himself to the innocuous-sounding group. At the first presidential debate, he attacked President Obama's tax plan by citing an NFIB study, twice, purporting to show the plan would cost American jobs. The study has been sharply criticized for, among other things, ignoring the fact that Obama's plan would use the money saved from letting the Bush tax cuts expire for deficit reduction, reaching conclusions contradicted by analysts at the Congressional Budget Office and the Joint Committee on Taxation.

Saturday, October 13, 2012

10 Steps to Break Up the Wealth of the Super Rich

Original Link:

By Chuck Collins

Here's what it's going to take to have a society where everybody prospers and get a fair shake, as this excerpt from Collins' book 99 to 1 explains.

The following is an excerpt from 99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do About It , by Chuck Collins (Berrett-Koehler, 2012).

We must change the rules of the economy so that they serve and lift up the 100 percent, not just the 1 percent. Starting in the mid-1970s, the rules were changed to reorient the economy toward the short-term interests of the 1 percent. We can shift and reverse the rules to work for everyone.
Three Types of Rule Changes

There are three categories of policy changes that we need: rules and policies that raise the floor, those that level the playing field, and those that break up overconcentrations of wealth and corporate power. These are not hard-and-fast categories, but a useful framework for grouping different rule changes.

1.Rule changes that raise the floor

• Ensure the minimum wage is a living wage
• Provide universal health care
• Enforce basic labor standards and protections

2. Rule changes that level the playing field

• Invest in eduction
• Reduce the influence of money in politics
• Implement fair trade rules

3. Rule changes that break up wealth and power

• Tax the 1 percent
• Rein in CEO pay
• Stop corporate tax dodging
• Reclaim our financial system
• Reengineer the corporation
• Redesign the tax revenue system

Rule Changes That Raise the Floor

Policies that raise the floor reduce poverty and establish a fundamental minimum standard of decency that no one will fall below. The Nordic countries—Norway, Sweden, Denmark, and Finland—have very low levels of inequality, and they are also societies with strong social safety nets and policies that raise the floor.

One-third of people in the United States have no paid sick days, and one-half have no paid vacation days. Everyone deserves the right to take time off when sick and have a few weeks of vacation each year. In the rest of the developed world, these are considered basic human rights.
Examples of rule changes include:

Ensure the Minimum Wage Is a Living Wage. The minimum wage has lagged behind rising basic living expenses in housing, health care, transportation, and child care.
Provide Universal Health Care. Expand health coverage so that every child and adult has a minimum level of decent health care. No one should become sick or destitute because of lack of access to health care.

Enforce Basic Labor Standards and Protections. Ensuring basic worker rights and standards can lift up the bottom 20 percent of workers who are particularly exploited and disadvantaged in the current system. These rule changes include the forty-hour workweek, minimum vacation and family medical leave, sick leave, and protections against wage theft. Such rules contribute to a more humane society for everyone.

Rule Changes That Level the Playing Field

Policies and rule changes that level the playing field eliminate the unfair wealth and power advantages that flow to the 1 percent. Examples include:

Invest in Education. In the current global economy, disparities in education reinforce and contribute to inequality trends. Public investment in education is one of the most important interventions we can make to reduce inequality over time. “Widespread education has become the secret to growth,” writes World Bank economist Branko Milanovic. “And broadly accessible education is difficult to achieve unless a society has a relatively even income distribution.”

Reduce the Influence of Money in Politics. Through various campaign finance reforms—including public financing of elections—we can reduce the nexus between gigantic wealth and political influence. Reforms include limits to campaign contributions, a ban on corporate contributions and influence, and a requirement for timely disclosure of donations.

Implement Fair Trade Rules. Most international free trade treaties have boosted the wealth of the 1 percent, whose members are the largest shareholders of global companies. Free trade rules often pit countries against one another in a race to lower standards addressing child labor, environmental protection, workers’ rights to organize, and corporate regulation. Countries with the weakest standards are rewarded in this system. Fair trade rules would raise environmental and labor standards, so companies compete on the basis of other efficiencies.

Rule Changes That Break Up Wealth and Power

We can raise the floor and work toward a level playing field, but we cannot stop the perverse effects of extreme inequality without boldly advocating for policies that break up excessive concentrations of wealth and corporate power.

For example, we cannot pass campaign finance laws that seek clever ways to limit the influence of the 1 percent, as they will always find ways to subvert the law. Concentrated wealth is like water flowing downhill: it cannot stop itself from influencing the political system. The only way to fix the system is to not have such high levels of concentrated wealth. We need to level the hill!

This section examines several far-reaching policy initiatives, the tough changes that have to be considered if we’re going to reverse extreme inequality. Some of these proposals have been off the public agenda for decades or have never been seriously considered.

Tax the 1 Percent. Historically, taxing the 1 percent is one of the most important rule changes that have reduced the concentration of wealth. In 1915, Congress passed laws instituting federal income taxes and inheritance taxes (estate taxes). Over the subsequent decades, these taxes helped reduce the concentrations of income and wealth and even encouraged Gilded Age mansions to be turned over to civic groups and charities.

Taxes on higher income and wealth reached their zenith in the mid-1950s. At the time, the incomes of millionaires were taxed at rates over 91 percent. Today, the percentage of income paid by millionaires in taxes has plummeted to 21 percent. Back then, corporations contributed a third of the nation’s revenue. Today, corporations pay less than one-tenth of the nation’s revenue. The corporate 1 percent pays an average of 11.1 percent of income in taxes, down from 47.4 percent in 1961.

Taxes on the wealthy have steadily declined over the last fifty years. If the 1 percent paid taxes at the same actual effective rate as they did in 1961, the U.S. Treasury would receive an additional $231 billion a year. In 2009, the most recent year for which data are available, 1,500 millionaires paid no income taxes, largely because they dodged taxes through offshore tax schemes, according to the IRS.

As with inequality, the higher up the income ladder people are, the lower the percentage of income they pay in taxes. This is why Warren Buffett’s disclosure about his own low taxes was so important. Buffett revealed that in 2010, he paid only 14 percent of his income in federal taxes, lower than the 25 or 30 percent rate that his co-workers paid. Buffett wrote:

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

The richest 400 taxpayers have seen their effective rate decline from over 40 percent in 1961 to 18.1 percent in 2010.

Between 2001 and 2010, the United States borrowed almost $1 trillion to give tax breaks to the 1 percent. The 2001 and 2003 tax cuts passed under President George W. Bush were highly targeted to the top 1 and 2 percent of taxpayers. They included reducing the top income tax rate, cutting capital gains and dividend taxes, and eliminating the estate tax, our nation’s only levy on inherited wealth.

Are we focusing too much on taxing millionaires, given the magnitude of our fiscal and inequality problems? Won’t we have to raise taxes more broadly? It is true that taxing the 1 percent won’t entirely solve our nation’s short-term deficit problems or dramatically reduce inequality in the short run. But it will have a meaningful impact on both problems over time. Thirty years of tax cuts for the 1 percent have shifted taxes onto middle- income taxpayers; they have also added to the national debt, which simply postpones additional tax increases on the middle class. Progressive taxes, as were seen in the United States after World War I and during the Great Depression, do chip away at inequalities. These extreme inequalities weren’t built in a day, and the process of reversing them will not be instant, either. But when there is less concentrated income and wealth, there will be less money available for the 1 percent to use to undermine the political rule-making process.

Rein in CEO Pay. The CEOs of the corporate 1 percent are among the main drivers of the Wall Street inequality machine. They both push for rule changes to enrich the 1 percent and extract huge amounts of money for themselves in the process. But they are responding to a framework of rules that provide incentives to such short-term thinking. An early generation of CEOs operated within different rules and values—and they had a longer-term orientation.

There is a wide range of policies and rule changes that could address the skewed incentive system that results in reckless corporate behavior and excessive executive pay. What follows are several principles and examples of reforms that will reduce concentrated wealth among the 1 percent and also reform corporate practices:

• Encourage narrower CEO-worker pay gaps. Extreme pay gaps—situations where top executives regularly take home hundreds of times more in compensation than average employees—run counter to basic principles of fairness. These gaps also endanger enterprise effectiveness. Management guru Peter Drucker, echoing the view of Gilded Age financier J. P. Morgan, believed that the ratio of pay between worker and executive could run no higher than twenty to one without damaging company morale and productivity. Researchers have documented that Information Age enterprises operate more effectively when they tap into and reward the creative contributions of employees at all levels.

An effective policy would mandate reporting on CEO-worker pay gaps. The 2010 Dodd-Frank financial reform legislation included a provision that would require companies to report the ratio between CEO pay and the median pay for the rest of their employees. This simple reporting provision is under attack, but should be defended, and the pay ratio should become a key benchmark for evaluating corporate performance.

• Eliminate taxpayer subsidies for excessive executive pay. Ordinary taxpayers should not have to foot the bill for excessive executive compensation. And yet they do—through a variety of tax and accounting loopholes that encourage executive pay excess. These perverse incentives add up to more than $20 billion per year in forgone revenue. One example: no meaningful regulations currently limit how much companies can deduct from their taxes for the expense of executive compensation. Therefore, the more firms pay their CEO, the more they can deduct off their federal taxes.

An effective policy would limit the deductibility of excessive compensation. The Income-Equity Act (HR 382) would deny all firms tax deductions on any executive pay that runs over twenty-five times the pay of the firm’s lowest-paid employee or $500,000, whichever is higher. Companies can pay whatever they want, but over a certain amount, taxpayers shouldn’t have to subsidize it. Such deductibility caps were applied to financial bailout recipient firms and will be applied to health insurance companies under the health care reform legislation.

• Encourage reasonable limits on total compensation. The greater the annual reward an executive can receive, the greater the temptation to make reckless executive decisions that generate short-term earnings at the expense of long-term corporate health. Outsized CEO paychecks have also become a major drain on corporate revenues, amounting, in one recent period, to nearly 10 percent of total corporate earnings. Government can encourage more reasonable compensation levels without having to micromanage pay levels at individual firms.

An effective policy would raise top marginal tax rates. As discussed earlier, taxing high incomes at higher rates might be the most effective way to deflate bloated pay levels. In the 1950s and 1960s, compensation stayed within more reasonable bounds, in part because of the progressive tax system.

• Force accountability to shareholders. On paper, the corporate boards that determine executive pay levels must answer to shareholders. In practice, shareholders have had virtually no say in corporate executive pay decisions. Recent reforms have made some progress toward forcing corporate boards to defend before shareholders the rewards they extend to corporate officials.
An effective policy would give shareholders a binding voice on compensation packages. The Dodd-Frank reform includes a provision for a nonbinding resolution on compensation and retirement packages.

• Accountability to broader stakeholders. Executive pay practices, we have learned from the run-up to the 2008 financial crisis, impact far more than just shareholders. Effective pay reforms need to encourage management decisions that take into account the interests of all corporate stakeholders, not just shareholders but also consumers, employees, and the communities where corporations operate.

An effective policy would ensure wider disclosure by government contractors. If a company is doing business with the government, it should be held to a higher standard of disclosure. Taxpayers, workers, and consumers should know the extent to which our tax dollars subsidize top management pay. One policy change would be to pass the Patriot Corporations Act to extend tax incentives and federal contracting preferences to companies that meet good-behavior benchmarks that include not compensating any executive at more than 100 times the income of the company’s lowest-paid worker.

Stop corporate tax dodging.There are hundreds of large transnational corporations that pay no or very low corporate income taxes. These include Verizon, General Electric, Boeing, and Amazon. A common gimmick of the corporate 1 percent is to shift profits to subsidiaries in low-tax or no-tax countries such as the Cayman Islands. They pretend corporate profits pile up offshore while their losses accrue in the United States, reducing or eliminating their company’s obligation to Uncle Sam.
These same companies, however, use our public infrastructure—they hire workers trained in our schools, they depend on the U.S. court system to protect their property, and our military defends their assets around the world—yet they’re not paying their share of the bill. In a time of war, the unequal sacrifice and tax shenanigans of these companies are even more unseemly.

Corporate tax dodging hurts Main Street businesses, the 99 percent that are forced to compete on a playing field that isn’t level. “Small businesses are the lifeblood of local economies,” said Frank Knapp, CEO of the South Carolina Small Business Chamber of Commerce. “We pay our fair share of taxes and generate most of the new jobs. Why should we be subsidizing U.S. transnationals that use offshore tax havens to avoid paying taxes?”

This same offshore system facilitates criminal activity, from the laundering of drug money to the financing of terrorist networks. Smugglers, drug cartels, and even terrorist networks such as al-Qaeda thrive in secret offshore jurisdictions where individuals can hide or obscure the ownership of bank accounts and corporations to avoid any reporting or government oversight.

The offshore system has spawned a massive tax-dodging industry. Teams of tax lawyers and accountants add nothing to the efficiency of markets or products. Instead of making a better widget, companies invest in designing a better tax scam. Reports about General Electric’s storied tax dodging dramatize how modern trans-nationals view their tax accounting departments as profit centers.
The combination of federal budget concerns and a growing public awareness of corporate tax avoidance will lead to greater focus on legislative solutions. One strategic rule change would be for Congress to pass the Stop Tax Haven Abuse Act, which would end costly tax games that are harmful to domestic U.S. businesses and workers and blatantly unfair to those who pay their fair share of taxes.

One provision of the act would treat foreign subsidiaries of U.S. corporations whose management and control are primarily in the United States as U.S. domestic corporations for income tax purposes. Another provision would require country-by-country reporting so that transnational corporations would have to disclose tax payments in all jurisdictions and not easily be able to pit countries against one another.

The act would generate an estimated $100 billion in revenues a year, or $1 trillion over the next decade.

Reclaim Our Financial System.Wall Street and the top 1 percent have conducted a dangerous experiment on our lives. They have destroyed the livelihoods of billions of people around the planet in a bid to control the financial flows of the world and funnel money to the global 1 percent.
We sometimes forget that our financial sector is a human-created system that should serve the public interest and be subordinate to the credit needs of the real economy. Instead, we have a system where the planet is ruled by a tiny 1 percent of financial capital.

As quoted earlier, David Korten writes in “How to Liberate America from Wall Street Rule” that the “priority of the money system shifted from funding real investment for building community wealth to funding financial games designed solely to enrich Wall Street without the burden of producing anything of value.”

Communities across the country, as discussed earlier, are shifting funds out of the speculative banking sector and into community banks and lending institutions that are constructive lenders in the real economy.

More than 650,000 individuals have closed accounts at institutions such as Bank of America and moved their money. A number of religious congregations, unions, and civic organizations have followed suit. Now local governments are beginning to shift their funds. In the City of Boston, the City Council has voted to link deposits of public funds to institutions with strong commitments to community investments.

Here are some interventions to break Wall Street’s hold on our banking and money system:

• Break up the big banks. Reverse the thirty-year process of banking concentration and support a system of decentralized, community-accountable financial institutions committed to meeting the real credit needs of local communities. Limit the size of financial institutions to several billion dollars, and eliminate government preferences and subsidies to Wall Street’s too-big-to-fail banks in favor of the 15,000 community banks and credit unions that are already serving local markets.

• Create a network of state-level banks. Each state should have a partnership bank, similar to what’s been in place in North Dakota since 1919. These banks would hold government funds and private deposits and partner with community-based banks and other financial institutions to provide credit to enterprises and projects that contribute to the health of the local economy. The North Dakota experience has shown how a state bank can provide stability and curb speculative trends. North Dakota has more local banks than any other state and the lowest bank default rate in the nation.

• Create a national infrastructure and reconstruction bank. Instead of channeling Federal Reserve funds into private Wall Street banks, Congress should establish a federal bank to invest in public infrastructure and partner with other financial institutions to invest in reconstruction projects. The focus should be on investments that help make a transition to a green, sustainable economy.

• Provide rigorous oversight of the financial sector. The 2010 reforms to the financial sector failed to curtail some of the most destructive, gambling-oriented practices in the economy. The shadow banking system—including unregulated hedge funds—should be brought under greater oversight, like other utilities, and Congress should levy a financial speculation tax on transactions to pay for the oversight system.

• Restructure the federal reserve. The Federal Reserve has been creating money and channeling it to beneficiaries within the economy with no public accountability. The Fed contributed to the economic meltdown by failing to provide proper oversight for financial institutions under its jurisdiction, keeping easy credit flowing during an asset bubble, ignoring community banks, and then propping up bad financial actors. The Fed must be reorganized to be an independent federal agency with proper oversight and accountability. Its regulatory functions should be separated from its central bank functions, the new regulator given teeth to enforce rules, and individuals who work for the regulatory agency prevented from subsequently going to work for banks.

• Re-engineer the Corporation. The concentration of power in the corporate 1 percent has endangered our economy, our democracy, and the health of our planet. There is no alternative but to end corporate rule. This will require not only reining in and regulating the excesses of the corporate 1 percent but also rewiring the corporation as we know it.

Unfortunately, the Supreme Court’s Citizens United (2010) decision moves things in the wrong direction, giving corporations greater “free speech” rights to use their wealth and power to change the rules of the economy. An essential first step in shifting the balance back to the 99 percent is reversing the Citizens United decision through congressional action.

There are good and ethical human beings working in corporations and in the 1 percent. But the hardwiring of these companies is toward the maximization of profits for absentee shareholders and toward reducing and shifting the cost of employees, taxes, and environmental rules that shrink profits. The current design of large global corporations enables them to dodge responsibilities and obligations to stakeholders, including employees, localities, and the ecological commons. The corporate 1 percent may pledge loyalty to the rule of law, but they spend an inordinate amount of resources lobbying to reshape or circumvent these laws, often by moving operations to other countries and to secrecy jurisdictions.

At the root of the problem is a power imbalance. Concentrated corporate power is unaccountable—and there is little countervailing force in the form of government oversight or organized consumer power.

Looking at corporate scandals such as those of Enron and AIG, or at the roots of the 2008 economic meltdown, we find case studies of the rule riggers within the corporate 1 percent using political clout to rewrite government rules, dilute accounting standards, intimidate or co-opt government regulators, or outright lie, cheat, and steal.

Changing the rules for the corporate 1 percent is not anti-business and, by creating a level playing field and a framework of fair rules, will actually strengthen the 99 percent of businesses that most contribute to our healthy economy. A new alignment of business organizations reflects this. The American Sustainable Business Council is an alternative to the U.S. Chamber of Commerce and advocates for high-road policies that will build a durable economy with broad prosperity.

Communities have used a wide range of strategies to assert rights and power in relation to corporations. In 2007, the Strategic Corporate Initiative published an overview of these strategies in a report called “Toward a Global Citizens Movement to Bring Corporations Back Under Control.” Many strategies are incremental, but worth understanding as part of the lay of the land in rule changes.

• Engage in consumer action. As stakeholders, consumers have leverage to change corporate behavior. Examples include consumer boycotts that changed NestlĂ©’s unethical infant formula marketing campaigns around the world and softened the hardball anti-worker tactics of companies such as textile giant J. P. Stevens. New technologies are enabling consumers to be more sophisticated in leveraging their power to force companies to treat employees and the environment better.

• Promote socially responsible investing. Shareholders can also exercise power by avoiding investments in socially injurious corporations. In 2010, over $3 trillion in investments were managed with ethical criteria. Companies do change some behaviors when concerned about their reputations.

• Use shareholder power for the common good. For more than forty years, socially concerned religious and secular organizations have utilized the shareholder process to change corporate behavior and management practices. Shareholder resolutions, in conjunction with educational and consumer campaigns, have altered corporate behavior, such as the movement to pressure U.S. companies to stop doing business in South Africa during the apartheid era.

• Change rules inside corporations to foster accountability. There are internal changes in corporate governance that potentially could broaden accountability and corporate responsibility.
These include:

• Shareholder power reforms. Presently, there are many barriers to the exercise of real shareholder ownership power and oversight. Corporations should have real governance elections, not hand-picked slates that rubber-stamp management decisions.

• Board independence. Public corporations should have independent boards free of cozy insider connections. This will enable them to hold management properly accountable.

• Community rights. Communities should have greater power to require corporate disclosure about taxes, subsidies, treatment of workers, and environmental practices, including use of toxic chemicals.

• Require federal corporate charters. Most U.S. corporations are chartered at the state level, and a number of states, including Delaware, have such low accountability requirements that they are home to thousands of global companies. But corporations above a certain size that operate across state and international boundaries should be subject to a federal charter.

• Define stakeholder governance. A federal charter could define the governing board of a corporation to include representation of all major stakeholders, including consumers, employees, localities where the company operates, and organizations representing environmental interests. The German experience with co-determination includes boards with community and employee representation.

• Ban corporate influence in our democracy. Corporations should be prohibited from any participation in our democratic systems, including elections, funding of candidates, political parties, party conventions, and advertising aimed at influencing the outcome of elections and legislation. This would require legislation to reverse the impact of the Supreme Court’s Citizens United decision.

Citizens United and Corporate Power

In January 2010, the U.S. Supreme Court decided the case known as Citizens United v. Federal Election Commission. It gave new rights of free speech to corporations by saying that governments could not restrict independent spending by corporations and unions for political purposes. This opened the door for new election-related campaign spending and has given birth to super PACs that further erode the power of the 99 percent to influence national politics.

Senator Charles Schumer (D-N.Y.) sponsored legislation called the DISCLOSE Act to force better disclosure of campaign financiers, but it has been opposed by the U.S. Chamber of Commerce and other big business lobbies.

Other potential remedies include a push for an amendment to the Constitution to remove the free speech rights for corporations that Citizens United provides. Move to Amend is a coalition organizing such an amendment.

The reeingineered corporation will still employ thousands of people and be innovative and productive. But it will be much more accountable to shareholders, to the communities in which it operates, and to customers, employees, and the common good.

Redesign the Tax Revenue System. This final section of rule changes examines how farsighted tax and revenue policies can aid in the transition to a new and sustainable economy. Present tax rules do not reflect the widely held values and priorities of the 99 percent. Rather, they reflect the designs and worldview of the powerful 1 percent of global corporations and wealthy individuals. The 1 percent devotes considerable lobbying clout to shaping and distorting our tax laws, which is one of the reasons those laws are so complex and porous.

Our tax revenue system should be simple, treat all fairly, and raise adequate revenue for the services we need. Tax rules and budgets are moral documents; we should not pretend they are value neutral.
We’ve already discussed two ways that the tax code has been distorted. The first is how it privileges income from wealth over income from work by taxing capital gains at absurdly low rates. Second, the offshore system gives advantages to the global tax dodgers in the corporate 1 percent who force domestic businesses in the 99 percent to compete on an uneven playing field.

Another example is the way our tax code offers larger incentives to mature extractive industries such as oil and natural gas instead of directing resources to communities and corporations that conserve resources, care for the Earth, and catalyze new green enterprises.

The present tax system not only fails to raise adequate revenue from those most capable of paying but also serves as a huge impediment to progress. Current tax rules lock us into the economy of the past, rather than encouraging a transition to a new economy rooted in ecological sustainability, good jobs, and greater equality.

Conventional tax wisdom asserts that we should “tax the bads” by placing a higher price on harmful activities. Hence the notion of “sin taxes” levied on liquor, tobacco, and now, with increasing ferocity, junk food. Taxing these items raises revenue to offset the societal costs of alcoholism, cancer, and obesity. But sin taxes, like any sales tax, are regressive, requiring lower-income households to pay a higher percentage of their income than the wealthy pay.

There are three major “bads” that our tax code should be revised to address:

1. Extreme concentrations of income, wealth, and power that undermine social cohesion and a healthy democracy
2. Financial speculation, such as the activities that destabilized our economy in 2008

3. Pollution and profligate consumption that deplete our ecosystems

There are several bold interventions that focus on “taxing the bads” of our contemporary era and reversing two generations of tax shifts away from the 1 percent. They cluster around three foci: taxing concentrated wealth, taxing financial speculation, and taxing the destruction of nature.

• Tax inheritances. Levy a progressive estate tax on the fortunes of the 1 percent. At the end of 2010, Congress reinstated the estate tax on estates over $5 million ($10 million for a couple) at a 35 percent rate. Congress could close loopholes and raise additional revenue from the 1 percent with the greatest capacity to pay. The Responsible Estate Tax Act establishes graduated tax rates, with no tax on estates worth under $3.5 million, or $7 million for a couple, and includes a 10 percent surtax on the value of an estate above $500 million, or $1 billion for a couple. Estimated annual revenue: $35 billion.

• Institute a wealth tax on the 1 percent. A “net worth tax” should be levied on individual or household assets, including real estate, cash, investment funds, savings in insurance and pension plans, and personal trusts. The law can be structured to tax wealth only above a certain threshold. For example, France’s solidarity tax on wealth is for those who have assets in excess of $1.1 million.

• Establish new tax brackets for the 1 percent. Under our current tax rate structure, households with incomes over $350,000 pay the same top income tax rate as households with incomes over $10 million. In the 1950s, there were sixteen additional tax rates over the highest rate (35 percent) that we have today. A 50 percent rate on incomes over $2 million would generate an additional $60 billion a year.

• Eliminate the cap on social security withholding taxes. Extend the payroll tax to cover all wages, not just wage income up to $110,100. Today, some in the 1 percent are done paying their withholding taxes in January, while people in the 99 percent pay all year.

• Institute a financial speculation tax. A tax on financial transactions could generate significant funds for reinvesting in the transition to a financial system that works for everyone. Speculative trading now accounts for up to 70 percent of the trades in some markets. Commodity speculation unnecessarily bids up the cost of food, gasoline, and other basic necessities for the 99 percent. A modest federal tax on every transaction that involves the buying and selling of stocks and other financial products would both generate substantial revenue and dampen reckless risk taking. For ordinary investors, the cost would be negligible, like a tiny insurance fee to protect against financial instability. Estimated revenue: $150 billion a year.

• Tax income from wealth at higher rates. Giving tax advantages to income from wealth also encourages speculation. As described by Warren Buffett and others, we can end this preferential treatment for capital gains and dividends and at the same time encourage average families to engage in long-term investing. Estimated revenue: $88 billion per year.

• Tax carbon. Instead of taxpayers paying indirectly for the expensive social costs associated with climate change, taxes could build some of these real costs into purchases and products. Perhaps the most critical tax intervention to slow climate change would be to put a price on dumping carbon into the atmosphere from the transportation, energy, and other sectors. For example, the real ecological and societal costs of private jet travel would greatly increase the cost of owning or using private jets.
A gradually phased-in tax on carbon would create tremendous incentives to invest in energy conservation and regional green infrastructure. Proposals include a straight carbon tax or a cap-and-dividend proposal that would rebate 50 percent of revenue to consumers to offset the increased costs of some products and still generate $75–100 billion per year. We could also explore similar taxes on other pollutants, such as nitrates that are destroying our water supplies.

• Tax excessive consumption. Consumption of unnecessary stuff, especially by the 1 percent, is filling our landfills and destroying our environment. A tax on certain nonessential goods, such as expensive jewelry and technological gadgets, would reflect the real ecological cost of such items. It could apply only to purchases that exceed a certain amount, such as cars that cost more than $100,000. Some states currently charge a luxury tax on high-end real estate transactions.

Objections by some in the 1 percent to these proposals will be strong, along with howls of “class warfare” and “job killing.” Some will argue that government shouldn’t be in the business of picking winners in the economy. But the reality is that our current tax policy is picking winners every day, and they’re usually in the 1 percent.

For several generations after the introduction of a federal income tax at the end of the nineteenth century, our progressive federal tax system was moderately effective in reducing concentrations of wealth. As we briefly described, during the 1950s wealthy individuals paid significantly more taxes than they do today. Since 1980, however, we’ve lived through a great tax shift as lawmakers moved tax obligations off the wealthy and onto low- and middle-income taxpayers, off corporations and onto individuals, and off today’s taxpayers and onto our children and grandchildren.

This program would reverse these tax shifts and set up signposts to help with the transition to the new economy.

8 Facts That Prove Our Govt. Is Not Going Broke

Original Link:

By Les Leopold

The Republicans are out to shred our social safety net -- and they're using debt as their excuse.

Pete Peterson, the billionaire former private equity mogul, is quietly funding a noisy bus tour to whip up debt hysteria across the land. The “Ten Million a Minute Tour” headed by the Peterson Foundation’s former CEO, David M. Walker (and featuring such economic soothsayers as Alan Greenspan and Ross Perot) will end this week in Washington, DC after traveling coast to coast to alert America about the myriad of alleged dangers posed by government debt and deficits.

Really, it should be called the “Million an Hour” cavalcade because that’s about how much Peterson and company made, in part, through obscene tax loopholes designed for private equity firms and hedge funds. If there really is a debt problem, then Peterson and his fellow tax-evading financial moguls have contributed mightily to it.

But America does not face a debt crisis. Nor are we likely to face one in the next 100 years. In fact, we are the last country on Earth that needs to worry about its public debt.

What’s really behind the debt histrionics is a relentless effort by these Very Important People to use a trumped-up crisis to shred the social safety net and bring forth their bleak vision of a dog-eat-dog society where government provides for no one (except the super-rich). Unfortunately, many liberals are also buying into a “debt crisis” that doesn’t exist.

It’s time to inoculate ourselves from deficit hysteria. The first step is recognizing that virtually everything we read and hear about government debt and deficits is misleading, manipulative or just plain wrong. So, here’s your handy guide to the eight biggest lies.
But first, some basic definitions and facts:
  • Deficits are how much the government budget goes into the red in a given year. The red ink is covered by the sale of government bonds to investors here and abroad.
  • The national debt is the total amount of what the U.S. owes on those government bonds. If we have deficits year after year, then the debt gets larger year after year.
  • The projected deficit for this fiscal year is over $1 trillion.
  • Our total government debt is more than $16 trillion as of Oct. 1, 2012.
1. Isn’t it extremely dangerous to have such a large government debt?

Supposedly, the danger point comes when investors no longer will buy our debt at reasonable interest rates because they fear we won’t pay it back. Are we there yet? Are we getting close?

Let’s start with a look at debt as a percentage of our nation’s annual economic activity (gross domestic product or GDP). The chart below shows our national debt as a percentage of GDP hit an all-time high of 121 percent during the depths of World War II and recently began sharply rising again in the aftermath of the Wall Street crash. In 2011 the debt/GDP percentage reached 102.9 percent. Most forecasts suggest it is now leveling off.

We can also compare ourselves to other large economies. Here’s a list from the International Monetary Fund.
  • Government Debt as a Percentage of GDP, 2011
    United Kingdom82.5%
    United States102.9%
What’s going on here? First off, China’s percentage is artificially low because it buries a good deal of public debt in opaque provincial and local government loans and land giveaways. And then you have Japan. Why isn’t everyone screaming about Japan’s debt? Because investors consider its economy to be strong, steady and safe. They’re happy to lend to Japan at very low interest rates. And where is the safest haven in the world? Here in the USA. Investors are willing to lend us money at almost no interest rate at all.

Here’s the rub. Debt is only too high if the underlying economy is shaky. Investors all over the world are betting that the U.S. is the strongest, most stable nation right now, and over the long haul. They expect our economy to grow which automatically will shrink the debt ratio. It’s simple math. Economy up, debt down as a percentage of the economy (all other things being equal).

Despite what you hear from nearly every media outlet and every politician, investors do not see our debt as dangerously high. They are more than willing to pour money into the most stable, dynamic economy in the world – one that is both safe now, and likely to grow in the future.

2. Aren’t we’re in danger of becoming the next Greece?

Greece is in a heap of trouble even though its debt-to-GDP ratio (169.8%) is far below Japan’s (229.8%). With an unemployment rate of over 25 percent, Greece’s economy is shrinking rapidly. The more it shrinks the more it has to borrow to pay back previous loans and to balance its budget. But it can’t borrow unless it cuts its budgets. To cut its budgets, it has to lay off public employees and cut its social safety net, which further increases unemployment and shrinks its economy. Unless you’re in love with retsina, this is not a great time to be living in Greece.

Perhaps the biggest obstacle to Greece’s recovery is that it doesn’t have its own currency. If Greece did, it could let the value of that currency fall, which would make its economy more competitive. Obviously, both the US and Japan have their own currencies. Also, the U.S. and Japanese economies are much, much richer, stronger and diverse than Greece’s. Therefore, there is no chance – none whatsoever --- that the U.S and Japan will face Greece’s debt problems. Anyone who makes that comparison is either a fool or a demagogue hoping to skewer popular social programs like Medicare, Medicaid and Social Security.

3. Won’t cutting the national debt make the economy grow?

When economic calamity strikes, we humans seem instinctively to hoard our remaining resources. (Once we had belts, we tightened them.) But complex modern economies are not like families. Economies mired in major recessions require spending, not austerity, to function properly. As John Maynard Keynes noted two generations ago, when an economy is in a depression, the worst thing you can do is pay down government debt, precisely because families and businesses already are belt-tightening so much. Instead you need to run up even more debt to make up for the demand we lose when households “tighten their belts.” If major governments move to austerity during hard times, the recession grows deeper.

You want proof? Look at Europe today, where a real-time austerity experiment is in progress. Led by Germany, each European nation is cutting back on social services and increasing taxes. The net result: The 17-nation Eurozone is falling back into another recession with unemployment now rising to 11.4%. As the New York Times reports:
Greece had an unemployment rate of 24.4 percent in June, the latest month for which data were available. Spain still had the region’s highest jobless rate, at 25.1 percent, and an even bigger problem among young people. Nearly 53 percent of Spaniards younger than 25 were classified as unemployed in August.
There is no way in hell that cutting government debt will put America back to work. Instead it will send our economy into a nosedive. We’ve already unnecessarily unemployed more than 650,000 public employees due to self-destructive cuts in local, state and federal budgets. It would have been far, far, better for the government to borrow more to put America back to work.

4. But isn’t it ominous that the rating agencies took away our AAA rating?

Ludicrous, not ominous.

Rating agencies were first established to help investors judge the ability of corporations to repay their debts (corporate bonds). At first the rating agencies were paid by investors who wanted the information. But, a new business model emerged --- agencies were paid by the corporations and banks who were selling bonds in question. No one seemed to care much about the obvious conflict of interest until the recent Wall Street crash. Then we painfully discovered that these “independent” rating agencies made tens of millions of dollars doling out AAA ratings on every piece of toxic trash that investment banks paid them to rate. Then when the crash hit, the rating agencies had to reclassify thousands of mortgage-back bonds from AAA to junk. In short, the rating agencies are best viewed as pet poodles for the too-big-to-fail Wall Street banks and investment houses.

Rating agencies also evaluate debt offerings by governments and government agencies so that investors can decide how much risk to take on. The lower the rating, the higher the risk, and therefore, the higher the interest rate for the government offering. Fair enough.

But when it comes to rating major economic powerhouses like the U.S., Japan or Germany, what the rating agencies say is meaningless. When the U.S. “lost” its AAA rating, it was supposed to signal a rise in risk and therefore a rise in the interest rates the U.S. would be forced to pay investors to hold its debt. Instead, U.S. government bond rates went down as investors poured more money, not less, into buying our debt.

So why did the rating agencies bother to offer what obviously was a meaningless downgrade? Because again, they were acting as Wall Street poodles, hoping to tip government policy toward debt reduction and away from making Wall Street pay for the unconscionable mess it created. It’s amazing to watch highly educated politicians genuflect before these bogus ratings. It’s theology, not economics.

In short, the cut in our AAA rating should be viewed for what it really is: a political act to help Wall Street support the Republicans, submarine new financial regulations, and redirect the debate away from increased taxes on Wall Street and the super-rich.

5. Isn’t China buying up most of our debt and doesn’t that put us at its mercy?

The U.S. imports more from China than it exports to China. This produces a trade deficit (not government debt). In the first six months of 2012 we imported $235 billion worth of goods from China but exported only $61 billion to China for a net trade deficit of $174 billion. (There are many reasons for this imbalance, but a big one is that China keeps its currency artificially undervalued, which in turn, keeps its products cheap and ours more expensive. That makes it very hard to compete.)

Since China wants to do something with all those extra dollars, it buys U.S. government bonds. How much of our debt does China now own? About 8 cents of every dollar of outstanding U.S. debt. Other U.S. agencies like the Social Security Trust Fund and the Federal Reserve own about 30 cents of every dollar of our debt, and individual investors, corporations and other countries own the rest – about 62 cents of every dollar of debt. (See U.S Treasury Department and
Yes, China is the biggest foreign player, but it's not about to make trouble. It couldn’t even if it wanted to. China needs us to buy its goods or its economy will collapse. (Think for a minute about the trade. We get real goods and China gets paper…or rather little electronic signals in a currency account. It’s not clear who’s getting the better of that deal.)

In the end, large global economies are joined at the hip. China will buy our debt because it has no other choice. It has no interest at all in roiling the U.S. debt markets. If we go down, they go down.

6. Isn’t the debt caused by runaway entitlements?

Now we’re getting down to what this debt debate is really about. The austerity folks don’t want to tighten just any belt. They want to shred our social safety net. Debt is their excuse. Instead of making an open and honest case for a dog-eat-dog society, the social Darwinists (with Paul Ryan their new leader) make the utterly untruthful claim that so-called entitlements are driving up debt.
With a little addition, we can see how bogus this claim really is.
About a decade ago we were running a yearly surplus, meaning that each year we were paying down our national debt, not adding to it. Then stuff happened.
  • The Bush tax cuts (continued by Obama under severe Republican pressure) cost $250 billion a year in revenue.
  • The wars in Iraq and Afghanistan added another $300 billion a year in unfunded expenditures.
  • The Wall Street crash (which destroyed 8 million jobs in six months) led to a total of $350 billion a year in lost tax revenues and increased expenditures for the unemployed.
  • The bailout/stimulus rescue of the economy cost an additional $300 million a year for two years.
As the bottom black line on the graph below shows, instead of our current trillion dollar deficit, we’d be very close to a balanced budget were it not for Wall Street’s reckless greed, the unnecessary wars, and tax cuts for the rich. And we’d get there without shrinking social programs.

7. Isn’t this Obama’s fault?

As we just reviewed, Obama is not the cause of the rising debt. The tax cuts, the unfunded wars, the Wall Street crash and the bailouts started on Bush’s watch. Obama did indeed push the stimulus through, but that was a good move for our economy not a bad one. Furthermore, it was too small, not too big. (And Obamacare, over the long haul, is roughly neutral when it comes to the national debt.)
Obama, however, is not blameless. He should be faulted, not for running up the debt, but for not running it up more! Instead of kowtowing to deficit mania he should have visited unemployment line after unemployment line to make the case that Congress must allocate the funds needed to put America back to work.

With long-term interest rates at record lows (2.81% for 30 years) we could easily afford to borrow more to rebuild our infrastructure, weatherize all public buildings, provide free tuition for college students, and finance a host of other public programs that would move us to a full employment economy. And Obama could even make the case for funding much of it through a financial transaction tax on Wall Street’s casinos, as well as increased taxes on the super-rich. Of course, the Republicans wouldn’t go along with it. But the Communicator-in-Chief could have done more to educate the public that jobs, jobs and more jobs should come first. No talk of debt reduction, no “Grand Bargains” with the Republicans, until unemployment comes down to 5 percent! (And by then the debt/GDP ratio would be rapidly declining anyway because of economic growth.)

8. Won’t our kids be forced to shoulder the debt we leave behind?

Yes, this is a real tearjerker. Who among us wants to pawn off our debts onto our kids? A sad thought, if were true. But it’s not. Government debt, unlike our mortgages, is rarely repaid in full. Instead they roll over. The cost to taxpayers is the interest we pay on the outstanding debt and the refinancing of it. With the global economy at stall speed there is no danger in the foreseeable future of rising interest rates.

What about in 30 years when our darlings are at the helm? The answer depends on the economy, not on debt. If we borrow cheaply now to put our people back to work, if we invest fully in funding higher education, and if we build up our crumbling infrastructure and tend to the environment, then we’ll leave behind a prosperous economy. Debt will shrink over time as the economy grows. And more revenues will come in as our people go back to work.

However, if we become obsessed with debt and deficits, and slash to the bone the programs that develop future prosperity, we’ll leave behind a faltering economy and an even bigger environmental mess.

Debt hysteria is like a pandemic that quickly cripples logical thinking. Once infected, Very Important People with Very Impressive Degrees sound like fools.