more than one billion people in
the world live on less than one dollar a day
AND 2.7 billion people struggle to survive on
less than two dollars per day.
Coddling the Rich
Thursday, 07 May 2015
By Bob Lord, OtherWords | Op-Ed
The casino billionaire Sheldon Adelson and his wife, Miriam, at the caucus at the Adelson Educational Campus in Las Vegas, February 4, 2012. Adelson, the biggest single donor in political history, supported eight candidates through super PACs and all lost on Election Day, November 6, 2012. (photo not shown)
Question: How much did Congress save taxpayers last year when it cut food stamp benefits for 16 million poor children?
Answer: Less than the windfall Congress is trying to bestow on a few of the richest American families by ending the federal estate tax. The House has already approved a bill to do this, and the Senate is poised to follow suit.
To get a sense of just how breathtaking this giveaway is, consider the $30 billion estate of casino magnate - and GOP super-donor - Sheldon Adelson.
If the repeal goes through, the Adelson family's savings, when added to what they've already avoided through loopholes, could total as much as $12 billion. That's far more than the $8.6 billion Congress sought to spare taxpayers over a decade by cutting food stamps last year.
Two very ugly realities are at play here.
First, the distribution of wealth in the United States is now so lopsided that the assets of individual families can rival the cost of entire government programs that serve as lifelines for millions of needy Americans.
Second, majorities in both houses of Congress won't shrink from inflicting additional misery on the people who rely on those programs to heap piles of wealth onto the already obscenely rich.
What's fueling this madness?
Ask any lawmaker who wants to repeal the estate tax, and she'll probably tell you it's all about family farms and small businesses. That fiction's been peddled by politicians across party lines, from Washington Republican Dave Reichert to Arizona Democrat Kyrsten Sinema.
But as they well know, virtually no owners of family farms or small businesses are subject to the estate tax, and there are ample relief provisions already in the tax law to protect the few who are.
Besides, even if there were a problem, Congress could solve it without bestowing a windfall on oil tycoons and Wall Street kingpins - you know, the folks making those million-dollar campaign contributions.
Make no mistake, the billionaire class, now numbering over 500, isn't the accidental beneficiary of estate tax repeal. It's the intended beneficiary.
The tribute Congress is seeking to pay to the children of any one of those billionaires, even the lowliest one, could offset the entire $400-million cut in 2013 to the Head Start program. That cut denied 57,000 poor kids a better chance in life, supposedly in the name of saving money.
In this golden age for billionaires, over half of public school students are poor enough to qualify for school lunch subsidies, according to The New York Times.
High-profile GOP funders Charles and David Koch together control about $100 billion. By repealing the estate tax instead of closing its loopholes, Congress could put an additional $40 billion in the pockets the next generation of Kochs. That's over 13 billion school lunches.
A century ago, Congress enacted the estate tax to stem the concentration of wealth and close the gap between haves and have-nots. This time around, it's doing the exact opposite.
The Rich Got Rich And The Poor Got Poorer. But Ain't We Got Fun?
By Susie Madrak-- Crooks & Liars
Good thing Democrats control the White House, House and Senate, huh? Because we know they're working hard to correct these horrible income discrepancies!
The gap between the wealthiest Americans and middle- and working-class Americans has more than tripled in the past three decades, according to a June 25 report by the Center on Budget and Policy Priorities.
New data show that the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest parts of the population in 2007 was the highest it's been in 80 years, while the share of income going to the middle one-fifth of Americans shrank to its lowest level ever.
The CBPP report attributes the widening of this gap partly to Bush Administration tax cuts, which primarily benefited the wealthy. Of the $1.7 trillion in tax cuts taxpayers received through 2008, high-income households received by far the largest -- not only in amount but also as a percentage of income -- which shifted the concentration of after-tax income toward the top of the spectrum.
The average household in the top 1 percent earned $1.3 million after taxes in 2007, up $88,800 just from the prior year, while the income of the average middle-income household hovered around $55,300. While the nation's total income has grown sharply since 1979, according to the CBPP report, the wealthiest households have claimed an increasingly large share of the pie.
Arloc Sherman, a researcher for CBPP, said the income gap is expanding not because the middle class is losing income, but because the wealthiest incomes are skyrocketing.
The Wealthy are ‘Deserving’
Greg Mankiw: the Wealthy are ‘Deserving,’ Even When They’re Crooks
The Harvard economist famous for defending the one percent says America’s top earners “deserve” what they make, nevermind that our system immunizes them from the consequences of their mistakes.
I remember being mildly dismayed back in November 2011 when students at Harvard walked out on one of Gregory Mankiw’s lectures. Not that I’d agree with the economist who once headed George W. Bush’s Council of Economic Advisers. It just struck me as kind of misplaced.
But today, after having read Mankiw’s opinion piece in Sunday’s New York Times, I officially reverse that position and indeed suggest—nay, plead—that every Mankiw student from here to the end of time boycott his lectures on the basis of its dishonest vapidity. The idea that someone could peddle these gaseous lies to college students (to our future leaders, no less!) fills me with horror. To the extent that the worldview he expressed is taken seriously in this country—which, alas, is a considerable extent—our economic prospects are grim.
The headline, “Yes, the Wealthy Can Be Deserving,” was undoubtedly slapped up there by the sheepish commissioning editor trying to understate the column’s more egregious claims. What Mankiw in fact argues is that nearly every super-rich corporate titan in America has earned whatever he makes, and that “the value of a good CEO is extraordinarily high.”
Sure, the value of a good CEO is extraordinarily high. Whether it’s 343 times as high as the wage of an average employee is highly debatable. But that’s not even my main criticism with Mankiw’s argument. The main problem in our society isn’t the over-compensation of good CEOs, scandalous though that is. It’s the over-compensation of bad ones.
Every year for the last 20 years, the Institute for Policy Studies has looked at the compensation packages of the top 25 highest-paid CEOs as defined by the Wall Street Journal. That’s 500 spots. Of those, 112 were held by Wall Street CEOs who drove their companies to bankruptcy or bailout. Another 39 were held by CEOs who ended up being terminated. A final 38 were taken by executives who ended up paying fines or settlements arising from fraud charges. That’s 189 out of 500, or 38 percent. Basically, two of every five of America’s highest paid CEOs behaved in a way that, if they were regular workers, would have gotten them fired, disgraced, possibly prosecuted—maybe even jailed.
But once you reach a certain level in America, you can’t fail. Oh, you can be humiliated, and in the most extreme cases, maybe even do a little soft prison time. But where it matters—financially—you can’t lose. And so the 112 received $258 billion in bailouts from American taxpayers. And the fired CEOs averaged golden parachutes of $48 million.
This is what’s wrong with American capitalism. It’s not that Robert Downey Jr. made $50 million for The Avengers, which is how Mankiw opens his column, marveling that no one he asks about it seems to resent Downey’s compensation. At least The Avengers made $1.5 billion.
Now, if The Avengers had lost $1.5 billion, and if Downey had turned in a universally reviled performance, and if its producers had been breaking laws and bilking investors throughout its production cycle, and if all this had become a national scandal along the lines of the Enron or Tyco or Lehman scandals, then yes, Greg, Americans would certainly be outraged that Downey took home fifty mil. But none of that happened. Paydays like Downey’s may be crazy, but at least he came by it honestly and hasn’t gotten rich at other people’s, and taxpayer’s, expense.
Mankiw acknowledges that such ducks exist. But here he gets even sillier: he cites … Bernie Madoff. So in other words, to join the ranks of the undeserving rich, you have to develop a massive Ponzi scheme and work it for three decades and defraud your investors of untold billions of dollars. If you’re just Dick Fuld, who made $75 million in the two years before Lehman collapsed, nearly bringing the world economy down with it, you’re still part of the solution, I guess.
Of course no one seriously begrudges Downey his money, or LeBron James his. Athletes least of all—they have to produce on the field of play, and subjective matters like their smile or charisma have nothing to do with it. And no one resented Steve Jobs’s fortune. It’s unserious even to mention these things. And while it gets trickier when you get to Wall Streeters and hedge-fund people, I think most of us understand and agree that investment spurs economic activity, gives innovators a shot seeing their dreams become reality, and grows the economy in any number of ways.
But we don’t live in an age in which big investors and corporate leaders are justly rewarded for their good bets and rightly punished for their bad ones. We live in an age of rentier capitalism, in which textbook risk-reward scenarios have too often been replaced by a system in which powerful actors make massive profits in distorted or uncompetitive markets and simply aren’t punished—indeed are often further rewarded!—when they make terribly wrong bets or, worse, cook the books. What that has to do with Robert Downey is precisely nothing, except that one wishes Iron Man could swoop in and provide the Hollywood ending these people deserve.
Tax Dodging: The Real Theft
By Dave Johnson, Campaign for America's Future | Op-Ed
The Speaker of the House last week said that taxing people to pay for government is theft. Let’s look at just where actual theft is occurring.
Michael McAuliff and Sabrina Siddiqui covered the story at the Huffington Post, in John Boehner Compares Tax Proposals Of White House To Stealing,
We don’t have a revenue problem. We have a spending problem,” Boehner added. “How much more money do we want to steal from the American people to fund more government? I’m for no more.”
Yes, the old “taxes are theft” argument again. This is the line of reasoning that says government is bad, that decision-making by We, the People is bad, that people are “takers” and the wealthy are “producers” and “job creators,” and that the people are lazy and “don’t want to work” and if you let them assemble together and vote they become a mob that will steal everything from the rich who are rich by Devine Right, etc…
Keep in mind that in a democracy We, the People make decisions and government spending by definition is We, the People deciding to do things that make our lives better.
In honor of Speaker Boehner’s argument that taxes are theft, this is from August 2010: (even though the post will say June 12, 2012…)
Tax Cuts Are Theft
Conservatives like to say that taxes are theft. In fact it is tax cuts that are theft because they break a long-standing contract.
The American Social Contract: We, the People built our democracy and the empowerment and protections it bestows. We built the infrastructure, schools and all of the public structures, laws, courts, monetary system, etc. that enable enterprise to prosper. That prosperity is the bounty of our democracy and by contract it is supposed to be shared and reinvested. That is the contract. Our system enables some people to become wealthy but all of us are supposed to benefit from this system. Why else would We, the People have set up this system, if not for the benefit of We, the People?
The American Social Contract is supposed to work like this:
A beneficial cycle: We invest in infrastructure and public structures that create the conditions for enterprise to form and prosper. We prepare the ground for business to thrive. When enterprise prospers we share the bounty, with good wages and benefits for the people who work in the businesses and taxes that provide for the general welfare and for reinvestment in the infrastructure and public structures that keep the system going.
We fought hard to develop this system and it worked for us. We, the People fought and built our government to empower and protect us providing social services for the general welfare. We, through our government built up infrastructure and public structures like courts, laws, schools, roads, bridges. That investment creates the conditions that enable commerce to prosper – the bounty of democracy. In return we ask those who benefit most from the enterprise we enabled to share the return on our investment with all of us – through good wages, benefits and taxes.
But the “Reagan Revolution” broke the contract. Since Reagan the system is working like this:
Since the Reagan Revolution with its tax cuts for the rich, its anti-government policies, and its deregulation of the big corporations our democracy is increasingly defunded (and that was the plan), infrastructure is crumbling, our schools are falling behind, factories and supply chains are being dismantled, those still at work are working longer hours for fewer benefits and falling wages, our pensions are gone, wealth and income are increasing concentrating at the very top, our country is declining.
This is the Reagan Revolution home to roost: the social contract is broken. Instead of providing good wages and benefits and paying taxes to provide for the general welfare and reinvestment in infrastructure and public structures, the bounty of our democracy is being diverted to a wealthy few.
And while you are at it here are some other posts in the Reagan Revolution Home To Roost series:
This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.
Dave Johnson (Redwood City, CA) is a Fellow at Campaign for America's Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California.
Dave has more than 20 years of technology industry experience including positions as CEO and VP of marketing. His earlier career included technical positions, including video game design at Atari and Imagic. And he was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.
Tax Cuts Are Theft: An Amplification
Dave Johnson’s post on the broken contract that’s allowed private interests to siphon off our public wealth for the past 30 years is incredibly important. His basic argument is this:
We, the People built our democracy and the empowerment and protections it bestows. We built the infrastructure, schools and all of the public structures, laws, courts, monetary system, etc. that enable enterprise to prosper. That prosperity is the bounty of our democracy and by contract it is supposed to be shared and reinvested. That is the contract. Our system enables some people to become wealthy but all of us are supposed to benefit from this system. Why else would We, the People have set up this system, if not for the benefit of We, the People?
Dave points to the practical effects of a piece of conservative theology that deserves a bit of deeper drilling. It’s this: Conservatives believe that only private individuals should hold wealth. They do not believe in commonly-held public wealth of any kind. And that’s why they feel perfectly free to raid the vast legacy that our ancestors have accumulated and stewarded for us over the past 230 years.
It is a legacy — the biggest one ever amassed in history, in fact — and we do need to be thinking about it that way.. What they’ve stolen from us and arbitraged away isn’t just our own money; it’s the vast accumulation of civilizational wealth that was bought with the blood, sweat, tears, endless sacrifice, earnest planning, and bold dreaming of a dozen generations of American ancestors, and then bequeathed to us to ensure our own futures. Each of those generations received it in trust from the one that came before, added its own unique contributions to it, and then passed it on as an endowment to the next. As time compounded the gift, the legacy got richer; and our sense of who was entitled to share in the bounty got broader. By the time we got our hands on it, the American legacy was, quite simply, the biggest trust fund of physical, social, and cultural capital on earth.
To understand the magnitude of the gift, consider how things work in the great aristocratic houses, both in Europe and the US. If you are a Mountbatten or a Rothschild or a Morgan or a Bush, your clan has a deep well of resources, built up over many centuries of careful investment, that ensures that you will never go without. There’s always a family-owned house somewhere to stay in, an income stream to support you, and connections that will open any doors you might want to pass through. There’s a villa, chalet, or yacht where you can vacation. There’s a fleet of cars standing by to take you wherever you need to go. There are trusted family retainers to advise you on matters of money and law. If you need anything at all, ask around: there’s undoubtedly someone in the extended clan who already has it to share, or knows how to get it for you.
It’s impossible to underestimate or overstate the lifelong advantages that come with being born into a family like this. At every turn, throughout your life, you’ll have every opportunity to make good — and no excuses not to.
For the first 200 years of our existence, being born American was not unlike being born into the richest, most powerful family on the planet. By the middle of the 20th century, generations of sound investment and careful stewardship had built our collective trust fund to the point where we, too, began to believe that the shame would be on us if any member of our great household ever had to go without. If you needed decent housing or a monthly remittance to get by, we could cover that. If you needed doors opened for you in other countries, we had friends all over the world who were glad to deal with Americans. If you wanted a world-class education or the vacation of a lifetime, no problem: the family ran the best schools and universities in the world, and owned breathtaking national parks for your pleasure. If you needed to get around, we provided safe transportation networks. If you needed advice or help with a plan, there were trusted public servants on retainer. Our attitude toward the proper role of government was that, at our best, America was a big, powerful clan that had a moral duty (however imperfectly and selectively met in practice) to take care of its own, and maximize the opportunties availble to its members.
It’s only when you think about our common wealth the way the world’s richest families do — as a bequest from a long line of distinguished ancestors, as a vast common resource base that provides us with extraordinary material comfort today, and as a sacred trust that we must manage and multiply on behalf of generations yet to come — that you can really begin to understand the sheer magnitude of everything they took from us.
The thieves didn’t just steal our houses, our retirement funds, our careers, or our tax money. It went far beyond that. They also stole the family jewels — the vast infrastructure that’s been built up for centuries by generations of foresighted Americans, now collapsing into uselessness. They defunded the great universities, crowded our kids into classrooms like factory farmed chickens, and are shutting down the magnificent state and national parks. And they’re also stealing our future, committing us to endless debt, sucking the marrow out of our international standing, foreclosing our opportunties, making it impossible to solve looming problems, and forcing us to hand off to our children a far more meager legacy than the one we received.
They’re not just cheating us. They’re stealing from all those hardworking generations that sacrificed to bring us here; and all the generations still yet to come, who will be so much poorer because we let them loot us blind.
Here’s the irony: the people who did this to us did it precisely because they also understand wealth in these generational terms. In many cases, the thieves were themselves from wealthy families that have operated exactly this same way for a very long time, and who have personally benefitted from the private wealth accumulated by their ancestors. In other cases, they were “self-made” billionaires who may not have wealth in their past, but were determined to capitalize a dynasty in the future.
So, if they understand this, where’s the disconnect? Why couldn’t they respect the public’s need to manage our common wealth the same way they manage their own private wealth?
The disconnect is this: In the conservative worldview, it’s right and legitimate for private families and corporations to accrue generational wealth, and build great dynasties. But it’s absolutely wrong for the democratic masses to accumulate wealth that way; or to collaborate, via the government, to ensure that all of their children will have a birthright sufficient to open the doors to their dreams.
Maggie Thatcher told us outright: “There is no such thing as society. There are only individuals and families, and their interests.” And if there’s no such thing as society, then society has no right to accumulate wealth — via taxes, investment, or any other means. Viewed this way, a conservative might even think it’s a virtuous thing to defund and defraud the public out of any capital it does manage to acquire.
In the view of these economic royalists, the bottom line is this: it’s OK to steal from their American brothers and sisters because they don’t really believe that the family is legitimate in the first place. Being bastards — heirs only to a social contract they insist never existed in the first place — the rest of us were never entitled to the blessings of a birthright, any more than we’re entitled to any other rights, including the right to govern ourselves.
Corporate Tax Dodging Has Cost States More Than $42 Billion in Revenue Over the Last Three Years
By Travis Waldron, ThinkProgress | Report
ThinkProgress has documented the repeated tax dodging of large corporations, some of which, like GE, have gone entire years without paying taxes despite hauling in massive profits. Now, that phenomenon has spread to the states, where many corporations have largely avoided paying state corporate income taxes despite growing profits. Some companies, like DuPont, avoided state taxes altogether, paying nothing from 2008 to 2010 even as its profits piled up.
But DuPont wasn’t alone. According to a study from Citizens for Tax Justice and the Institute on Taxation and Economic Policy, 68 corporations avoided state taxes entirely for at least one year from 2008 to 2010, costing state governments at least $42.7 billion, as the New York Times reports:
To gauge how much Fortune 500 companies are paying in corporate income taxes, the study looked at the 265 of them that are both profitable and disclose their state tax payments. It found that 68 reported paying no state corporate taxes in at least one year between 2008 and 2010. All together, the study found that the companies reported $1.33 trillion in domestic profits from 2008 to 2010, but paid states only about half of what they would have if they had paid at the average corporate income tax rate of all states — reducing their state taxes by some $42.7 billion.
As the Times notes, the share of state revenues coming from corporate taxes has steadily declined since 1980, from about 10 percent then to less than 6 percent now. And despite Republican rhetoric calling for lower corporate taxes on the national level, America’s rate there remains low as well. Corporations continue to sit on huge amounts of cash without investing in job creation, but GOP politicians and corporate leaders have called for even larger tax giveaways.
Meanwhile, the lost tax revenue would have gone a long way toward plugging budget holes that were instead filled by cutting education, social services, and programs that helped states’ most vulnerable and needy residents.
"US Uncut" Calls Out Corporate Tax Deadbeats
By Veronica Morris Moore and Victoria Crider, Truthout | Report
Dark Money and the US Chamber of Commerce:
Majority of Donations Given by Just 64 Entities
By Candice Bernd, Truthout | News Analysis
A new report by Public Citizen, called "The Gilded Chamber," analyzes the US Chamber of Commerce's 2012 tax forms and found that more than half of all contributions to the Chamber came from just 64 donors in 2012.
The report looks at 1,619 contributions listed on Form 990 tax return documents, required for nonprofits to report contributions of more than $5000 to the IRS, by the Chamber and its partner, the US Chamber Institute for Legal Reform (ILR). The ILR works in conjunction with the Chamber for legal reforms that largely favor business and against consumer-access to the courts. Only a few of the organization's overall donors make up the majority of their contributions, according to the report.
"It makes you wonder whether they have policy disputes: whether concerns from small businesses who donate to the Chamber and want certain things to come out of it; are they going to get their policies pushed by the Chamber if the companies giving the hundreds of thousands and millions are making up much more of the base of the Chamber's fundraising?" Sam Jewler, the report's author, told Truthout.
According to the report, the sum of all contributions of $5,000 or more amounted to more than 94 percent of the Chamber's total donations in 2012, with an average donation at $111,254. Overall, the top 43 organizations contributed a combined $80.4 million to the Chamber. The Chamber's revenue came largely from dozens of contributions of $500,000 or more and of $100,000 or more, according to the study.
"The US Chamber is one of the largest conduits of 'dark money' in the country, but it refuses to disclose its donors," said Lisa Gilbert, director of Public Citizen's Congress Watch division, in a press release. "The American people deserve to know more about who's influencing this powerful force in our politics. By looking at the size of the Chamber's and ILR's donations, we can learn a little more about what kinds of businesses they represent - seemingly, very large ones."
But the ILR was even worse in terms of the disparity between large donations from a few entities and smaller ones. The report found that the ILR's average donation was $454,110, with just 21 entities giving a combined $27.3 million. This accounted for more than two-thirds of the ILR's total $43.6 million in donations. The ILR's funding came almost exclusively from contributions ranging in the hundreds of thousands or millions. The report found that a huge majority, 71 percent, of the ILR's 96 donations were for $100,000 or more, and more than half were for $250,000 or more.
"Generally, [the ILR] works to characterize consumer lawsuits as frivolous and a waste of time and money, and that may be the perspective of entities that were able to donate an average of $450,000 dollars - which what the ILR got in its average donation - but for the average consumer, a lot of people want to hold on to the right to sue in a class-action lawsuit if there's a large number of people damaged by a company's practices," Jewler said.
The Chamber characterizes itself as representing "the interests of more than 3 million businesses of all sizes, sectors, and regions. Our members range from mom-and-pop shops and local chambers to leading industry associations and large corporations." But this appears to be in stark contrast to what the organization's funding actually says about the interests that hold sway over the Chamber.
But it's still hard to say exactly what the interests of these large corporations and organizations are beyond generalizations because the donor's identities remain largely unknown. According to the report, of the top 35 donations given to the Chamber, only Dow Chemical Co., publicly disclosed giving $2.9 million (its sixth biggest donation in 2012).
Candice Bernd is an assistant editor/reporter with Truthout. With her partner, she is co-writing and co-producing Don't Frack With Denton, a documentary chronicling how her hometown became the first city to ban fracking in Texas. Follow her on Twitter @CandiceBernd.
Chamber of Commerce, Wrong Again
By Donald Cohen, Cry Wolf Project | Op-Ed
Dark Money Political Groups Target Voters Based on Their Internet Habits
By Lois Beckett, ProPublica | Report
Dark Money Poured Into New Mexico Senate Contest
By Justin Elliott, Kim Barker, ProPublica | Report
The 67 People As Wealthy As The World's Poorest 3.5 Billion
Kasia Moreno , Contributor
Oxfam International, a poverty fighting organization, made news at the World Economic Forum in Davos earlier this year with its report that
the world’s 85 richest people own assets with the same value as those owned by the poorer half of the world’s population, or 3.5 billion people (including children). Both groups have $US 1.7 trillion. That’s $20 billion on average if you are in the first group, and $486 if you are in the second group.
Oxfam’s calculations of the richest individuals are based on the 2013 Forbes Billionaires list. I decided to take a closer look at this group of 85 in search of trends. That’s when I realized that they are by now a much wealthier group. The rich got richer. And it was quite fast and dramatic. For example, while last year it took $23 billion to be in the top 20 of the world’s billionaires, this year it took $31 billion, according to Luisa Kroll, Forbes wealth editor, writing on Forbes.com.
As a result, by the time Forbes published its 2014 Billionaires List in early March, it took only 67 of the richest peoples’ wealth to match the poorer half of the world. (For the purpose of this blog, I will put aside the conversation about the importance of income inequality versus impoverishment. This has recently been skewing strongly toward recognition of the importance of income distribution and its inequality, most recently with the publication of Capital in the Twenty-First Century by Thomas Piketty.)
Each of the 67 is on average worth the same as 52 million people from the bottom of the world’s wealth pyramid. Bill Gates, the world’s richest man, with a net worth of $76 billion, is worth the same as 156 million people from the bottom.
Who are the 67? The biggest group—28 billionaires, or 42% of them—is from the United States. No other country comes close. Germany and Russia have the second-highest number, with six each. The rest are sprinkled among 13 countries in Western Europe, APAC and the Americas.
That the biggest group of the super rich comes from the U.S. should not be a surprise, as the country holds almost a third of the world’s wealth (30%), significantly more than any other country, according to the Global Wealth Databook, from Credit Suisse Research Institute. However, Europe, with a slightly bigger chunk of the world’s wealth (32%), produced substantially fewer of the richest. That is due to less dynamic economies, which do not equal the U.S. in how they foster innovation, on which many of the newest U.S. fortunes are based.
When comparing the ratio of the richest to the percentage of the world’s wealth held by each country, it is Russia that comes out the most lopsided, with its holdings skewed to the super rich. As a country, Russia holds only half a percent of the world’s wealth, and yet it has 9% of the 67 richest.
The 67 fortunes come from three main industries: technology (12), retail (12) and natural resources-based sectors such as oil and gas, mining and steel. The geographical split by industry illustrates the state and progression of the various economies. Almost all technology fortunes are recent and from the U.S. (Microsoft MSFT +0.91%, Oracle, Facebook). Retail is dominated by second- or third-generation Western Europeans. The majority of the rich whose money comes from natural resources are from emerging markets, with most of them from Russia.
The majority of the 67—40, or 60%, to be precise—are self-made. This rarified group of people thus shows that there is wealth mobility over time in the highest echelons, among both individuals and countries. Had there been less global mobility, the majority of the richest would necessarily have inherited wealth and come from the countries with the oldest fortunes, which are in Western Europe. Already back in the late 1980s, when Forbes first started to compile its Billionaires list, Western Europe stood apart from the rest of the world, with the majority of its fortunes inherited. That did not provide a long-term edge. Today, just 13 of the 67 come from Western Europe.
For Top 25 Hedge Fund Managers, a Difficult 2014 Still Paid Well
By ALEXANDRA STEVENSON
MAY 5, 2015
For investors in hedge funds, like big pension funds, 2014 was not a lucrative year. But for those who managed their money, the pay was spectacular.
The top 25 hedge fund managers reaped $11.62 billion in compensation in 2014, according to an annual ranking published on Tuesday by Institutional Investor’s Alpha magazine.
That collective payday came even as hedge funds, once high-octane money makers, returned on average low-single digits. In comparison, the benchmark Standard & Poor’s 500-stock index posted a gain of 13.68 percent last year when reinvested dividends were included.
Still, the men (no woman has ever made the cut) at the top of the hedge fund universe now run firms that are bigger than they have ever been. Their influence is growing beyond the industry and even beyond Wall Street. They lobby in Washington, donate to political campaigns nationwide, and can pick their advisers from a pool of former central bankers.
Topping the list is Kenneth C. Griffin, who started by trading convertible bonds out of his dormitory at Harvard. He took home $1.3 billion last year.
James H. Simons, a former National Security Agency code breaker who makes billions of dollars every year from his hedge fund, Renaissance Technologies, earned $1.2 billion. And Raymond Dalio, who runs the world’s biggest hedge fund, Bridgewater Associates, with more than $170 billion in assets under management, reaped $1.1 billion.
In close fourth was William A. Ackman, who is known for making large and concentrated bets, and for being outspoken about them. Mr. Ackman earned $950 million in 2014.
The pay estimates are based on the value of each manager’s stake in his firm and the fees charged. Investors in hedge funds generally pay an annual management fee of 2 percent of the total assets under management and 20 percent of any profits.
For the average person, these sums are extraordinary. But the overall pay for top earners was down by hundreds of millions of dollars in 2014. These managers made just over half of the $21.15 billion earned by the top 25 in 2013.
Still, what makes such nine- and 10-figure paychecks remarkable for 2014 is that many of the top earners had mediocre performances at best. Only half of the top 10 earners recorded returns that exceeded that of the S.&.P 500.
For investors, 2014 was the sixth consecutive year that hedge funds have fallen short of stock market performance, returning only 3 percent on average, according to a composite index of 2,200 portfolios collected by HFR, a firm that tracks the industry. Hedge funds are lightly regulated private pools of capital open to institutional investors like pension funds, university endowments and wealthy investors.
Such large investors continue to shovel money into the $2.9 trillion hedge fund industry, desperate to make returns in an environment of near-zero interest rates. So far this year, $18.2 billion of new capital has flowed in.
In terms of performance, Mr. Ackman’s Pershing Square Capital and Mr. Griffin’s Citadel were standouts. Pershing Square’s two funds gained 36 percent and 40 percent, the best returns in the 2014 ranking. Citadel posted returns of 18 percent to investors in its flagship Kensington and Wellington funds. Both Mr. Ackman and Mr. Griffin declined to comment for this article.
At Renaissance, the best-performing equities fund was up 14.5 percent, and its institutional futures fund gained 7.4 percent. Mr. Simons’s wealth, however, is tied up in the firm’s secretive Medallion fund, which manages only employees’ money and has earned average annual returns of more than 30 percent over two decades.
Elsewhere, returns were more modest.
Mr. Dalio’s Bridgewater started the year strong, with well-placed bets on interest rates in Europe and the United States, but momentum slowed in the second half of the year. He made 3.6 percent and 8.7 percent in his two main Pure Alpha funds. Mr. Dalio’s spokesman declined to comment.
Some notable managers were missing from the Alpha list entirely. The billionaire financier John A. Paulson did not make the cut because his Paulson & Company hedge fund lost money in 2014. Mr. Paulson, an inveterate art collector whose office is lined with Alexander Calder watercolors, was the second-highest earner in 2013, reaping $2.3 billion. He declined to comment.
Hedge funds represented by the Barclay Hedge Fund Index. Bonds represented by the Barclays U.S. Aggregate Bond Index. Stocks are 70% U.S. and 30% non-U.S. U.S. stocks represented by the MSCI US Broad Market Index through June 2, 2013, and the CRSP US Total Market Index thereafter. Non-U.S. stocks represented by the Total International Composite Index through Aug. 31, 2006; MSCI EAFE & Emerging Markets Index through Dec. 15, 2010; MSCI ACWI ex USA IMI Index through June 2, 2013; and FTSE Global All Cap ex US Index thereafter.
By The New York Times
And some of the most prominent names on past Alpha lists are no longer counted, having converted their hedge funds into family offices, managing chiefly their own money. Among them are George Soros, Steven A. Cohen, Carl C. Icahn and Stanley Druckenmiller.
Computer scientists whose firms use quantitative strategies were among the top earners last year. Mr. Simons employs astronomers and physicists and uses computer programs to scan reams of data in search of patterns to make investments, for example.
David E. Shaw, whose $36 billion D. E. Shaw firm hires data scientists to build algorithms for trading, made $530 million in 2014. Mr. Shaw, who has a computer science Ph.D. from Stanford, is no longer involved with the daily management of D. E. Shaw’s investments. A spokesman for D. E. Shaw declined to comment.
In a year when managers complained about unnavigable markets, with the leading central banks keeping interest rates low, hedge funds that employed a variety of strategies fared better.
Israel A. Englander took home $900 million after his firm, Millennium, made returns of 12 percent in 2014. Based in New York, Millennium uses a platform model to invest with 170 individual managers who each use their own trading strategies. Mr. Englander does not charge a management fee. Instead, investors share the costs of running the firm.
The highest-earning managers have also emerged as leading political donors. For example, Mr. Griffin, whose $26 billion firm, Citadel, is based in Chicago, was the single largest backer for Rahm Emanuel’s successful second-term mayoral campaign, donating more than $1 million. (Last month, Citadel hired Ben S. Bernanke, the former Federal Reserve chairman, as a senior adviser.)
Mr. Simons, who stepped down from day-to-day management of his $25 billion firm, Renaissance, in 2010, has been a significant political supporter of the Democrats, donating $8.3 million in 2014 alone. A spokesman for Mr. Simons declined to comment.
Activist investors, once the scourge of corporate America because of their strategy of buying up large stakes in companies and then throwing their weight around with management, came out on top, too.
Larry Robbins, an activist investor who prefers to be called a “suggestivist,” made $570 million in 2014. He made a fortune for himself and his investors in 2013 after winning a proxy contest against Health Management Associates. Mr. Robbins has also made a windfall betting on health care stocks like Humana, Thermo Fischer Scientific, HCA Holdings and VCA. A spokesman declined to comment.
One group of hedge fund managers known as the Tiger Cubs also made the top of list. Protégés of Julian H. Robertson, they are named after his firm, Tiger Management.
One of them was O. Andreas Halvorsen, the founder of Viking Global Investors, who earned $450 million last year. A former Norwegian Navy SEAL, Mr. Halvorsen is fiercely competitive; he came in eighth for his division several years ago in an Ironman race that included swimming, running and cycling.
Chase Coleman made $425 million last year. His firm, Tiger Global Management, reported steady returns for investors. The Tiger Global fund reported gains of 16.9 percent and Tiger Global Long Opportunities of 15.5 percent. The firm also makes venture capital investments in start-ups. A spokeswoman for Mr. Coleman declined to comment.
Ways Rich People's "Entitlements" Cheat You and Me
And the more they take from us, the greater their belief that they deserve the wealth we all helped to create.
By Paul Buchheit / AlterNet
February 9, 2014
The word 'entitlement' is ambiguous. For working people it means "earned benefits." For the rich, the concept of entitlement is compatible with the Merriam-Webster definition: "The feeling or belief that you deserve to be given something (such as special privileges)." Recent studies agree, concluding that higher social class is associated with increased entitlement and narcissism.
The sense of entitlement among the very rich is understandable, for it helps them to justify the massive redistribution of wealth that has occurred over the past 65 years, especially in the past 30 years. National investment in infrastructure, technology, and security has made America a rich country. The financial industry has used our publicly-developed communications technology to generate trillions of dollars in new earnings, while national security protects their interests. The major beneficiaries have convinced themselves they did it on their own. They believe they're entitled to it all.
Their entitlements can be summarized into four categories, each of which reveals clear advantages that the very rich take for granted.
1. Income: Mocking Our 'Progressive' Tax System
Americans who earn millions of dollars a year feel entitled to the same maximum tax rate as those making about $400,000 a year. Progressive taxation stops at that point. In fact, it reverses itself, with the highest earners paying lower tax rates. The richest 10% pay about 20 percent in federal taxes, and it goes down from there, with the richest 400 paying less than 20 percent. When all taxes are included (payroll, sales, state and local), the super-rich pay about the same percentage as America's middle and upper-middle classes.
Corporations feel entitled to lower taxes, too, having cut their income tax rate in half in just ten years. The companies that have benefited the most from public research have become skilled tax avoiders.
Some corporate CEOs feel entitled to total freedom from taxes, employing a noble-sounding strategy of a $1 per year salary to avoid federal income taxes. It allows them to defer all capital gains taxes on their stock holdings, which can be used, if cash is needed, as collateral for low-interest loans.
2. Wealth: Trillions in Financial Gains, Zero Tax
America has gained $16 trillion in financial wealth over the past five years, with 80-90 percent of that gain going to the richest 10%, for many of whom productive labor may have been limited to checking their online portfolios. America is gaining in wealth because of technological infrastructure and a deregulated financial industry that uses the technology to capture most of those gains.
There is no tax on all that wealth. Capital gains can be deferred indefinitely, and then another entitlement comes into play: the lower capital gains rate, purportedly meant to stimulate new business investment, but in large part failing to do that. The nation's wealth needs to be distributed more equitably among productive citizens, ideally by allowing everyone to share in the capital of companies that use our nationally developed technologies.
3. Financial Transactions: Trillions in Speculative Purchases, Zero Tax
As Forbes notes, the hundreds of trillions of dollars of speculative financial transactions constitute "a massive financial accident waiting to happen, yet again."
We pay a sales tax of up to 10 percent on boots and mittens for the kids, But not a penny of sales tax is paid on U.S. financial transactions, which may be valued as high as three quadrillion dollars annually, or over three thousand times the deficit. No sales tax is paid despite the high-risk nature of "flash trading" that can lose entire pension funds in a few seconds.
The trading industry feels entitled to tax-free purchases, claiming that even a tiny sales tax will decrease liquidity, or slow the economy, or constitute a sin tax. Yet it's an easily administered tax that has been imposed in some of the freest economies in the world.
4. Subsidies: Alms for the Rich
About two-thirds of nearly $1 trillion in individual "tax expenditures" (deductions, exemptions, exclusions, credits, capital gains, and loopholes) goes to the top quintile of taxpayers.
At the corporate level, tens of billions of dollars go in subsidies to the fossil fuel, fishing, and agricultural industries. Fossil fuel subsidies may be much, much more. The IMF reports U.S. fossil fuel subsidies of $502 billion, and according to Grist, even this is an underestimate.
There's more. A regressive payroll tax, an almost nonexistent estate tax, the lower capital gains rate on carried interest for investment managers, trillions socked away in tax havens -- all involve tax avoidance by wealthy Americans who feel entitled to their privileged positions.
Entitlements for the rich mean cuts in safety net programs for children, women, retirees, and low-income families. They threaten Social Security. They redirect money from infrastructure repair, education, and job creation.
And the more the super-rich take from us, the greater their belief that they're entitled to the wealth we all helped to create.
Paul Buchheit is a college teacher, a writer for progressive publications, and the founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org)
one must conclude that the American voter is 'stupid' to keep voting against their own economic interests...
Corporate Tax Breaks: How Congress Rigs the Rules
By Robert Borosage, Campaign for America's Future | News Analysis
“The game is rigged and the American people know that. They get it right down to their toes.”
— Senator Elizabeth Warren
This week, the House Ways and Means Committee is poised to demonstrate exactly how the rules are rigged. On Tuesday, the committee will begin to mark up a series of corporate tax breaks – known as “extenders” because they have been extended regularly every year or two for over a decade. Only now the committee plans to make many of them permanent, at the cost of an estimated $300 billion over 10 years. And it does not plan to pay for them by closing other corporate loopholes or raising rates. The giveaway – almost all of which goes to corporations – will simply add to the deficit, no doubt fueling the later demands of those who vote for them for deeper cuts in programs for the vulnerable in order to bring “spending” under control.
The tax measures range from big to small, sensible to inane. Two centerpieces are glaring loopholes for multinational companies and banks, encouraging them to ship jobs and report profits abroad to avoid an estimated $80 billion in taxes over a decade.
Call them – one known as the “active finance exception” and the other as the “CFC look-through rule” – the General Electric tax dodges. The loopholes allow multinationals with huge finance arms, like General Electric or Wall Street banks, to dodge paying their fair share of taxes simply by claiming that U.S. based financial income is being generated offshore. These “exceptions” are central to how GE managed to declare a profit of more than $27 billion over the past five years, while not only paying nothing in taxes, but pocketing tax refunds of more than $3 billion. The multibillion-dollar multinational pays less in taxes than any mom and pop store that turned a profit. These breaks don’t pass the smell test.
Making these permanent without offsetting them by closing other loopholes is a brazen insult to American voters. Republicans have railed incessantly about deficits, forcing austerity budgets that have impeded the recovery and cost jobs. They have even refused to pass emergency unemployment compensation for long-term unemployed workers unless it was “paid for” by cuts elsewhere. (And even after the Senate passed the measure with “pay-fors,” Republican House Speaker John Boehner still refuses to allow it to come to a vote.)
Emergency unemployment compensation is temporary, targeted and timely. It goes to sustain the families of unemployed workers who are still looking for work. It is of limited duration. And the families that receive it spend it immediately on food, rent, gas – helping to boost jobs and the economy. And that can’t get a vote on the floor of the House.
The offshore tax dodges that the committee is about to mark up and bring to a vote will be permanent. They aren’t emergency measures. They are targeted perversely to benefit the biggest corporations and banks the most. And they will cost jobs rather than help generate them.
But in a Congress supposedly locked in hapless partisan gridlock, these bills are greased to go. They are backed by a full-court press from the corporate lobbies. They gain bipartisan support by pairing the obscene with “side of the angels measures” – a deduction for schoolteachers who pay for supplies out of their own pockets, a tax break for employees that ride mass transit to work, a tax relief for families taking a loss from selling a home with an underwater mortgage, a production tax credit for renewable energy.
This is the routine way the rules get rigged, the powerful get the gold and the workers get the shaft. But perhaps this time business as usual may bear a price. Warren is right: Americans are increasingly onto the game. As polling for Americans for Tax Fairness has shown, voters are outraged that corporations and the wealthy aren’t paying their fair share of taxes. They are incensed at the notion that Congress is giving multinationals incentives to ship jobs or report profits abroad. Or that Wall Street banks are paying lower tax rates than small businesses.
Even the perpetually tanned House Speaker John Boehner will blanche at trying to explain how unemployed workers can’t be helped but multinationals need permanent loopholes to stash their earnings abroad. Even the glib Republican budget chair Rep. Paul Ryan will find it hard to justify deeper cuts that boot kids out of Head Start or cut Pell grants for college in order to make up for deficits produced by rewarding GE for stashing profits in the Cayman Islands.
This is an election year with voters in a surly mood. Embattled incumbents might be wise to think twice before bowing to the dictates of the corporate lobbies. Surely challengers in both parties should relish going after legislators who voted to carve a permanent loophole for multinationals that ship jobs abroad, while cutting investments in education and abandoning workers struggling to find a job.
Washington is a city wired for the insider’s deal to fix the game. And the rules will keep getting rigged until voters sort out who is on their side and who isn’t – and throw some of the latter out of office.
This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.
Robert L. Borosage is the founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future.
Corporate Tax Dodging Has Cost States More Than $42 Billion in Revenue Over the Last Three Years
By Travis Waldron, ThinkProgress | Report
What Happens When a Dark Money Group Blows Off IRS Rules?
Monday, 28 April 2014 09:52 By Kim Barker and Theodoric Meyer, ProPublica | Report
To see how easy it is for a dark money group to ignore the Internal Revenue Service, look no further than the loftily named Government Integrity Fund.
The Fund, an Ohio nonprofit, spent more than $1 million in 2012 on TV ads attacking Ohio Sen. Sherrod Brown and praising his Republican opponent, Josh Mandel. Now the Fund's tax return, which ProPublica obtained from the IRS this week, indicates that the group spent most of its money on politics — even though IRS rules say nonprofits like the Fund aren't allowed to do that.
The Government Integrity Fund was founded in May 2011 and applied later that year for IRS recognition of its tax-exempt status, swearing under penalty of perjury that it would not engage in politics but would instead "promote the social welfare of the citizens of Ohio." Within two months, the IRS had recognized the group.
It then devoted much of its resources to backing Mandel's unsuccessful bid to unseat Brown. As previously detailed by ProPublica, the Fund was linked to a former top Mandel staffer.
The Fund's return highlights the ways such nonprofits, known as dark money groups because they are not required to disclose their donors, can skirt IRS rules designed to limit their political activities. Such groups are playing an increasingly prominent role in elections, spending more than $256 million on election activity in 2012.
Dark money groups can spend money on politics as long as they can persuade the IRS that their primary purpose is social welfare. This can lead to quite creative accounting on tax forms, with groups describing ads that should qualify as political under IRS rules as "education" or "issue advocacy."
On the Government Integrity Fund's latest tax return — for 2012 — the group told the IRS it spent $5.2 million overall. Of that, $2 million went to two super PACs — mostly the Fund's sister super PAC, the Government Integrity Fund Action Network — which then used the money to pay for different ads than the ones the Fund bought. According to the filing, this $2 million made up all of the Fund's political spending in 2012.
But that didn't include an additional $1.08 million the Government Integrity Fund spent on TV ads praising Mandel and attacking Brown in the spring and summer of 2012, which ProPublica reported on in September 2012. (The spending was tallied by Brown consultants. The lawyer listed on the Fund's incorporation papers confirmed that the group spent more than $1 million on the ads.)
If the Fund had categorized the additional money it spent on the ads as political, almost 60 percent of its expenditures would have gone toward elections — which would seem to violate IRS rules that say a social welfare nonprofit's primary purpose can't be politics.
"Josh Mandel served our country with two tours in Iraq," one ad said. "Now he's fighting for taxpayers, fighting for our future." Another slammed Brown, contrasting his performance in 2012 with that of his younger self. "Young Sherrod Brown voted more for Ohio," it said. "Today's Sherrod Brown — he just votes the party line. Where did the young Sherrod go?"
The ads stopped short of telling people how to vote, but three nonprofit experts who reviewed them for ProPublica said they all qualified as election ads under IRS rules.
"There's no question," said Brian Galle, a Boston College associate professor of law who has written about political activity by nonprofits. "It's not even close. They're blatantly political advertisements."
The Fund now appears to be inactive. Its website is no longer operating. The Fund's president, Thomas Norris, who signed its tax return, did not respond to requests for comment.
"I think they existed solely to help Josh Mandel," said Justin Barasky, the Brown campaign's communications director, this week.
Unraveling what the Government Integrity Fund spent in 2012 wasn't possible until recently because the group didn't file its tax return until January of this year, when it was two months overdue. The long wait highlights one of the major problems with regulating dark money groups and their spending: The IRS typically doesn't look at these groups until a tax return is filed, often more than a year after an election has been decided.
Even with the return in hand, several aspects of its operations remain confusing.
In one spot, the group says $4.6 million of its $5.2 million in expenditures were made as grants "and similar amounts paid." But it doesn't identify which groups received the grants, as the IRS requires, or what the "similar amounts paid" might have gone toward. At the end of the form, the group says only $1.1 million went toward grants — again, without saying who received the grants — with the rest of the $4.6 million going to its sister super PAC and what it classifies as "public education."
The group offers no details on what the $1.5 million attributed to education included — mathematically, though, it would have to include the ads it bought related to the Brown-Mandel race.
Experts scoffed at the idea that the ads qualified as education.
"There's no way you can claim these are education. If this is public education, then everything is public education," said Donald Tobin, a law professor at Ohio State University who specializes in the intersection of tax and campaign finance law. "These are clearly designed to be political ads to benefit or oppose a candidate. And that's not social welfare activity."
The Fund attributes its remaining expenses mainly to fundraising fees paid to three companies. No records could be found for two of the three companies. And, according to the return, none of them raised any money for the group.
The nonprofit is not alone in how it categorizes its ad spending, as detailed in past ProPublica stories. For example, one group, the Coalition for American Values Action, told the IRS it spent $508,491 in 2012, almost all of it for the "creation of videos to educate Americans on various issues that affect their lives," and said it spent nothing on politics. Yet it actually donated more than three-quarters of its money to a political action committee that bought election ads.
It's an open question how vigorously the IRS, which doesn't comment on individual taxpayers like the Fund, will pursue groups for irregularities. The agency has revoked the nonprofit status of only one social welfare nonprofit, a liberal group, and its affiliates since the Supreme Court's Citizens United decision in 2010 paved the way for dark money groups to pour hundreds of millions of dollars into outside election ads.
Experts on nonprofits say the IRS has taken an even more hands-off approach since top officials admitted the agency had targeted applications from conservative groups for extra scrutiny, sparking a scandal and investigations.
The IRS has proposed new regulations to curtail political spending by social welfare nonprofits, but the agency has acknowledged that there's virtually no chance the regulations will be in place by this year's midterm election.
"This kind of nonsense just shows that the IRS should remain committed to a meaningful set of reforms, even if they can't get them done in time for this election cycle," said Galle, the law professor.
Theodoric Meyer is an intern at ProPublica. He has also written for the New York Times, the Seattle Times, and GlobalPost.
Dark Money Political Groups Target Voters Based on Their Internet Habits
By Lois Beckett, ProPublica | Report
Dark Money Poured Into New Mexico Senate Contest
By Justin Elliott, Kim Barker, ProPublica | Report
The Rich Get Richer and The Poor Get Prison
Annotation:This analysis of crime, offender characteristics, and criminal justice policies concludes that offense definitions and sentencing policies not only fail to reduce crime but have created the mistaken image that crime is primarily a threat from the poor and have unintentionally served the interests of the rich and the powerful.
Abstract:The analysis focuses on the risks and costs of both criminal and noncriminal harms, including street crimes, drug law offenses, white-collar crimes, and occupational and environmental hazards. It notes that the criminal justice system is more lenient toward white-collar offenders than nonviolent property offenders and that affluent offenders are less likely to serve prison sentences than poor offenders even when they have committed the same offense. The text argues that society fails to protect people from the crimes they fear by refusing to alleviate the poverty that generates them. In addition, the criminal justice system fails to protect people from the most serious dangers by failing to define the dangerous acts of those who are affluent as serious crimes and by failing to enforce the law vigorously against affluent persons. Recommended changes include reducing poverty, actively prosecuting white-collar crime, decriminalizing illicit drugs and victimless crimes, gun control, creating a correctional system that promotes human dignity, and giving all accused persons access to high-quality defense attorneys. Additional recommendations; tables; chapter study questions, readings, and notes; appended Marxian critique of criminal justice; and index
Debunking the Republican Myth of Economic Prosperity Through Tax Cuts
October 13, 2014 By Allen Clifton
Before getting started, this isn’t going to be some elaborate analysis of tax rates, or economic patterns outlining why trickle-down economics is a scam. Because, honestly, there’s really no point. It’s an indisputable fact that the richest among us in this country (as well as Wall Street and big corporations) have never done better. They’ve all gotten richer while the vast majority of Americans have fallen further and further behind. Yet despite these facts, tens of millions of Americans continue to buy into this ridiculous notion that “tax cuts create jobs” simply because Republicans tell them they will.
Heck, early on in George W. Bush’s first term as president he promised the American people that within a decade his tax cuts would usher in unheralded economic prosperity and eliminate our national debt. Instead, despite the fact that we didn’t raise taxes during his eight years in office, we saw our national debt nearly double and our nation endured one of the worst economic recessions in history. One would think that this would have been the “death blow” to the con of trickle-down economics. But, sadly, it wasn’t.
In fact, Republicans have actually doubled-down on pretty much the same economic policies as their solution to “solve” our economic issues. You know, the exact same policies that caused these issues in the first place. But as most people with any kind of common sense know, this whole “economic prosperity through tax cuts” propaganda is nothing but a con.
And the saddest part is, it’s not even elaborate. Tax cuts do nothing but fatten the pockets of the rich while placing the burden for maintaining this country on everybody else.
Meanwhile, Republicans harp on and on about reducing our spending, yet they never go after cuts that would impact the rich or big business. Like closing tax loopholes corporations use to avoid paying taxes, ending oil subsidies or reductions to our insanely bloated defense budget. In fact, they often push for more defense spending – while rallying that we can’t continue to spend money we don’t have.
Instead they focus on cuts to things like the EPA, education, welfare, Social Security, Medicare, Medicaid and a whole host of other programs that benefit the vast majority of Americans. This propaganda isn’t hard to expose. What baffles me is how few Americans seem to actually recognize it.
Just look at the Bush years. They flat-out promised us that his tax cuts would pay off our debt. Which, of course, was a lie. And now to tackle this massive debt he helped create, what’s the Republican solution? You guessed it: More tax breaks for the rich, spending cuts on programs for the rest of us.
Republicans will almost always push for tax cuts that overwhelmingly favor the rich, while focusing their spending cuts on programs that most Americans rely on every single day.
It’s a cycle that will repeat time and time again as long as we continue to allow the GOP to get away with it. Sure, they might cut taxes for every American, giving most a few hundred dollars extra per year. But that’s basically just a quick bribe to distract us from the damage they’re doing in less obvious areas of our country. Because make no mistake about it, we’ll end up paying for these tax cuts in some form or fashion.
So, while they’ll stand in front of cameras, bragging about the $400 per year the average American will be getting if we pass some tax cuts they’re pushing for – they’re also not mentioning that a few years from now that major bridge in your town that desperately needs to be repaired won’t get those repairs. And the reason it won’t get those repairs is because the spending cuts they pushed through to offset those tax cuts from a few years ago killed the funding to make that bridge safer to drive on.
And it’s not just infrastructure. This happens in many facets of our lives. Republicans just know that as long as they distract Americans with a few hundred dollars here and there in promised tax breaks, they won’t notice the less than obvious areas where they’ll screw them over later on. And they do all of this just so that they can continue to give their rich buddies tax breaks, protect tax loopholes big corporations exploit to avoid paying taxes, keep subsidies for big oil and continue to fund bloated defense contracts.
Is anything I’m saying here “breaking news”? Of course not. But I think it’s good to toss out a reminder every now and then as to just how absurd Republican policies are. And I keep holding out hope that one day some of these Americans will finally wake up and stop being conned by the Republican party.
Living on Less
One Dollar Per Day
More than one billion people in the world live on less than one dollar a day. In total, 2.7 billion struggle to survive on less than two dollars per day. Poverty in the developing world, however, goes far beyond income poverty. It means having to walk more than one mile everyday simply to collect water and firewood; it means suffering diseases that were eradicated from rich countries decades ago. Every year eleven million children die-most under the age of five and more than six million from completely preventable causes like malaria, diarrhea and pneumonia.
In some deeply impoverished nations less than half of the children are in primary school and under 20 percent go to secondary school. Around the world, a total of 114 million children do not get even a basic education and 584 million women are illiterate.
There will be more mobility among the richest individuals if more of the world’s richest give away their money to philanthropy, expecting future generations to start anew. Out of the 67, eight have signed a giving pledge, promising to leave the majority of their wealth to philanthropy. All but one, Indian billionaire Azim Premji, are from the U.S. That amount pledged to charity comes to at least $150 billion, assuming half of their fortunes are given away. That means that these eight people have pledged to give to philanthropy what some 309 million people (average members of the group of 3.5 billion poorest) today have. Presumably, this philanthropy, which has been increasingly systemic—meaning that it aims to create long-term change instead of alleviating immediate needs—will in the long run help more than 300 million people.
Turning fortunes over to philanthropy will also drastically change the makeup of the richest, making room for more of the self-made. It has to be noted, however, that not every region of the world is on the same wavelength in this respect, with family legacy in business especially important in Europe.
Late breaking: Forbes has just announced it is updating its Billionaires rankings in real time now. The latest counts show that over the last month the number of billionaires whose net worth equals that of the 3.5 billion poorest people has fallen to 66.