Why The Mega Banks and Multinational Corporations Are Destroying America

From Washingtonsblog.com

The following excellent pieces explain and give links to why these corporations don't pay taxes and are destroying our country.

Why You Pay Too Much In Taxes: Because Everyone from the Ultra-Rich to Illegal Immigrants Pay Nothing … Or Get Tax Refunds

Posted on July 23, 2012 by WashingtonsBlog

Illegal Aliens Scam Tax Refunds

For years, American taxpayers have been shelling out $4.2 billion dollars per year to pay for a scam.

A report by the Inspector General found that some 2 million illegal immigrants have been receiving large tax refunds by pretending that numerous dependents live with them … when, in fact, most of the dependents live in Mexico and have never lived in the United States.

Once whistleblowers called attention to this problem, their IRS bosses told them to ignore the fraud and look the other way.

WND notes:

The problem was not a revelation to the Northern California IRS field-office worker who viewed the report: “The fraud has been going on for years,” he told WND. “Business as usual.”

“As the video indicates the Service does nothing,” he said, asking WND not use his name to avoid reprisal.

(The Federal Reserve has been bailing out foreign banks for years; but we assume that this is not a backdoor bailout for foreign nationals.)

Giant Corporations Scam Tax Refunds

Pulitzer prize winning reporter David Cay Johnston reports that – in 16 states – giant companies pocket your “state income taxes”.

This includes foreign corporations.

Workers are never informed that their “state income taxes” are being pocketed.   And states often refuse to make this information public, claiming that it is “proprietary information”.

In addition, big companies use a variety of international scams to avoid taxes:

The Washington Post notes:

About two-thirds of corporations operating in the United States did not pay taxes annually from 1998 to 2005, according to a new report scheduled to be made public today from the U.S. Government Accountability Office…

In 2005, about 28 percent of large corporations paid no taxes…

Dorgan and Sen. Carl M. Levin (D-Mich.) requested the report out of concern that some corporations were using “transfer pricing” to reduce their tax bills. The practice allows multi-national companies to transfer goods and assets between internal divisions so they can record income in a jurisdiction with low tax rates…

[Senator] Levin said: “This report makes clear that too many corporations are using tax trickery to send their profits overseas and avoid paying their fair share in the United States.”

Indeed, as … Johnston documents, American multinationals pay much less in taxes than they should because they use a widespread variety of tax-avoidance scams and schemes, including:

• Selling valuable assets of the American companies to foreign subsidiaries based in tax havens for next to nothing, so that those valuable assets can be taxed at much lower foreign rates

• Pretending that costs were spent in the United States, so that the companies can count them as costs or deductions in the U.S. and pay less taxes to the American government

• Booking profits as if they occurred in the subsidiary’s tax haven countries, so that taxes paid on profits are at the much lower safe haven rate

• Working out sweetheart deals with certain foreign governments, so that the companies can pretend they paid more in foreign taxes than they actually did, to obtain higher U.S. tax credits than are warranted

• Pretending they are headquartered in tax havens like Bermuda, the Cayman Islands or Panama, so that they can enjoy all of the benefits of actually being based in America (including the use of American law and the court system, listing on the Dow, etc.), with the tax benefits associated with having a principal address in a sunny tax haven.

• And myriad other scams

Indeed, some of the world’s biggest companies not only dodge all taxes, they actually enjoy a negative tax rate … where they are paid money by the U.S. government, just like the illegal immigrants discussed above.

The World’s Richest Hide $31 Trillion Dollars to Avoid Taxes

A new report from the former chief economist at the prestigious McKinsey firm – an expert on tax havens – concludes that

The Guardian notes:

A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together ….

James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.

He shows that at least £13tn – perhaps up to £20tn [i.e. $31 trillion dollars] – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, “protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy”.

***

The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.

***

“The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments,” the report says.

The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry’s calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world’s population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.

“These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people,” said John Christensen of the Tax Justice Network. “People on the street have no illusions about how unfair the situation has become.” [Remember that rampant inequality destroys economies.  And conservatives or liberals are both offended by it.]

Al Jazeera reports:

Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280bn in lost income tax revenues, according to research published on Sunday.

The study estimating the extent of global private financial wealth held in offshore accounts – excluding non-financial assets such as real estate, gold, yachts and racehorses – puts the sum at between $21 and $32 trillion.

***

John Christensen of the Tax Justice Network told Al Jazeera that he was shocked by “the sheer scale of the figures”.

“What’s shocking is that some of the world’s biggest banks are up to their eyeballs in helping their clients evade taxes and shift their wealth offshore,” said Christensen.

“We’re talking about very big, well-known brands – HSBC, Citigroup, Bank of America, UBS, Credit Suisse – some of the world’s biggest banks are involved… and they do it knowing fully well that their clients, more often than not, are evading and avoiding taxes.”

Much of this activity, Christensen added, was illegal.

***

The research estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3 to $9.3 trillion of “unrecorded offshore wealth” by 2010.

Private wealth held offshore represents “a huge black hole in the world economy,” Henry said in a statement.

Either Eliminate Taxes – Or Tax Fairly – But Don’t Allow Fraud to Rob the Middle Class Blind

Some say that we could eliminate all taxes if we take away from the big banks the monopoly power to create credit, so that the government doesn’t have to pay trillions on interest for that credit.

Some say that income taxes are illegal, because they were never ratified by the states.

Some say that – since more than half of all government discretionary spending goes to imperial wars of adventure and most of the rest is thrown at the big banks so they can keep ripping us off – paying taxes is just propping up a destructive system.

Others – including some leading conservatives – say that the problem is that the wealthiest haven’t been forced to pay their fair share of taxes.

We’re not weighing in one way or the other.  But one thing is for sure: either no one should pay taxes, or we should all – illegal immigrants, giant corporations and the super-rich – be subject to the same rules and pay our fair share.

Soaking the middle class is unfair, unjust … and unAmerican.   Indeed, while the Boston Tea Party was a revolt against taxation without representation, it largely centered on the British government’s disproportionate tax breaks – towards the East India Company, the giant company which dominated the tea market and hurt small American business.

(http://eye-on-washington.blogspot.com)

The GOP And Their Destructive Agenda

From Phil Davis At Seeking Alpha

Here is an excerpt:

While large portions of the World are facing starvation this summer - the rest of the World is simply enduring harsh austerity while businesses enjoy record profits as the ratio of Wages to Corporate Profits slips to the lowest level EVER MEASURED - down a whopping 60% since 2000, down 80% since the 1980s and nearly half of what they were after WWII. This is what is being done to the 80% of the workforce still lucky enough to have jobs at all - while Corporations make record profits and commodity prices skyrocket and record numbers of Americans are forced to go on food stamps and millions around the World simply starve:

"The Prosperity of Big Business Has Become Disconnected from the Well-Being of Most Americans"

Robert Reich wrote that yesterday and it's an important enough point to merit big, bold letters. Most "US Corporations" are no longer really "American" companies. They've become global networks that design, make, buy, and sell things wherever around the world it's most profitable for them to do so. Apple employs 43,000 people in the United States but contracts with over 700,000 workers (94% of the work-force) overseas. It assembles iPhones in China both because wages are low there and because Apple's Chinese contractors can quickly mobilize workers from company dorms at almost any hour of the day or night.

Low wages aren't the major force driving Apple or any other American-based corporate network abroad. The components Apple's Chinese contractors assemble come from many places around the world with wages as high if not higher than in the United States. More than a third of what you pay for an iPhone ends up in Japan, because that's where some of its most advanced components are made. Seventeen percent goes to Germany, whose precision manufacturers pay wages higher than those paid to American manufacturing workers, on average, because German workers are more highly skilled. Thirteen percent comes from South Korea, whose median wage isn't far from our own.

What's going on, says Reich, is that America isn't educating enough of our people well enough to get American-based companies to do more of their high-value added work here. American roads are congested, our bridges are in disrepair, and our ports are becoming outmoded. American-based companies aren't pushing to repair our infrastructure or to educate our workers, despite their huge clout in Washington. They don't care about making Americans more competitive. They say they have no obligation to solve America's problems. They only want lower corporate taxes, lower taxes for their executives, fewer regulations, and less public spending. To achieve these goals they maintain legions of lobbyists and are pouring boatloads of money into political campaigns and are currently running a professional outsourcer on the GOP ticket of all things!

Who cares what a few squiggly lines on a chart "indicate" when we have these deep-seated issues to address? And America is the star compared to most other countries with Europe aging more rapidly and emerging markets crashing after their own growth spurts.

This should be a time when America re-takes it's leadership role in the World by re-investing in and re-building our infrastructure - to put people to work and to shape the next generation of American manufacturing (and alt-energy leadership is just there for the taking). Instead we have political brinksmanship that threatens an already shaky economic foundation where self-interest trumps National Interest every time - because we let it happen.

The Big Business Party (Republicans, for those of you who are clueless) likes to tell you Government is the problem but I'm telling you that the GOP is the problem. They are literally destroying America and the worse our problems get, the more they go on the attack - not so much fiddling while Rome burns as looting the treasury and then claiming it was all lost in the fire anyway and hitting up the insurance company (which turns out to be the taxpayers they are robbing) for claims against the money they stole.

As Jon Stewart notes, the LIBOR scandal is Part 37 of the International Banking Scandal - a destruction of the Global Financial System that is made possible by LACK of Government regulation and oversight:

As you can see from the exchange of emails - there is not enough fear of regulation against manipulating the financial markets to stop traders from openly discussing in their daily mail! This is a completely broken system. Even now,

Sheila Bair is warning us that

, if the SEC does not beef up its oversight of money market funds - "

emergency government support may again be needed to stem large outflows

." The funds own more than 40 percent of U.S. dollar-denominated financial commercial paper outstanding, according to the New York Fed.

Confidence in the money fund industry was shaken in 2008 when the Reserve Primary Fund, one of the oldest and biggest money funds, broke the buck, or its per-share value fell below $1. That happened because of the fund's heavy losses on debt holdings in Lehman Brothers, which had collapsed a few days earlier. The SEC enacted money market reforms in 2010 that tightened credit quality standards, shortened weighted average maturities and imposed a liquidity requirement on money market funds.

The new safeguards are strongly opposed by the $2.7 trillion money market fund industry and the U.S. Chamber of Commerce - which is the Big Business consortium that pretends to be on the side of small business while taking their money, failing to represent their interests and, in fact, stabbing them in the back every chance they get. Oops, did I say that out loud?

Goldman Sachs' former mortgage chief will be using their 0.25% loan rates and Government bail-out money to start a $500M fund that will buy foreclosed homes from people who couldn't refinance or extend their 6% loans and were thrown out of their homes, losing their deposits and life savings. Goldman's plans is to take these "bargain" homes and turn around and rent them back to the people who can no longer afford them - turning another generation of property owners back into serfs - backed up by a Government GS paid to elect. Ain't America great?

Something needs to change in this country folks and it isn't the President!

And, here is more from Phil Davis:

Hoover promoted "economic partnerships" between government and business to boost the economy of 1928, arguing that the "job creators" should be allowed to work unfettered by regulations. Hoover championed the "Efficiency Movement," claiming that the government and the economy were riddled with inefficiency and waste but, when push came to shove in the great crash of 1929 - his response was to blow off all his campaign promises and RAISE taxes in the top bracket from 25% to 63%, along with an increase in corporate taxes that guaranteed Hoover a one-term presidency and led the way to 40 years of Democratic Rule along with the greatest period of prosperity (after a 10-year depression) this country had ever known.

Like Romney, Hoover was a very successful businessman who made his fortune in mining and, in fact, donated his entire presidential salary to charity so, like Romney, he wasn't evil per se - just an arrogant wealthy man who was nothing more than a tool of the top 1% who was set up to placate the masses while the carpet-baggers looted what was left of the Treasury. Sound familiar?

Jobs, jobs, JOBS!!! That's what this country (as well as the rest of the planet) needs to turn the economy around. You can give zillions of dollars to the banks but how does that help out the families the banks confiscate homes from? There are still over 4M properties in the US in the foreclosure process and our housing turnover is running just over 1M per year.

As Robert Reich said on Friday: "The prosperity of big business has become disconnected from the well-being of most Americans." I am anti-Republican (as opposed to being pro-Democrat) for the same reason I am bearish on the market - the long-term fundamentals of their economic policies are BAD for the market. Why would I vote for people who are going to destroy the economy of this country?

We NEED Socialism (I know, a word that immediately inflames half the readers) at this stage in the economic cycle - just like we needed it in 1928 and to pretend that more capitalism coupled with harsh austerity measures will make things better sets us on the same dire path this country, and the whole world, followed into 10 years of misery in the 1930s. It's as simple as that. This country is DOOMED if we back Romney and the GOP in what is going to be the most important decision made by American voters since Bush "won" in 2000 (and boy did we blow that one).

Unfortunately, our fate is not completely in our hands. The euro dropped to an 11-year low versus the yen this morning and near that against the dollar as well ahead of Spain's 7.5% bond auction which is, of course, disastrous. Both Japan and the IMF are lowering their global outlook - pointing to slowing economies in China and India now dragging the global economy where previously it had been hoped they would provide leadership.

Sales at S&P companies are up just 2.9% in Q2 among the 119 companies that have reported so far and that's the worst performance since the third quarter of 2009. Just 42% of the reporting companies have beat sales estimates but 73% have beaten very low profit estimates as a result of stock buybacks and accounting changes we had outlined earlier in the month that mask the underlying weakness in the reports.

Overall, U.S. poverty is on track to reach it's highest level since the 1960s as the "war on poverty" has somehow morphed into a war against the middle class, waged by the "job creators" of the top 1%. The official poverty rate is heading toward 15.7% of our population, just 0.1% shy of the worst recorded back in 1965. Poverty is spreading at record levels across many groups (see chart), from underemployed workers and suburban families to the poorest poor. More discouraged workers are giving up on the job market, leaving them vulnerable as unemployment aid begins to run out.

The 2010 poverty level was $22,314 for a family of four, and $11,139 for an individual, based on an official government calculation that includes only cash income, before tax deductions. It excludes capital gains or accumulated wealth, such as home ownership, as well as non-cash aid such as food stamps and tax credits, which were expanded substantially under President Barack Obama's stimulus package. An additional 9 million people in 2010 would have been counted above the poverty line if food stamps and tax credits were taken into account. Outside of Medicaid, federal spending on major low-income assistance programs such as food stamps, disability aid and tax credits have been mostly flat at roughly 1.5 percent of the gross domestic product from 1975 to the 1990s.

This IS our economy folks - empty promises and Congressional filibusters are NOT going to make it any better and ignoring the plight of the bottom 99% will NOT let you enjoy your dividends because, ultimately, these are your customers - believe it or not you have an obligation to take care of them or, surprise, they won't be there anymore to buy your goods and services. That's not politics - that's economics.

(http://eye-on-washington.blogspot.com)