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Entries tagged "debt"
On June 12, 2013, the Institute for Policy Studies released the sixth in a series of reports on the Fix the Debt corporate lobby group. This newest report, Corporate Pirates of the Caribbean, uses Fix the Debt members’ SEC filings to calculate how much they would stand to gain from a shift to a territorial tax system. Such a reform would permanently exempt U.S. corporations’ foreign earnings from U.S. income taxes.
In response to this IPS report, Fix the Debt issued a press release denying that they have ever taken a position on this controversial tax reform and spokeswoman Maya MacGuineas described the report as “lies and mudslinging.”
These attacks on our research conflict with clear statements in support of a territorial tax system, both by Fix the Debt directly and by numerous Fix the Debt leaders.
As we pointed out in our first report, published in November 2012, Fix the Debt expressed unambiguous support for a territorial tax system in a PowerPoint on their web site (see slide 11). The PowerPoint was described as a “CEO Tool” to help business leaders recruit others to join Fix the Debt. This IPS report, The CEO Campaign to “Fix” the Debt: A Trojan Horse for Massive Corporate Tax Breaks, received significant coverage in the mainstream and alternative press.
More than six months later, with this same PowerPoint still on their web site, Fix the Debt is claiming they have never had a position on a territorial tax system. And even though we reprinted the slide in our new report, Fix the Debt spokespeople did not address this obvious inconsistency.
Support for territorial tax reform is a core plank of the fiscal reform plan articulated by Fix the Debt Co-Chairs Erskine Bowles and Alan Simpson. In April 2013, Fix the Debt prominently featured Bowles-Simpson 2.0 on their website. In their piece applauding the new Simpson-Bowles plan, Fix the Debt includes “move toward a territorial system” as one of five key components of the plan.
Our plan puts in place a process for comprehensive tax reform to eliminate or scale back tax expenditures in order to generate nearly $600 billion in revenues for deficit reduction substantially reducing marginal tax rates for individuals, corporations and small business, and moving toward a competitive territorial system while maintaining the progressivity of the tax code.
Excerpted from A Bi-Partisan Path Forward to Securing America’s Future, (aka Bowles-Simpson 2.0) Moment of Truth Project; April 2013, p 7.
Other prominent Fix the Debt leaders have also been vocal in their support of a territorial tax system for corporations:
“We shouldn’t be imperiling U.S. companies to be competitive with our foreign competitors by putting in a tax policy that puts them at a disadvantage. So, I’m very much in favor of a territorial system and that’s what we advocated in Simpson-Bowles."
- David Cote, CEO of Honeywell, CEO Fix the Debt Steering Committee member and Member of the Simpson-Bowles Deficit Reduction Commission, Bloomberg Street Sense, August 27, 2012
The U.S. needs to "allow this territorial system [excusing repatriated profits from being subject to domestic taxes] so that companies can repatriate their earning back to the United States."
- Jeffrey Immelt, CEO of General Electric, Fix the Debt CEO Steering Committee member, exclusive interview with CNN, October 4, 2012
“We need comprehensive business tax reform that will lower tax rates and provide certainty for all businesses. We also need to move to a competitive territorial tax system in line with other major industrialized nations.”
- Doug Oberhelman, CEO of Caterpillar, Fix the Debt CEO Steering Committee (with Mary Andringa), op-ed in Roll Call, June 6, 2012
“Tax policy: I think the President's put out some really good suggestions, but we've got to get to the territorial tax.”
- Andrew Liveris, Chairman Dow Chemical, Fix the Debt CEO Steering Committee member, Kudlow Report, CNBC, April 19, 2012
“One of the things that's always bothered me is that we don't have a territorial tax system.”
- Paul Jacobs, CEO of Qualcomm, Fix the Debt CEO Steering Committee member, USA Today, May 20, 2013
The Fix the Debt campaign appears to be facing a dilemma.
On the one hand, they seem to be trying to recruit and maintain CEO supporters by creating a platform for promoting policies that would primarily benefit large corporations. On the other hand, they are trying to build broad public support through slick PR gimmicks emphasizing a message of shared sacrifice.
Rather than attacking IPS research, they may want to focus on resolving these inconsistencies.
November 21, 2011 · By Miriam Pemberton
In its final stages, debate over the supercommittee has boiled down to squeezing new revenues out of millionaires vs. cutting the social safety net. The largest portion of the discretionary budget, however, funds the military — and that fact has been mostly obscured in this equation. With the panel in its final death throes, military spending is emerging from the shadows in the form of “defense sequestration.” This is the requirement that failure would trigger $1.2 trillion in spending cuts over 10 years, half of which would come from the Pentagon's coffers.
Scare tactics don’t tend to produce entirely sensible legislation, and this one is no exception. Yet can these cuts be made with no sacrifice to our security? Emphatically, yes.
The Pentagon and its allies in industry and Congress are warning us over and over that this “doomsday” scenario will leave us weakened and vulnerable. They're ignoring several pretty important facts. The “sequestration” cuts, added to those already planned, would bring our military spending, in inflation-adjusted terms, to its 2007 level. Was anyone talking about doomsday then?
Thirteen straight years of military increases, moreover, have more than doubled the Pentagon's base budget (excluding war spending), bringing it to its highest level since World War II. And these increases have actually expanded the gap between U.S. military spending and the rest of the world. At the beginning of this period, we were spending about a third of the world’s total. Now we're spending about half.
Even if sequestration cuts across all military programs, this sort of ham-handed approach is safely doable. Our blank-check approach to military spending in this century has created waste in every program, waiting to be trimmed. Even as Defense Secretary Leon Panetta works to protect his budget at the expense of all others, his Pentagon remains the only federal department that can't pass an audit of its books.
The Project On Government Oversight has calculated that simply cutting back by 15 percent on the privatization of military functions that has occurred in this period would save $300 billion over 10 years.
Is sequestration the best way to manage a defense drawdown? No. For one thing, the best way would make choices based on how much we need to spend, on what, to keep us safe. A new security strategy could allow us to question, for example, the need for our current “forward presence,” which has between 105 and 125 ships cruising around three oceans nearly all the time, and target savings accordingly in the naval budget. Sequestration bypasses this kind of thinking.
Nor would the sequestration “haircut” do anything good for our enduring unemployment crisis. Military cuts, it is true, will have a smaller impact on jobs than other cuts in the domestic discretionary budget. A study by economists at the University of Massachusetts found that $1 billion in military spending sustains about 11,000 jobs as compared to about 17,000 from an equivalent amount of spending on clean energy. Let's cut spending on military programs we don’t need and invest those savings in job creation by making things we do need.
This is the kind of vision laid out in a new report from my organization, the Institute for Policy Studies. It outlines a set of cuts to those military programs we don’t need, and combines that with fiscal reforms and pollution taxes. The result would be more than $800 billion we can invest in building the kind of country we all deserve.
July 29, 2011 · By Lacy MacAuley
Rallies and demonstrations on the debt ceiling crisis are expected to roll through Washington throughout the weekend, as long as Congress, House Speaker John Boehner, and President Barack Obama fail to resolve the deficit crisis that threatens to take the U.S. and global economy down a notch. Tea partiers, flag-waving labor unions, peace activists, gun-loving libertarians, and everyday Americans have all been showing up at the Capitol steps to have their say in the budget debacle.
Yesterday, 10-year-old Maceo Dolan-Sandrino was among the demonstrators. Maceo is from Maryland, just on the outskirts of Washington, the son of IPS Fellow Karen Dolan. He attended yesterday’s rally at the Capitol to oppose the cuts to our social safety net, services like healthcare and income assistance that many Americans rely upon through hard times. I thought it might be interesting to get a 10-year-old’s perspective on the day’s events. I asked Maceo what he thought about the protest.
At first, Maceo reported that he hadn’t really listened to anything, and that his feet had hurt. But when I asked him again, I got a different answer.
“The protest was about how John Boehner was going to take away social security and how he was going to – um, it was something about the taxes,” said Maceo. “Planned Parenthood was there and they had signs that said, ‘Don’t take away our birth control.’”
I asked Maceo if he realized that the United States was in debt, and that Obama, Boehner, and Congress were trying to decide whether to borrow more money. In return, Maceo offered a surprisingly searing analysis.
“It’s because the rich and wealthy people aren’t paying their fair share of taxes, and all of the big corporations are finding loopholes not to pay taxes, and then we don’t have enough money to pay our debts,” he said.
I found this comment to be incredibly astute. As IPS Fellow Chuck Collins wrote in an article for OtherWords, “Overseas tax havens enable companies to pretend their profits are earned in other countries like the Cayman Islands. Simply making that ruse illegal would bring home an estimated $100 billion a year.”
Making sure our government doesn’t tax the highest income brackets is another way the wealthy avoid paying their fair share of taxes. Since 1970, “the top marginal tax rate on our richest has been halved, from 70 to 35 percent, and our rich have become phenomenally richer,” wrote Peter Diamond and Emmanuel Saez in an article this month on toomuchonline.org. And you can bet that this tax rate plunge had a lot to do with campaign contributions to friendly elected officials. Money talks, Congress listens.
Unlike Obama, Boehner, or most members of Congress, Maceo intends to stick around for quite a while in order to help pay back the debt now being discussed in Washington. I asked Maceo about how he felt about our politicians leaving future generations to pick up the tab after the government has had its spending frenzy.
“I don’t feel good at all. No, I don’t think I’m going to have that money, because I know I’m going to have a family to take care of. So, I don’t feel good about that at all.”
Maceo is a sharp kid. If Obama, Boehner, and Congress listened to the wisdom of 10-year-olds, and made the wealthy pay their fair share for this budget, kids like Maceo wouldn’t inherit such a large debt burden for them to pay back through their taxes.
Tax the rich. For kids like Maceo.