Rep. Peter Roskam, R-IL: "How come only conservative groups got snagged?"


Outgoing acting IRS commissioner Steve Miller: "They didn't sir. Organizations of all walks and all persuasions were pulled in. That's shown by the fact that only 70 of the 300 organizations were tea party organizations, of the ones that were looked at by TIGTA [Treasury Inspector General for Tax Administration]."

One of those groups, Emerge America, saw its tax-exempt status denied, forcing it to disclose its donors and pay some taxes. None of the Republican groups have said their applications were rejected. Progress Texas ... faced the same lines of questioning as the Tea Party groups from the same IRS office that issued letters to the Republican-friendly applicants. A third group, Clean Elections Texas, which supports public funding of campaigns, also received IRS inquiries.

In a statement late yesterday, the tax agency said it had pooled together the politically active nonpartisan applicants -- including a "minority" that were identified because of their names. "It is also important to understand that the group of centralized cases included organizations of all political views," the IRS said in its statement.

Conservatives don't just complain loudly, endlessly and inaccurately about liberal media bias. They also train right-leaning journalists to make their way into the supposedly hostile terrain of Beltway media. And one of the most famous alums of a conservative media training program is now a major star at a network news outlet: ABC's senior political correspondent Jonathan Karl.


Karl came to mainstream journalism via the Collegiate Network, an organization primarily devoted to promoting and supporting right-leaning newspapers on college campuses -- such as the Rutgers paper launched by the infamous James O'Keefe. The network, founded in 1979, is one of several projects of the Intercollegiate Studies Institute, which seeks to strengthen conservative ideology on college campuses. William F. Buckley was the ISI's first president, and the current board chair is American Spectator publisher Alfred Regnery. Several leading right-wing pundits came out of Collegiate-affiliated papers, including Ann Coulter, Dinesh D'Souza, Michelle Malkin, Rich Lowry and Laura Ingraham.

... a well-developed echo chamber and superior top-down discipline, the right has a much easier time forming the triangle. Fox News, talk radio, Drudge, a well-trained and highly visible punditocracy, and a lily-livered press corps takes care of the media side of the triangle. Iron-clad party loyalty -- with rare exceptions -- and a willingness of Republican officials to jump on the Limbaugh-Hannity bandwagon du jour takes care of the party establishment side of the triangle.

Whereas rightwing bloggers can rely on their leadership and the rightwing noise machine to build the triangle, left-leaning bloggers face the challenge of a mass media consumed by the shop-worn narrative of Bush the popular, plain-spoken leader, and a Democratic Party incapacitated (for the most part) by the focus-grouped fear of turning off "swing voters" by attacking Bush. For the progressive netroots, the past half-decade has been a Sisyphean loop of scandal after scandal melting away as the media and party establishment remain disengaged.

At the root of the problem is this: the GOP benefits from a superior communications mechanism with which to shape and reshape conventional wisdom. Faced with a public that holds opposing views, politicians can either change their positions to match the public's views or change the public's views to match their positions -- Republicans almost always choose the latter, bolstered by a highly sophisticated framing and messaging infrastructure crafted and funded over decades.

... On the other side you have the Democratic establishment, political leaders, pollsters and strategists who, by and large, are poll addicts, chronically incapable of taking principled stands, obsessed with appealing to independent voters, hostile to progressive advocates, often just as captive to moneyed interests as their Republican counterparts. ...

[. . .] So the brashest, loudest, most confident-sounding voices end up filling the knowledge void, voices that sound authoritative and principled. Rush Limbaugh, for instance. Or Sarah Palin. Sean Hannity. Ann Coulter. Bill O'Reilly.

Echoing these blaring 'voices of authority' are Republican politicians and the right's online denizens. Conservative pundits and columnists then lend it all an air of seriousness. And the media, desperately seeking to appear "fair," give an uncritical national platform to those voices. Not to mention Fox News, which pipes a steady stream of propaganda into millions of American homes. The triangle of establishment, media, and Internet comes together on the right and conventional wisdom is created. Pollsters then dutifully register that shift in sentiment and the media regurgitate it. A virtuous loop for the right.

There's simply nothing comparable on the Democratic side.

If anything, in the debt debate, President Obama and leading Democrats were part of the Republican triangle, reinforcing GOP talking points and running roughshod over a country that didn't even agree with the conservative position.

... if you listened only to the corporate media, you --- like the Obama Administration --- also probably thought that the phony, trumped-up "scandals" that led to the inappropriate firing of USDA official Shirley Sherrod, the cowardly firing of White House green jobs adviser Van Jones and the outrageous federal defunding of ACORN were also the unhappy result of an endemic culture of corruption by the Obama Administration, the Democratic Party and its insidious political apparatchiks.

Those fake scandals, however, all three of them, were shams. They were eventually identified as such, though only after a great deal of harm to Sherrod, Jones and ACORN had already been done by the Democrats who fell for them and acted out of knee-jerk and cowardly fear to try and contain the perception of "scandal" which was, naturally, helped along by the very loud misreporting of "the nightly news".

The tax code states that 501(c)(4)'s must operate "exclusively" to promote social welfare, a category that excludes political spending. Some court decisions have interpreted that language to mean that a minimal amount of political spending would be permissible. But the I.R.S. has for years maintained that groups meet that rule as long as they are not "primarily engaged" in election work, a substantially different threshold.


Nowhere do the rules specify what "primarily engaged" means, though there are indications that the agency has begun to re-examine the question. In March, the I.R.S. began sending out questionnaires to roughly 1,300 tax-exempt organizations, including some 501(c)(4)s, regarding their political lobbying and other activities. The agency has said it is merely seeking a clearer picture of how tax-exempt groups operate to ensure better compliance.

An analysis of Apple Inc.'s financial reports makes clear that Apple has paid almost no income taxes to any country on its $102 billion in offshore cash holdings. That means that this cash hoard reflects profits that were shifted, on paper, out of countries where the profits were actually earned into foreign tax havens.

• intellectual property rights like patents and copyrights,


• government procurement like Buy American which would be banned,


• investment and land use,


• service-sector regulation,


• food and product safety,


• corporate competition,


• labor,


• even environmental standards.


• Leaks show that TPP even limits government regulation of financial services!

Tariffs and quotas might raise the price of various items by 20 or 30 percent. By contrast, patent and copyright protection is likely to raise the price of protected items 2,000 percent or even 20,000 percent above the free market price. Drugs that would sell for a few dollars per prescription in a free market would sell for hundreds or even thousands of dollars when the government gives a drug company a patent monopoly.

"One year into the Korea FTA, U.S. goods exports to Korea have declined by 10 percent (a $4.2billion decrease) in comparison to the year before FTA implementation. U.S. meat producers lost a combined $206 million in beef, pork and poultry exports in the first year of the Korea FTA relative to the year before FTA implementation, while the U.S. auto and auto parts industries suffered a 16 percent increase in the U.S. auto trade deficit with Korea. Overall, the U.S. trade deficit with Korea has swelled 37 percent under the FTA."

• Imports of cars and auto parts from Korea have soared 15 percent (more than $2.5 billion) under the FTA, driving a 16 percent increase in the U.S. trade deficit with Korea in autos and auto parts relative to the year before FTA implementation.

"The combined U.S. trade deficit with Korea, Colombia and Panama under the FTAs has jumped 11percent above pre-FTA levels for the same months as exports to Korea have declined and imports from Korea and Panama have risen substantially. Using the same ratio employed by the Obama administration, this $2.3 billion combined trade deficit expansion implies the net loss of more than 12,000 U.S. jobs in just the first several months of the new FTAs."

The Democrats' Make it in America plan is a bold initiative to get America working again by building the products of the future here at home. Make it in America will create the conditions necessary to unleash American skill and ingenuity to power our 21st century economy. As President Obama has said, America must out-innovate, out-educate, and out-build the rest of the world and our initiative will help our nation do just that. When we Make it in America, American families will make it too.

• The U.S. international goods and services deficit fell from $43.6 billion in February to $38.8 billion in March.




• The U.S. goods deficit with China fell from $23.4 billion in February to $17.9 billion in March.

The U.S. trade deficit narrowed in March for a second month as the daily flow of imported crude oil dropped to the lowest level in 17 years. ... Overall, the deficit shrank to $38.8 billion, an 11 percent drop from February's $43.6 billion, the Commerce Department reported Thursday.


... A smaller trade gap can boost economic growth as U.S. companies earn more from overseas sales while consumers and businesses spend less on foreign products.

Multinational companies based in the U.S. boosted their global work forces in 2011 almost entirely by hiring workers overseas, underscoring the slow growth in the U.S. job market.


... The paltry hiring at home reflects where multinational companies are focusing their attention. Stronger economic growth in overseas markets in Asia and Latin America is driving their expansion, reinforcing their shift toward cheaper labor or closer access to customers.


The U.S. parents of multinational firms account for about one-fifth of total private U.S. employment. Since 1999, employment by U.S. multinationals is down by 1.1 million inside the U.S., while it is up by 3.8 million overseas.

Why is part of the same company set up based in Delaware, and part in the Cayman Islands or Luxemburg or Bermuda? Because the functions of the American-based company are those functions that avoid taxes on foreign entities, and the functions of the Caymans-based part are the functions that would have to pay US taxes if it was in the US. But in reality it is the same company -- except for tax purposes! Here is the explanation of the foreign-based parts, from the Times article:

Had those funds been set up in the United States, the Romneys and other American investors would probably have been subject to certain federal taxes for their ownership of "controlled foreign corporations." Setting up the funds in the Caymans allowed them to avoid those taxes.

Here is an explanation of the American-based parts,

Another appeal of offshore funds is that they help private equity attract investment from deep-pocketed big institutions like pension funds and university endowments. While these are generally tax-exempt, they are liable for taxes on "unrelated business taxable income" if they put money in funds that use debt financing to make investments.

So why aren't they all just foreign-based? Why do they need to have an American-based part? One reason is that making the loans that run up the debt that enables these companies to get the interest deductions (more tax avoidance) would incur income taxes if the loans came from a foreign entity,

Beyond their tax advantages, however, offshore funds controlled by American money managers can also create new tax problems. Those funds are limited in their ability to make loans without triggering corporate income taxes -- an issue for Sankaty funds. Therefore, they usually have a parallel domestic fund that makes the loans, holds them for a period before selling a portion to the offshore fund, a practice known as "season and sell."

And, of course, the American-based entities enable the low "carried interest" tax rate that hedge fund managers enjoy. The company paying Romney can't be foreign-based,

So-called carried interest, the cut of a fund's investment gains earned by its managers, enjoys a favorable tax treatment. But under I.R.S. rules, carried interest cannot be derived from a corporation, like the offshore blockers used by Sankaty.

The American-based entities can buy American companies without incurring "foreign-based" obligations. Then the foreign-based entities can avoid the taxes that the American-based buyers of companies would have to pay. And the foreign-based investors can be in the foreign-based parts of the company, avoiding US tax obligations. Also American entities like pension funds can avoid US taxes they would otherwise have to pay.

To put it another way, the same company can pretend it is US-based when that is what it needs to be, and foreign-based when that is what it needs to be.

The chart shows that wages used to go up as productivity went up, but in the 1970s they decoupled. Productivity kept going up but wages stagnated.

Now, here's another chart. This chart shows that financial-sector and non-financial-sector compensation used to rise together, but in the late '70s / early '80s they decoupled. Financial-sector compensation took off, while non-financial-sector compensation did not.

There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth. While the top 1 percent of income earners took home 93 percent of the growth in incomes in 2010, the households in the middle -- who are most likely to spend their incomes rather than save them and who are, in a sense, the true job creators -- have lower household incomes, adjusted for inflation, than they did in 1996. The growth in the decade before the crisis was unsustainable -- it was reliant on the bottom 80 percent consuming about 110 percent of their income.

Second, the hollowing out of the middle class since the 1970s, a phenomenon interrupted only briefly in the 1990s, means that they are unable to invest in their future, by educating themselves and their children and by starting or improving businesses.

Third, the weakness of the middle class is holding back tax receipts, especially because those at the top are so adroit in avoiding taxes and in getting Washington to give them tax breaks. The recent modest agreement to restore Clinton-level marginal income-tax rates for individuals making more than $400,000 and households making more than $450,000 did nothing to change this. Returns from Wall Street speculation are taxed at a far lower rate than other forms of income. Low tax receipts mean that the government cannot make the vital investments in infrastructure, education, research and health that are crucial for restoring long-term economic strength.

Fourth, inequality is associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile and vulnerable. Though inequality did not directly cause the crisis, it is no coincidence that the 1920s -- the last time inequality of income and wealth in the United States was so high -- ended with the Great Crash and the Depression. The International Monetary Fund has noted the systematic relationship between economic instability and economic inequality, but American leaders haven't absorbed the lesson.

1. Top 1 percent (a few people) taking most of the gains, income in the middle (lots of people) is falling, they can't buy stuff.


2. Middle class disappearing, unable to invest in education or start businesses.


3. Tax system rigged so gains going to 1 percent not bringing revenue to government, with incomes to the rest falling, revenue to government decreasing. Government can't afford to invest in infrastructure, research, education, health and other things the help economy.


4. Inequality that drives such massive amounts to a top few makes even the rich feel poor so they speculate and engage in quick-buck schemes, economy becomes "volatile and vulnerable."

• New tax brackets for higher incomes,


• restoring the estate tax,


• restoring corporate taxation,


• getting rid of tax incentives that encourage corporations to move jobs and factories and profit centers out of the country,


• possibly a wealth tax to address the deficit and debt,


• a tax on Wall Street speculation,


• restoring government services that help lower- and middle-income people obtain affordable higher education and get job training,


• renegotiating trade deals that pit American workers against exploited, underpaid workers in non-democracies, thereby making American democracy and wages a competitive disadvantage


• and many other steps to address the changes brought in since the "Reagan Revolution" that drove the huge increase in inequality and decrease in government investment in our economy's future.

WMT derives most of its revenues from domestic operations in the U.S. where it has a dense network of stores and logistic centers. However, U.S. growth has almost flattened over the last couple of years eking out a yearly growth rate of just 1 percent.

Imagine this, though it might be difficult: some people are greedy and want more for themselves, at the expense of the rest of us. Yes, this is shocking, but true!

Government protects us from those who would take advantage and take too much. Government does this both domestically and internationally. At home it protects us from criminals and exploiters. Government also protects us from physical and economic threats from other countries.

[. . .] When too many business reduce costs by cutting employees or paying less, the system collapses from lack of demand. Government is needed to keep businesses from laying off too many people or cutting pay. Sometimes government does this by stepping in and hiring people (or just giving them money like unemployment benefits), or buying things, thereby creating demand, causing businesses to hire.

When government is strong we have more enforcement of a level playing field for all of us, more education for all of us, more security for all of us, more protection of our environment, more infrastructure so our own startup businesses can flourish and compete, more parks, more promotion of the general welfare.

And when government is weak we end up with a very few greedy, ruthless billionaires and their giant corporations controlling the economy, stifling competition, scamming and defrauding us, and consuming the environment and resources for their own short-term profit.

The Fair Minimum Wage Act would increase the current federal minimum wage, $7.25, to $10.10 in three steps over a three-year period, and then index it annually to inflation from that point forward.

The bill would make an even more significant difference for tipped workers, mostly in the restaurant industry. They currently have a minimum wage of $2.13 an hour that has not increased since 1991. Under the bill, tipped workers would earn a minimum 70 percent of the regular minimum wage.

... House members have in fact had one opportunity to vote on the bill in March, in the form of a motion instructing the House to add the minimum wage increase to a workforce training bill. The motion was unanimously rejected by House Republicans.

The bill, though, deserves a stand-alone vote in its own right. It's been three years since the minimum wage went up to $7.25, and that increase did not undo the damage done to low-wage workers by decades of congressional failure to keep this wage floor from sinking.

The GOP lawmakers accuse Perez of misusing his power last year to persuade the city of St. Paul, Minn., to withdraw a housing discrimination case before it could be heard by the Supreme Court. In exchange, the Justice Department agreed not to intervene in two whistleblower cases against St. Paul that could have won up to $200 million for taxpayers.


... Top Democrats on the House Oversight Committee issued a report on the investigation Sunday, writing that Perez "acted professionally to advance the interests of civil rights and effectively combat the scourge of housing discrimination." The Justice Department also defended Perez, saying litigation decisions made by the department "were in the best interests of the United States and were consistent with the department's legal, ethical and professional responsibility obligations."


The GOP report cites documents that suggest Perez's decision frustrated and confused career lawyers at Justice who initially wanted to join the whistleblower cases against St. Paul. These lawyers described the department's change of heart as "weirdness," "ridiculous" and a case of "cover your head pingpong."

The deal Perez helped cut likely prevented a landmark civil rights law from being struck down by the Roberts court. Perez's civil rights division later used this law to secure record financial settlements against banks that discriminated against minority borrowers during the financial crisis. And Republicans were very angry about it.

The President's budget includes devastating Social Security cuts. But they will not become law if Congress rejects them. It's up to us to speak out and let Congress know the public will punish any legislator that supports undermining Social Security. Use the form below to tell your senators and representative: Say no to Obama's Social Security Cuts.

JCPenney CEO Ron Johnson announced on the company's Q4 earnings call that he has brought on former Coke marketing exec Sergio Zyman as an advisor as he tries to turn around the ailing department store.

... Johnson said on the company's Q4 earnings call ... Sergio has a unique ability to understand customers and as well as strategies that will succeed based on rapid fire test and response."

The executives who run the giant multinationals want to be let off the hook for paying taxes on profits they make outside our borders. As an Apple executive said to The New York Times, giant multinationals "don't have an obligation to solve America's problems." And to prove it, American corporations are holding $1.7 trillion in profits outside the country - just sitting there - rather than bringing that money home, paying the taxes due and then paying it out to shareholders or using it to "create jobs" with new factories, research facilities and equipment.

After its 1986 tax overhaul, the United States had one of the lowest corporate tax rates among OECD countries. Since then, these countries have been slashing their rates in order to attract foreign direct investment and discourage their own companies from shifting operations and profits to low-tax foreign locations. In the most recent and audacious move, the British government has embarked on a three-year plan to reduce its corporate tax rate from 28% to 20% - one of the lowest in the OECD - by 2015.


The US now has the highest corporate tax rate of these countries. Even after incorporating various deductions, credits, and other tax-reducing provisions, the effective average and marginal corporate tax rates in the US - what corporations actually pay - are higher than the OECD average.


Cutting the rate to a more competitive level would encourage more domestic investment by US corporations, and would also make the US more attractive to foreign investors.

1. In the 1986 tax overhaul we cut corporate taxes a lot.


2. But then other countries cut their corporate tax rates "in order to attract foreign direct investment and discourage their own companies from shifting operations and profits to low-tax foreign locations."


3. So we are now above the average.


4. Therefore we need to cut corporate taxes even more to be more "competitive" and "attract investment."


5. Go to step 2 until corporate taxes worldwide are zero, then giant corporations start threatening to leave the country unless the country gives THEM money. (Tyson leaves out this obvious next step.)

Similarly, a modest carbon tax or value-added tax, with credits or subsidies to offset the regressive effects on low-income households, could generate enough revenue both to pay for a significant reduction in the corporate tax rate and to make a meaningful contribution to deficit reduction.

Of all taxes, corporate taxes are the most harmful to economic growth - without which meaningful deficit reduction is far more difficult to achieve.

The conservatives argued that they'd taken the worst the president and the press had to offer during the sequestration fight. They'd won. They would win again.


"In Vietnam, we took a hill and defeated the enemy, then we retreated and let the enemy take over," said South Carolina Rep. Jeff Duncan. "In the sequester we've held that ground ... the momentum is with us."

Michele Bachmann has taken a fair amount of heat lately for various over the top statements about the evils of government spending, from her false claim that 70 percent of food stamp money goes to "bureaucrats" to her false claim that President Obama and his family enjoy $1.4 billion in personal "perks and excess."


But there's nothing like a few spending cuts in your own district to concentrate the mind.

As expected, the Federal Aviation Administration (FAA) has announced the early April closure of control towers at 149 smaller airports across the U.S., part of the Obama administration's response to the federal budget cuts mandated under the so-called sequestration program.


Two of the affected towers are in Minnesota: Anoka County-Blaine Airport and St. Cloud Regional Airport. Both are in the congressional district of U.S. Rep. Michele Bachmann, who just last week was complaining about President Obama's high-flying lifestyle in the White House.

... "While I certainly agree we need to balance our budget, it must be done in a responsible way that sets priorities, not in an arbitrary way."

"I am disappointed to learn of the FAA's decision to implement the budget sequestration by closing the air traffic control tower in Columbia," wrote Rep. Vicky Hartzler (R-MO).


[. . .]"There's no reason the Obama Administration shouldn't be able to figure out a 2.5 percent spending cut without interrupting Americans' lives and air travel to communities like Branson and Columbia," said Sen. Roy Blunt (R-MO) in a statement last week.

Reps. Blake Farenthold (R-TX), Jim Sensenbrenner (R-WI), Paul Gosar (R-AZ), Ron DeSantis (R-FL), and others have made similar statements.

Rep. Dennis Ross (R-FL) is concerned that the closure of a tower in his district will imperil the state's annual Sun 'n Fun convention.

Is it concern over Head Start closings? Food-safety furloughs? Struggling Americans going without housing assistance? Setbacks for medical research into Alzheimer's disease and influenza? Layoffs at nuclear containment sites? Disruptions in the courts?


No, as is it turns out, the one issue that finally managed to capture Republicans' attention is ... airports.

Over the last two years, President Obama and Congress have put the country on track to reduce projected federal budget deficits by nearly $4 trillion. Yet when that process began, in early 2011, only about 12% of Americans in Gallup polls cited federal debt as the nation's most important problem. Two to three times as many cited unemployment and jobs as the biggest challenge facing the country.


So why did policymakers focus so intently on the deficit issue? One reason may be that the small minority that saw the deficit as the nation's priority had more clout than the majority that didn't.

Two-thirds of the respondents had contributed money (averaging $4,633) in the most recent presidential election, and fully one-fifth of them "bundled" contributions from others. About half recently initiated contact with a U.S. senator or representative, and nearly half (44%) of those contacts concerned matters of relatively narrow economic self-interest rather than broader national concerns. This kind of access to elected officials suggests an outsized influence in Washington.

• 68 percent of the general public believes Washington ought to see to it that everyone who wants to work can find a job. Only 19 percent of the wealthy believe the same.


• The general public is twice as likely to support raising the minimum wage high enough to keep families out of poverty as affluent respondents.


• People of color are disproportionately represented in the bottom third income percentile -- 53 percent of African Americans and 45 percent of Latino Americans are in the bottom third of income distribution.


• While polling has long shown that a majority of Americans think that wealth should be taxed at the same rate as work, the "donor class," which almost perfectly overlaps with the small percentage of Americans benefiting from low capital gains rates, has secured cuts time and again.


• Of those who contribute more than $200 to a campaign, 85 percent have annual household incomes of $100,000 or more.


• Just 0.07 percent of the U.S. population made campaign donations of $2,500 or more in 2012.

Gilens, who focused on the divide between the top 10 percent and everyone else, found a high degree of what he calls political inequality.


"I looked at lots of survey data that indicated what people at different income levels wanted the government to do, and then I looked at what the government did," Gilens explained.


"For people at the top 10 percent, you could predict what the government would do based on their preferences," he said. "But when the preferences of people at lower income levels diverged from the affluent, that had no impact at all on the policies that were adopted. That was true not only for the poor but for the middle class as well."

David E. Broockman of the University of California at Berkeley and Christopher Skovron of the University of Michigan surveyed nearly 2,000 state legislative candidates in the 2012 election and asked them what percentage of their constituents they thought supported same-sex marriage, a universal health care system and abolishing all welfare programs.


The result was a vast conservative misperception. Constituents, on average, supported gay marriage and universal health care by 10 percentage points more than their politicians had estimated. For conservative politicians, the spread was around 20 percentage points, meaning that conservative legislators tend to greatly overestimate how conservative their constituents actually are.


... The authors note that their findings rebuke Nixonian notions of a "silent majority," or more recently, former Alaska Gov. Sarah Palin's contention that "real America" supported her and Sen. John McCain's (R-Ariz) 2008 ticket.

Broockman and Skovron find that legislators consistently believe their constituents are more conservative than they actually are. This includes Republicans and Democrats, liberals and conservatives. But conservative legislators generally overestimate the conservatism of their constituents by 20 points. "This difference is so large that nearly half of conservative politicians appear to believe that they represent a district that is more conservative on these issues than is the most conservative district in the entire country," Broockman and Skovron write. This finding held up across a range of issues.

Members of the LIFT America Coalition include - 3M, Caterpillar Inc., Cisco, Eli Lilly and Company, Emerson, Financial Executives International, Honeywell International, Inc., Hewlett-Packard Company, International Business Machines Corporation, Information Technology Industry Council, Intel, Johnson & Johnson, National Foreign Trade Council, Oracle, Pfizer, Procter & Gamble, Semiconductor Industry Association, The Coca-Cola Company, United Technologies Corporation., Xerox Corporation, and Yum! Brands.

Between 2008 and 2011, 26 major American corporations paid no net federal income taxes despite bringing in billions in profits, according to a new report (PDF) from the nonprofit research group Citizens for Tax Justice. CTJ calculates that if the companies had paid the full 35 percent corporate tax rate, they would have put more than $78 billion into government coffers.

Currently, U.S.-based multinationals owe U.S. taxes on the income they generate at home as well as overseas; they get a credit for the foreign taxes they pay so that they aren't taxed twice on the same income.

But multinationals don't owe tax on much of their foreign profits until they bring them back to the United States. So they can -- and many do -- defer U.S. tax indefinitely by keeping those profits overseas. ...

First, a territorial system would create greater incentives for U.S.-based multinationals to invest and book profits overseas rather than at home. ...

Second, by encouraging capital to flow overseas, a territorial system would risk reducing wages at home. ...

Third, a territorial tax system would risk higher budget deficits by draining revenues from the corporate income tax. ...

Fourth, a territorial system would risk higher taxes on smaller businesses and domestic businesses. ...

This plan is particularly dangerous to American wages and jobs -- YOUR wages and job -- as well as any American companies that don't export their profit centers. This threat is not limited to the blue-collar jobs that have been disappearing, it also threatens the professionals, "knowledge workers," designers, innovators and others who contribute to corporate profits here in the U.S.

The territorial tax proposal asks for no taxes on foreign profits of American corporations. This system would encourage and practically force companies to move profit generation (innovation, intellectual property, etc.) out of the U.S. This gives corporations an incentive to move everything that makes them money out of the country -- every profit center, every job, every factory, every designer, inventor, and so on.

This plan only benefits the giant multinational corporations -- and helps them kill off even more American jobs and smaller businesses. And without those wages and taxes our infrastructure, schools, police and fire protections, and everything else here will decline even more.

The 63 Fix the Debt companies that are publicly held stand to gain as much as $134 billion in windfalls if Congress approves one of their main proposals -- a "territorial tax system." Under this system, companies would not have to pay U.S. federal income taxes on foreign earnings when they bring the profits back to the United States.

"All pre-effective date, tax-deferred foreign earnings of foreign companies owned by 10 percent U.S. shareholders would be taxed once at a low tax rate (similar to a repatriation holiday). U.S. companies could pay this tax ratably over eight years, and these earnings could then be brought back to the United States under the exemption system."

Complexity Helps the Lobbyists and Lawmakers Who Hope the Public Does Not Catch On

It may be that politicians remain open to tax proposals that the public hates because the issues involved are so complicated that they believe no one is paying attention. This makes it vital to call attention to the effects a territorial system would have on ordinary Americans.

The issues are admittedly complicated. For example, Americans have been presented over and over with a very simple story about how the U.S. has a corporate tax that is more burdensome than the corporate taxes of other countries, and that our companies need new rules that make them "competitive" with global competitors.

... On the other hand, there are a number of countries that have extremely low corporate tax rates or no corporate tax at all - mostly very small countries with little actual business activity - where U.S. companies like to claim their profits are generated, in order to avoid U.S. taxes. These are the offshore tax havens that exploit the rule allowing U.S. corporations to "defer" U.S. taxes on their offshore profits. If the U.S. completely exempts these profits from U.S. taxes (in other words, enacts a territorial system) these incentives will be greatly increased.

• 64 percent say large corporations should pay more in taxes than they do now.


• 78 percent say making sure big corporations pay their fair share of taxes is an important budget goal (55 percent extremely important), and 80 percent say the same about closing tax loopholes that benefit big corporations.


• A 73%-25 percent margin approved of closing loopholes that allow corporations and wealthy individuals to avoid paying U.S. taxes by shifting income to overseas tax havens.


• A 73%-20 percent margin disapproved of allowing corporations to not pay any U.S. taxes on profits that they earn in foreign countries.

Use the Tax Code to Incentivize Domestic Manufacturing. Any tax reform package should reshape the tax code in a revenue-neutral way to provide incentives for job creation and inward investment. Research and development tax credits should help firms that not only innovate in America, but also make their products here. We should lower tax rates for manufacturing activity in America and expand up-front expensing for plant and equipment purchases.

First, we should adopt the GOP-favored territorial tax system for profits reported in any country that taxes corporate profits at an average effective rate above some minimum threshold, approximately 15 to 18 percent. With that threshold, U.S. corporations would no longer incur an additional tax burden when repatriating profits from most countries where they legitimately conduct business.

Second, we should adopt President Obama's proposed "international minimum tax," equal to that 15 to 18 percent threshold, to minimize profit shifting. Corporations should still be allowed to claim a credit against any actual foreign taxes paid; if a corporation paid 13 percent in taxes to, say, Switzerland, it should only owe to the U.S. the difference between 13 percent and the international minimum tax rate.

In combination, such a compromise would ensure that all foreign profits of U.S. corporations are taxed consistently at a reasonable rate.

"I've watched year in and year out as companies have shut down and people have lost their jobs because China has not played by the same rules, in part by holding down artificially the value of their currency," Mr. Romney said.

The U.S. goods trade deficit could be reduced by between about $190 billion and $400 billion over the course of three years (modeled in this paper as having started in 2011) by eliminating global currency manipulation. Without any increase in federal spending or taxation, the United States would reap enormous benefits. As this paper explains, over three years a reduction in the U.S. goods trade deficit of this magnitude would:

• Create between 2.2 million and 4.7 million U.S. jobs (equal to between 1.4 percent and 3.0 percent of total nonfarm employment)


• Reduce the national unemployment rate by between 1.0 and 2.1 percentage points


• Create about 620,000 to 1.3 million manufacturing jobs (27.5 percent of all jobs created by eliminating currency manipulation)


• Increase U.S. GDP by between $225.0 billion and $473.7 billion (an increase of between 1.4 percent and 3.1 percent)


• Shrink the federal budget deficit by between $78.8 billion and $165.8 billion (reductions that would continue as long as the trade balance remained stable), as growth in output expands tax receipts and reduces safety net payments

"The Currency Reform for Fair Trade Act is a common-sense bill and should be passed and signed into law. Congress has acted on China's currency in 2005, 2010, and 2011. I hope 2013 is the year that the stars align and both the House and Senate finally pass it.


"It's clear the Administration is not going to do enough to really press China on currency. That's why congressional action is so important.


"You'd be hard-pressed to find another job-creating bill with this level of bipartisan Congressional support. The China currency bill broke a filibuster in 2011, and a majority of the House cosponsored it last year in what is otherwise a deeply divided political environment.


"This is the year that Speaker Boehner and Chairman Camp should free the currency bill, or they will show they are completely out of step with the American people, Republicans in Congress, and the vast majority of Republican voters."

"Our members place a high priority on neutralizing the trade impact of foreign currency manipulation," said Michael Stumo, CEO of CPA. "This problem is not going away. An enforcement remedy is needed, not more talk. U.S. manufacturers, farmers, ranchers and workers face a currency tariff in many world markets. They also face predatory priced imports from companies in other countries benefitting from a currency subsidy."


"Legislators who believe in free trade should support this bill. Free traders must oppose foreign government intervention in currency markets which cause a trade advantage,"


"The U.S. trade deficit with China was $333.4 billion in 2012 and was caused, in substantial part, by that country's persistent currency undervaluation. Otherwise competitive companies have ceased operations, moved offshore and/or laid off workers because of this foreign government currency market rigging."

"Currency manipulation to gain an unfair competitive advantage is among the most destructive trade-distorting practices used today. While China has been the largest offender, in today's weak global economy an increasing number of governments are manipulating their currencies to insulate their domestic producers. This is devastating to U.S. domestic manufacturers - especially the steel industry -- and is contributing to the nation's inability to fully recover from the recession."