Pursuant to the recent debt ceiling agreement, Congress has begun setting up what's officially called the Joint Special Select Committee on Deficit Reduction. Much of the speculation about what this committee will do has centered on two questions: Will it cut essential programs like Medicare, Medicaid and Social Security? Will it raise taxes on the wealthy?
Two recent reports from my colleagues at The Greenlining Institute give good reasons why the committee should consider a different approach entirely.
The first, "Corporate America Untaxed," documents the vast degree to which major U.S. corporations avoid paying federal income taxes by hiding profits offshore. My colleagues Samuel S. Kang and Tuan Ngo found that 77 of Fortune 100 companies have at least one operation in countries that are designated as tax havens -- places like Bermuda and the Cayman Islands where very little business actually goes on, but corporate taxes are minimal or nonexistent. Today, Americans on average pay over 20 percent of their income in federal taxes, while Exxon pays 14 percent, IBM pays less than four percent, and General Electric and DuPont paid virtually nothing in income tax last year.
How much lost tax revenue are we talking about? Estimates have ranged between $60 billion and $100 billion a year. Cracking down on these offshore tax havens could bring in $1 trillion over the next decade -- two thirds of the savings the committee is charged with finding -- without raising taxes on any individual American and without cutting benefits that the elderly and poor depend on for survival.
Adding insult to injury, many of these companies get huge contracts from the federal government. Our taxes contribute billions of dollars to the income of firms that duck their responsibilities by funneling profits offshore.
All this is made more urgent by the picture painted by another recent Greenlining report, "The Economic Crisis Facing Seniors of Color." While many Americans have found their retirement nest eggs battered by the economic downturn, some groups are in far worse shape than others, to the point of facing genuine crisis. And because standard measures like the federal poverty level don't include factors that disproportionately affect elders, many who are struggling financially never get counted in official poverty statistics.
Using the most accurate data available, an astonishing 91 percent of African American and Latino seniors are financially vulnerable. While data on Asian Americans is more sparse, some Asian ethnic groups have poverty rates three to four times that of whites.
There are lots of reasons for this, including the fact that Latinos, African Americans and Asians are all less likely than whites to be working at a job that offers a retirement plan. They also tended to have more of their wealth tied up in their home as real estate values tanked and millions faced foreclosure.
But the bottom line is that there are millions of Americans at or approaching retirement age who have essentially nothing to fall back on besides Social Security and Medicare. If benefits are cut or eligibility reduced or delayed, the results won't be statistics on a chart. They'll be actual human beings -- elderly, often frail human beings -- sleeping in alleys and eating dog food.
America can do better than this. Before it even thinks about cutting programs that literally keep people alive, the congressional special committee should make sure that the IBMs and General Electrics of the world pay their fair share. And companies that evade taxes shouldn't get one dime of taxpayer-funded contracts.
Follow Preeti Vissa on Twitter: www.twitter.com/Greenlining
Just raising the rates makes pouring resources into the tax department more pressing...something large companies can do much better than small companies. So, by eliminating all the politically motivated deductions, credits etc. and lowering the rate you could both raise revenues and make it much fairer and transparent. It would also save some of the estimated 6 billion hours Americans spend complying with the tax code. Some of this was in Bowles -Simpson which everyone in Washington just ignored.
Unfortunately this is very unlikely to happen.
If entitlements are to be completely untouched the government will be unable to fund non-entitlement programs (http://eng.am/nE0nnN). So what can be done? Spending constraints simply won’t do enough. The reason for this is that almost half of the projected growth of Medicare is due to population growth and aging (http://eng.am/qluJR). Entitlements simply cannot be deemed “off limits.” If that is to be the case then we can say goodbye to all other governmentally funded programs.
Government (specifically government employees) goes after the weak, those least likely to be able to defend themselves, because it looks good on your resume if you win most of the time.
If you go after the Big Guys, they have lawyers................ quite possibly better than those that work for the Government, and that's a career path to nowhere.
How bad is it?
http://www.nakedcapitalism.com/2009/08/judge-takes-sec-and-bank-of-america.html
Our government is being told what to do by Big Business, not the other way around.
That is why there should be a 2 term limit for all 3 branches of government in this country just like the president.
Go after seniors as well.
Social spending is 2/3 of a federal budget that needs to borrow 40 percent of it's expenditures. A 3rd grader can look at tht simple equation and come to the conclusion that Medicaid, social and welfare are all unaffordable.
They MUST be cut.
ALL THREE are the means by which people take more than they contribute.
That difference must be made up for by younger workers.
What is given to one man is taken from another.
But the one being robbed (workers) can barely support himself.
Finally, the entire economy runs on capital formation and to enable capital formation to occur, we must resort purchasing power to workers so they can save and then borrow.
Look at how much the average person contributes to Medicaid and social. They take out more than they put in. Ponzi.
ENOUGH!!!
Interest on the national debt is over $400 BILLION per year.
If you took EVERY PENNY OF PROFIT from EVERY FORTUNE 500 company, it would add up to $400 BILLION!!!! So we could layoff most of our entire country to tax companies at 100% and JUST pay the interest for ONE YEAR!!!!
Secondly, Medicaid and Social Security BOTH cost about $750 - $800 BILLION per year! We are deficit spending (borrowing money we don't have) the same amount - $1.7 TRILLION. We are BORROWING money to pay people unaffordable benefits!!!!
It's over!
Repeating The Same Old Mantra-Raise Revenue From Those Who Create Tax Paying Jobs Is A Form of Insanity..
Since the turn of the century progressives like yourself thought that the income tax would be a great way to raise revenue from the the so called rich and redistribute it through a government bureaucracy to those in need...I would think someone like yourself would be smarter than that and question more than a century old idea that has not worked to encourage commerce and at the same time ensure everyone pay their share including the almost 50% lower income bracket that is not paying any taxes yet the largest consumers of government social services....Have you ever considered the alternative such as a flat tax or a national consumption tax where everyone pays and there are no tax loop holes.
It is time that you expand your horizons and ignore what they taught you in government schools- You should read Intellectuals and Society by Thomas Sowell and The Fair Tax-by Neal Bortz In Sowell's book you may find how bad ideas are recycled by the intelligentsia yet the consequences for those bad ideas fall upon the disadvantage instead of the people who have promoted them...By the way he backs his arguments with factual evidence instead of verbal virtuosity that iyou are using in your article..
Warm regards,
Michael Winters
2) The higher the tax rate, the greater the proclivity to shelter income. Why isn't the US positioning itself to be the world's tax haven?
3) Based on the above, the US should abolish the corporate income tax
4) Why should citizens find themselves dependant on the state for their livelihood, rather than the fruit of their own efforts?
Stated another way, what is the morality of purposely engendering dependance of a large part of the population on the benevolence (or not) of the state? Why should the people be told they have a right to a certain lifestyle in retirement, whether earned or not? Given this right, who is responsible for paying for it, and why?
That money is taken out of every paycheck until they retire.
This was sold to ordinary American workers as money for their retirement.
Retirement money they earned by working hard all their lives.
Or did somebody LIE big time?
Just getting the unwashed masses to pay more in taxes and SS wasn't meant to be paid out past a certain time?
Was it a ponzi scheme that now the politicians and rich have tired of having around?
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BTW....ANYBODY can get sick, have an accident, lose his (her) job, or get old.
According to Ayn Rand laissez faire capitalists....that is just too bad.
Suck air.
And you wonder why there is increasing social and political unrest world wide.
In many countries, the rich are scared to leave their heavily guarded gated communities unless they have armed bodyguards. (Check out some Latin American countries.)
If you are so anxious to let people starve....you better be ready to live with the consequences....to you and America.
If workers received benefits commensurate with what they'd paid in taxes, SS would be fully funded (except for the fact that since LBJ opened the "lockbox" all those SS taxes collected have been dumped into the general fund & been spent. That's how Clinton claimed a "surplus" - he got to count SS tax receipts).
The ave Medicare recipient will receive 2-3 times in benefits what they pay in taxes - who gets to make up the difference?
How does Bush's profligate spending justify BHO/Pelosi/Reid's levels of debt generation?
SS is cutting COLA's (cost of living adjustments)....by the time your son and grandsons retire, they WILL be more on their own.
You will be so proud.
BTW....Bush II spent like a drunken sailor, cut tax rates while going to war soon after, and had a huge housing bubble on his watch.
It is not like Obama did all this mess by himself.
Bush and Congress have dirty hands and then some.
Actually, this goes back at least 30 years through several presidents and congresses.
As the tax code becomes ever more punitive and onerous, the likelihood of using tax shelters and cheating increases.
I would also like to see the committee suggest that Iraq and Afghanistan pay us for use of our military. If their governments insist we stay until their forces are trained, then charge them! And I mean in the billions!
No government contracts to companies who off-shore. No more waivers of the Buy American Act, including those waivers for Nafta, Gatt, and any and all current and future Shaftas.
Medicare: Negotiate for drugs. Single payer for all WHO WANT IT.
Social Security: 2% payroll tax up to $20,000, and increase to 7% gradually up to infinity.
Pentagon: Buy American, and cut the budget by 10% total across the board.
Reduce corporate taxes by 5%, but stop all corporate welfare subsidies. No loopholes.
Reinstate a transaction tax on all stock transactions.
Tax capital gains and dividends beyond $20,000 at 20%.
Single page, simple tax forms.
Sit back and notice that the crooks will scream loudly, but everybody else will be happier and secure.
I said this earlier that there should no capital gains tax or at the most 5%. Why should the government profit on a chance I take when I chance my money. They dont cover any losses so why profit from my gains. Remeber folks the Government makes no money. I understand the need for taxes but to tax everything is wrong.
And all of you who scream tax the rich more is not going to work. The rich will hide more money, the revenue will go down and they will continue to move stuff overseas.