Ending a Rigged Economy

The following is an excellent excerpt from the book “OUR REVOLUTION: A Future You Can Believe In” by Bernie Sanders from Part Two: “An Agenda For a New America: How We Transform Our Country” from Chapter Three: “Ending a Rigged Economy” on page 263 and I quote: “REAL TAX REFORM For the past forty years, Wall Street banks, large profitable corporations, and the billionaire class have rigged the tax code to redistribute wealth and income to the richest and most powerful people in this country.  At a time of massive wealth and income inequality, when major corporation after corporation pays nothing in federal income taxes and many CEOs pay an effective tax rate that is lower than their secretarys’, we need progressive income tax reform based on the ability to pay.

On December 10, 2010, I spoke on the floor of the Senate for eight and a half hours.  Some called it a filibuster.  Others said it was just a very long speech.  It doesn’t really matter.  The reason I took to the Senate floor for such a long period of time was to express outrage at the proposed two-year extension of the Bush tax breaks for the top 2 percent.  I thought it was profoundly unfair, economically unwise, and politically wrong to provide hundreds of billions in additional tax breaks to the wealthiest people in this country, especially while the overwhelming majority of Americans were still suffering through the Great Recession.

Almost every Republican, and far too many Democrats, claimed that if the Bush tax breaks for the wealthy expired, the economy would suffer and unemployment would increase.  After decades of evidence that unequivocally refuted trickle-down economics, the Republican establishment was just not giving up.  When the superwealthy get more tax breaks, they don’t spend more, they don’t invest more in the economy, they don’t create more jobs.  They just look for new ways to reduce their remaining taxes.

The Bush tax breaks were in place for more than a decades, and they did not create a single net new private-sector job.  In fact, under the eight years of President Bush, the private sector lost nearly half a million jobs and the deficit exploded.  On the other hand, in 1993, when President Bill Clinton increased taxes on the top 2 percent and used that revenue to reinvest in America and reduce the deficit, more than 22 million jobs were created, and we had a $236 billion budget surplus.

Had Congress let the Bush tax cuts expire in 2010, the top marginal income tax rate would have gone back to 39.6 percent–where it was when President Clinton was in office.  That is not very high for someone earning millions of dollars a year, in my opinion.  But apparently, it would have been too big a sacrifice for the people on top, despite the great wealth and political power they already had.  So the tax cuts stayed in place, a $186 billion gift to the top 2 percent.

The bill that I was filibustering also extended the 15 percent rate for capital gains and dividends, which meant we would continue to tax income from passive investment at a lower rate than we tax work.  And that meant some millionaires and billionaires could continue paying a lower tax rate than firefighters, nurses, and teachers.  As recently as 1978, the maximum capital gains rate was almost 50 percent, but that was steadily reduced over the next fifteen years, until George W. Bush pushed through the 15 percent rate in 2003.  Extending that rate was another gift to the wealthy, this one priced at $53 billion.

The bill reduced the estate tax to 35 percent–and raised the minimum inheritance to which it was applied to $5 million–a gift to the top two-tenths of 1 percent.  As recently as the 1990s, the estate tax was 55 percent and applied to all estates worth more than $1 million.  Bush actually succeeded in eliminating the estate tax entirely for a year but he was unable to keep the income inequality clock turned back to pre-1916, when there was no tax on inheritances, no matter how big the estate.  The wealthy had to “settle” for reduced rates and a fivefold increase in the minimum amount before the tax kicks in–a $68 billion tax break for the economic elite.

To this day, I still cannot believe that Congress’s response to the worst economic crisis since the 1930s was more tax cuts for the wealthy.  In December 2010, millions of middle-class Americans who had lost their jobs were still searching for work.  Millions had lost their homes to foreclosure and many had become homeless, including tens of thousands of veterans–men and women who served in uniform to defend this country.  A growing number of children across the country were going hungry, and many seniors couldn’t afford the prescription drugs they needed.  But pass more tax cuts for wealthy was exactly what Congress did, despite my protestations on the Senate floor and my best efforts to rally the American people.

At the time, I predicted that as soon as the wealthy got their tax cuts, Republicans (and many Democrats) would flip a switch and start yammering on about the urgent need to reduce the deficit.  Do you think they even once suggested raising more revenue to balance the budget?  Of course not.  They demanded budget cuts.  That’s right–deep budget cuts in the middle of a recession, to reduce a deficit that had grown out of control because George W. Bush gave the wealthiest people in this country massive tax cuts while waging disastrous and costly wars in Iraq and Afghanistan.

Sure enough, the budget cuts went through.  Over the next decade, Congress cut trillions of dollars from education, health care, and vitally important programs that help the children, the elderly, the sick, and the poor.

In the past decade, how many times have you heard the refrain, “America is broke”?  How many times have we heard politicians say that they would like to expand Social Security, provide health care to all or make college affordable, but those goals are just not feasible when we have a $19.4 trillion national debt?

Baloney.  The establishment wants you to believe America is broke, indeed they need you to believe America is broke.  But in reality, we are the richest country in the world, and we are richer than at any other time in history.  The U.S. has a record-breaking $88 trillion in total wealth, twice the amount of just fifteen years ago and almost four times greater than the next wealthiest country.

And yet every year the federal budget gets squeezed more and more, and the deficit grows.  The problem is not that we’re broke.  The problem is that way too much of that extraordinary wealth is owned by the top 1 percent, who, instead of paying their fair share in taxes, have been receiving huge tax breaks for years.

If we taxed the wealthy in a progressive manner, we could begin to address the most urgent needs facing our country.  But we don’t.  According to Citizens for Tax Justice, the richest 1 percent of Americans, who took in an astounding 21.6 percent of all income in the U.S. last year, paid just 23.6 percent of all federal, state, and local taxes.  That is not the kind of tax system we need in America.

It’s not just the marginal tax rates that benefit the rich, it’s also the loopholes.  As Warren Buffett, the multibillionaire investor has often reminded us he pays a lower effective tax rate than his own secretary.  This is because capital gains and dividends are, quite incredibly, taxed at a lower rate than wages and salaries.

And then there is the carried-interest loophole, a tax break that allows Wall Street hedge fund managers to treat most of their earnings as long-term capital gains instead of payments for services rendered.  Although it makes no rational sense, this loophole cuts the tax rate in half for a small group of incredibly wealthy people–costing the U.S. Treasury as much as $180 billion over a ten-year period.

Add in a whole slew of other credits and deductions that advantage the wealthy, and a billionaire hedge fund manager can pay a lower effective tax rate than a truck driver, teacher, or nurse.  The old adage “It takes money to make money” is alive and well.  The tax code is helping the very rich get insanely richer, while the middle class is disappearing and the poor are getting poorer.  It is the Robin Hood principle in reverse.

In my view, we have got to send a message to the billionaire class: “You can’t have it all.”   You can’t get huge tax breaks while children in this country go hungry.  You can’t continue getting tax breaks by shipping American jobs to China.  You can’t hide your profits in the Cayman Islands and other tax havens while there ae massive unmet needs in every corner of this nation.  Your greed has got to end.  You cannot take advantage of all the benefits of America if you refuse to accept your responsibilities as Americans.  We need a tax system that is fair and progressive.

The good news is that the overwhelming majority of Americans agree.  A June 2016 survey by the Brookings Institution and the Public Religion Research Institute found that almost 70 percent of Americans support increasing taxes for people earning $350,000 or more per year.  And what should send shivers down the spine of the billionaire class is that 54 percent of Republicans agree.  “Over the last four years,” the survey noted, “there has been a sea change in opinion among Republicans with regard to taxing the wealthy,” noting an astounding 18-point increase in Republican support for increasing taxes on the rich just since 2012.

That is remarkable, and it shows that the American people are catching on to how unfair the tax system is.

And the Brookings survey was not an outlier.  An April 2016 Gallup poll found 61 percent of Americans believe upper-income individuals pay too little in taxes.  And to the conservative pundits who insist redistributing wealth is fundamentally un-American, the American people respectfully disagree, 52 percent believing “that our government should redistribute wealth by heavy taxes on the rich.”

Corporate Taxes – According to conservative groups like the Heritage Foundation, Cato Institute, and U.S. Chamber of Commerce, and their many allies in Congress, corporations in the United States are the highest-taxed in the world.  That is a lie.  Yes, technically, the top statutory corporate income tax rate of 35 percent is the third highest but, in reality, most corporations don’t pay anywhere close to the statutory rate.

In April 2016 Government Accountability Office study found that large corporations actually paid just 14 percent of their profits in federal income taxes from 2008 to 2012.  Not 35 percent, but 14 percent.

And rather incredibly, one of every five large, profitable corporations paid no federal income taxes at all in 2012.  Not 35 percent, but zero percent.

The reality is that for decades, corporations have been paying a smaller and smaller share of overall federal tax revenues.  In 1952, corporate income taxes accounted for 32 percent of all federal revenue.  By 2015, that number had been reduced by two-thirds, to just 10.6 percent.  In other words, a much greater share of paying for the basic government services the American people enjoy and demand–national defense, education, health care, the social safety net, caring for our veterans, running the national parks, and so much more–falls on the backs of working families instead of profitable corporations.

And yet, according to a March 2016 article in The Economist, U.S. corporate profits are at all-time highs.  How can that be?   It should come as no surprise that just as our tax code benefits wealthy individuals, it also benefits some of the largest and most profitable corporations in the world with myriad tax breaks, deductions, credits, and tax avoidance loopholes.  Our tax code has essentially legalized tax dodging for large corporations.

Take, for example, legal tax avoidance schemes, like stashing cash in offshore tax havens.  The Cayman Islands and Bermuda are two of the favorite countries for corporations to stash their cash, since they have secretive banking laws and no corporate taxes at all.  None.  All you need to do is set up a post office box in one of those countries, and voila–you now have a foreign company, with no tax liabilities!  The practice has become so absurd that a single five-story office building in the Cayman Islands is now the official legal “home” to more than 18,000 corporations.  Incredibly, this one tax avoidance scheme alone allows corporations to avoid paying more than $100 billion in U.S. taxes each and every year.

These companies benefit in innumerable ways from being based in America, by using taxpayer-funded infrastructure, accessing the most highly trained and productive workforce in the world, using numerous government services (and sometimes, grants and contracts), and so much more.  They are proud to be American companies.  That is, until it’s time to pay their fair share of taxes.

And some of the worst offenders are the big Wall Street banks.

After the greed, recklessness, and illegal behavior on Wall Street drove this country into the deepest recession since the 1930s, the largest banks in the United States took every advantage of being American.  They loved America and everything that taxpayers could do for them.  In 2008, Congress passed a $700 billion bailout, paid for by American taxpayers.  And the Federal Reserve gave the financial institutions $16 trillion in virtually zero-interest loans.  America.  What a great country!

But just two years later, as soon as these behemoths started making record-breaking profits again, they suddenly lost their love for their native country.  At a time when the nation was suffering from a huge deficit–largely created by the recession that Wall Street caused–the major financial institutions did everything they could to avoid paying American taxes by, among other things, establishing shell corporations in the Cayman Islands and other tax havens.

In 2010, Bank of America set up more than two hundred subsidiaries in the Caymans.  Not only did it pay no federal income taxes that year, it received a tax refund for $1.9 billion.  Apparently Bank of America thought stiffing the American treasury was the appropriate way to thank taxpayers for the more than $1.3 trillion it received through the bailout and the Federal Reserve.

In 2013, JPMorgan Chase made a profit of more than $17 billion, but received a $1.3 billion tax refund, thanks in large part to its four subsidiaries incorporated in offshore tax havens.  I guess JPMorgan Chase thought that was the right thing to do after receiving a bailout of more than $400 billion.

In 2013, Citigroup made a profit of more than $6.3 billion, but received a tax refund of $260 billion.  During the financial crisis, Citigroup received $2.5 trillion in financial assistance from the Federal Reserve that kept it from going under.

And in 2014, Goldman Sachs had twenty subsidiaries in offshore tax havens, which allowed it to avoid an estimated $4.6 billion in U.S. taxes.  What a nice way to say thanks for the more than $800 billion in assistance Goldman received during the financial crisis.

On and on it goes.  Wall Street banks and large companies love America when they need corporate welfare.  But when it comes to paying American taxes, they want nothing to do with this country.

And let’s be clear: Offshore tax abuse is not just limited to Wall Street.”

(THE FOLLOWING IS FROM PAGE 274 AND I QUOTE:

Top Ten Corporate Tax Avoiders – Here are some of the worst corporate tax dodgers in America.  Not coincidentally, the CEO of every company listed belongs to the Business Roundtable–an organization that lobbies Congress to slash corporate taxes.  But that’s not all.  The Roundtable also wants to raise the eligibility age for Social Security and Medicare to seventy, and to cut cost-of-living adjustments for seniors and disabled veterans.  These CEOs callously promote the idea that increasing their corporate profits is more important than their fellow Americans receiving benefits they have earned by working or by serving in the military.  The top ten are: Johnson Controls, IBM, Xerox, American Airlines, Pacific Gas & Electric, Boeing, General Electric, Citigroup, Pfizer and Verizon.”

MY COMMENTS: BERNIE SANDERS HAS WRITTEN A GREAT BOOK AND I HAVE PUT JUST A FEW OF HIS COMMENTS ON MY BLOG SITE, HOPING YOU WILL READ THE WHOLE BOOK.  PRESIDENT-ELECT DONALD TRUMP AND SPEAKER PAUL RYAN ARE GOING TO TAKE THE REPUBLICAN PARTY AS FAR RIGHT AS THEY CAN TAKE IT, HOPEFULLY WITHOUT LOSING REPUBLICAN SUPPORT.  IF THEY DO LOSE SUPPORT, THEN THEY WILL HAVE TO BACK OFF AND START SUPPORTING THE WORKING MIDDLE CLASS.  THE REPUBLICANS ARE GOING TO HAVE TO FORGET ABOUT THE IDEA OF CUTTING MEDICARE, A VERY POPULAR PROGRAM WHICH THE VOTERS PAY FOR THEMSELVES.  ALSO, KEEPING SOCIAL SECURITY AND NOT PRIVATIZING IT OR PUTTING IT IN THE STOCK MARKET.  THEY MUST KEEP THE DODD-FRANK BILL TO KEEP OUR BANKS SAFE FOR THE BENEFIT OF THE WORKING PEOPLE.  SEN BERNIE SANDERS, ALONG WITH SEN ELIZABETH WARREN, EVEN WANT TO REINSTATE THE GLASS-STEAGALL ACT WHICH IS SOMETHING DONALD TRUMP HAS TALKED ABOUT BUT SPEAKER RYAN PROBABLY WOULDN’T BE IN FAVOR OF.  AS FOR OUR FEDERAL INCOME TAXES, WHICH IS THE WAY WE PAY FOR OUR GOVERNMENT, IT MUST BE FAIR AND PROGRESSIVE AND LIKE BERNIE SANDERS SAYS ON PAGE 277, THAT HE WANTS THE TOP RATE OF 52 PERCENT FOR THE RICHEST BILLIONAIRES AND NOT AT 33 PERCENT WHERE DONALD TRUMP AND SPEAKER PAUL RYAN ARE PROPOSING.

LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veteran

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About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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