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Entries since June 2013Page Previous 1 • 2 • 3 Next
June 20, 2013 · By Emily Schwartz Greco
In an op-ed the Los Angeles Times published today, IPS associate fellow Sam Pizzigati and Phoenix tax lawyer Bob Lord pinpoint what's truly unsustainable about the nation's tax system. Taxes on labor are rising while taxes on wealth are declining and an increasing share of wealth isn't subject to any taxes at all.
Pizzigati edits Too Much, the Institute for Policy Studies' weekly publication on excess and inequality and writes a weekly column for OtherWords, the Institute's national editorial service. Lord is an OtherWords contributor.
June 19, 2013 · By Emily Schwartz Greco
This week in OtherWords, Sam Pizzigati points out that the contracts our government doles out to private companies to snoop on us are making some corporate executives very rich. As always, our commentaries and cartoons are available for use at no charge in newspapers and new media under a Creative Commons license. Editors may find information about that on our website or contact me with any questions at OtherWords[ AT ]ips-dc.org. If you haven't already subscribed to our weekly newsletter, please do.
- A New Education Debate / Isaiah J. Poole
It's time to focus on what the children who attend public schools really need to succeed.
- Failing a Test of the Emergency Broadcast System / Stephanie Worden
Our emergency communications system needs an upgrade.
- Our Star-Spangled Banner Waves for All of Us / Raul A. Reyes
The racist attacks on a young Mexican-American prodigy who sang the National Anthem didn't occur in a vacuum.
- Fantasy Budgeting Won’t Make Us Safer / Ryan Alexander
Lawmakers should make targeted and smart Pentagon budget cuts.
- A Deceptive Win on Plan B for Women / Kathleen Robin Joyce
Our reproductive rights are still in danger.
- Uncle Sam’s Vast Dragnet / Donald Kaul
We have a right to be left alone unless the government can give us a very good reason to the contrary.
- Snooping Makes an Easy Road to Riches / Sam Pizzigati
Corporate execs at firms like Booz Allen have a vested self-interest in pumping up demand for their snooping services.
- Eat Real / Jill Richardson
Too many diets are about hype, not health.
- Metadata Mining Is Mega Awful / Jim Hightower
There's no shortage of complaints about the nation's massive surveillance dragnet now that We the People know about it.
- Locking Up Our Future / Emily Schwartz Greco and William A. Collins
The logical fix would require putting more money and effort into securing jobs, transitional housing, and drug treatment for ex-offenders.
- The Naked Dragnet Emperor / Khalil Bendib cartoon
Emily Schwartz Greco is the managing editor of OtherWords, a non-profit national editorial service run by the Institute for Policy Studies OtherWords.org
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.
June 13, 2013 · By Alina Butareva
If lawmakers can’t come up with a solution, interest rates on federal student loans are set to double from 3.4 percent to 6.8 percent starting July 1. When I graduate from college in December, I will join the 37 million Americans with student loan debt.
For me, college has always been synonymous with financial stress. I have spent the last three years on financial aid, scrambling to finish all of my credits in order to graduate early and save on a semester of tuition at my university. If the interest rate on my Stafford loan doubles, I will have to continue to put my dream of law school on hold. The fear of sealing myself into a tomb of debt will prevent me from seizing opportunities at the time in my life when I am supposed to be taking risks.
The number of students and the price of college continue to rise every year. It shouldn’t come as a surprise that not only are more people taking out student loans, but they are also taking out more money. The average student loan balance increased by 49% between 2005 and 2012 and more than half of borrowers took out over $10,000 in loans. Total student loan debt is increasing at a rate of about $2,853.88 per second and it is approaching 1.1 trillion dollars. In the last ten years, this number has nearly quadrupled and has already surpassed credit card and auto loan debt.
Of particular concern is the effect on women. According to the American Association of University Women (AAUW)’s study “Graduating to a Pay Gap,” 20 percent of women-compared with 15 percent of men- pay more than 15 percent of their take-home salaries to pay off educational debt. This is directly related to the fact that women earn only 82 cents to every dollar that a man earns.
The plan proposed by Sen. Elizabeth Warren (D-MA), "The Bank on Students Loan Fairness Act," would allow students to borrow money at the same rate that banks borrow: 0.75 percent. House Republicans passed “The Smarter Solutions for Students Act,” which would increase the rate to an even higher percent than if nothing is done before July 1 based on market rates and fluctuations. In President Obama’s plan, called “Pay as You Earn,” loans would also vary depending on the economy, though it would also allow low-income borrowers to cap their monthly loan payments to 10 percent of their income. Among others offering solutions are Senators Jack Reed (D-RI) ,Tom Harkin (D-IA), and Harry Reid (D-NV) , Sen. Kirsten Gillibrand (D-NY), and Rep. Joe Courtney (D-CT).
There are lots of ideas but one thing is clear- inaction is not an option. Doubling interest rates on student loans is not an option. Currently, 35 percent of people under 30 and 32 percent of those between the ages of 30 and 49 are near default on their student loans, numbers that will only continue to grow unless something is done. Recent graduates and current students like me have worked hard enough to hear messages of support and encouragement from our lawmakers—not that we are being forgotten about and taken advantage of. When I walk across the stage and receive my diploma this December, I want to feel that the sky’s the limit as it relates to my opportunities, not my debt.
Alina Butareva is an intern at the Institute for Policy Studies and a rising senior at Tufts University.
June 13, 2013 · By Scott Klinger
When the Republican chair of the powerful House Ways and Means Committee called a June 13 hearing on tax havens, he expressed concerns that echoed those of many progressives.
Among the general public, opposition to this form of tax avoidance cuts across the political spectrum. Small business owners (who don’t tend to have bank accounts in the Cayman Islands) are particularly upset about the practice, which costs the U.S. Treasury an estimated $100 billion a year.
But could tax havens become a “purple” issue on Capitol Hill?
In his opening statement at the hearing, Committee Chair Rep. Dave Camp (R-MI) said: “There is widespread agreement amongst academics, economists, and lawmakers that these practices are both unfair to taxpayers who aren’t able to engage in the strategies and harmful to the U.S. economy.”
Testimony at the hearing suggested abuse of tax havens harmed not only the U.S. economy but those of our major trading partners as well. University of Southern California Law School Professor Edward Kleinbard reported that 37 percent of the income of the foreign subsidiaries of U.S. corporations was taxed at rates less than 5 percent and spoke of companies “siphoning off profits” that are taxed neither in the home country nor the host country.
Pascal Saint-Amans, who directs the tax policy department of the Organisation for Economic Co-operation and Development (OECD), observed that corporations are finding their way around bi-lateral global tax treaties by routing that trade through a third nation that is not party to the treaty. “In order for changes to the rules and international standards to be effective, greater transparency will be needed,” Saint-Amans told the Committee. British Prime Minister David Cameron is expected to call upon leaders of the G8 to address ways to curtail tax haven abuse and improve tax transparency at their meetings in Northern Ireland next week.
Meanwhile U.S. multinational corporations continue to make lobbying for corporate tax reform a high priority. Fix the Debt, a corporate pro-austerity lobby group, is calling on Congress to adopt “pro-growth tax reform” including a territorial tax system. This reform would increase incentives to exploit tax havens by permanently exempting U.S. corporations’ foreign earnings from U.S. federal income taxes.
Fix the Debt members, who collectively have shifted more than half a trillion dollars offshore, stand to gain as much as $173 billion in tax windfalls if a territorial system is adopted, according to Corporate Pirates of the Caribbean, a just-released report by the Institute for Policy Studies.
Professor Kleinbard worried that a system of “unprotected territoriality” like that favored by Fix the Debt and other corporations “heavily subsidizes foreign investment, at the expense of our own domestic economy.” Kleinbard is not alone in his concerns: a poll sponsored by the American Sustainable Business Council and Main Street Alliance found that 85 percent of America’s small business owners opposed a territorial tax system, including 67 percent of small business owners who self-identified as Republicans.
Ending the gaming of the tax code and restoring confidence in the basic fairness of the tax system is not a Democratic nor a Republican issue. It is not even just an American issue. It is something we all can agree on, and ought to be a first step toward a healthier society, a strong economy, and a business climate which allows all companies – large and small – to prosper.