Wednesday, April 20, 2011

Tax Day +2


Above is an important speech by author Chris Hedges at Union Square in NYC on April 15. It's extraordinary and well worth the 10 minutes of your time. A brief excerpt:
We stand today before the gates of one of our temples of finance. It is a temple where greed and profit are the highest good, where self-worth is determined by the ability to amass wealth and power at the expense of others, where laws are manipulated, rewritten and broken, where the endless treadmill of consumption defines human progress, where fraud and crimes are the tools of business.

The two most destructive forces of human nature-- greed and envy-- drive the financiers, the bankers, the corporate mandarins and the leaders of our two major political parties, all of whom profit from this system. They place themselves at the center of creation. They disdain or ignore the cries of those below them. They take from us our rights, our dignity and thwart our capacity for resistance. They seek to make us prisoners in our own land. They view human beings and the natural world as mere commodities to exploit until exhaustion or collapse. Human suffering, wars, climate change, poverty, it is all the price of business. Nothing is sacred. The Lord of Profit is the Lord of Death.

The pharisees of high finance who can see us this morning from their cubicles and corner officers mock virtue. Life for them is solely about self-gain. The suffering of the poor is not their concern. The 6 million families thrown out of their homes are not their concern. The tens of millions of pensioners whose retirement savings were wiped out because of the fraud and dishonesty of Wall Street are not their concern. The failure to halt carbon emissions is not their concern. Justice is not their concern. Truth is not their concern. A hungry child is not their concern.

Fyodor Dostoyevsky in Crime and Punishment understood the radical evil behind the human yearning not to be ordinary but to be extraordinary, the desire that allows men and women to serve systems of self-glorification and naked greed. Raskolnikov in the novel believes-- like those in this temple-- that humankind can be divided into two groups. The first is composed of ordinary people. These ordinary people are meek and submissive. They do little more than reproduce other human beings in their own likeness, grow old and die. And Raskolnikov is dismissive of these lesser forms of human life.

The second group, he believes, is extraordinary. These are, according to Raskolnikov, the Napoleons of the world, those who flout law and custom, those who shred conventions and traditions to create a finer, more glorious future. Raskolnikov argues that, although we live in the world, we can free ourselves from the consequences of living with others, consequences that will not always be in our favor. The Raskolnikovs of the world place unbridled and total faith in the human intellect. They disdain the attributes of compassion, empathy, beauty, justice and truth. And this demented vision of human existence leads Raskolnikov to murder a pawnbroker and steal her money.

When I ran Reprise Records for TimeWarner I paid a lot more taxes than Obama did-- and I always felt pretty good about it. I was doing better than more than 99% of the country and I was doing well, at least in part, because of the country. Monday my tax bill came to zero. That's how a Congress filled with rich people structures the tax code for rich people. I didn't feel good about it; I felt unclean and in on the cheating game.

I had lunch with my financial advisor, a senior vice president at MorganStanley. We were celebrating because he had just bought a $4 million house on an acre of land in Beverly Hills. He was complaining how grossly undertaxed he is and how unfair it is. When I drove home from lunch I heard this exchange on KCRW (Marketplace) about how, since Reagan got the ball rolling, taxes have sunk, especially for the super-rich.
MOON: When we talk about the tax burden, most people, I think, point to the policies enacted under former President Ronald Reagan as the reason that it's been easing over the years. Does he deserve all the credit?

THORNDIKE: He deserves a good share of the credit. Although, it's a long-term process in which most of us have seen our taxes drop a least a little bit. But you know the big numbers sort of obscure some of the important smaller numbers. They've dropped quite a bit more for some groups than they have for others.

MOON: Now there are no shortages of stories out there about the super rich paying next to nothing, but you're suggesting that across all brackets?

THORNDIKE: Well there's been, I think it might be fair to say, a modest decline across all brackets. But there's been a particularly big decline for both ends of the spectrum: for very low-income taxpayers and for very rich taxpayers. For those at the bottom of the income spectrum, they've done pretty well. The bottom quintile taxpayers payed an average rate of 8 percent in 1979, and that dropped to 4 percent in 2007, which is the latest year I have numbers for. But for the rich, they've also done quite well: the top 1 percent had been paying at 37 percent in 1979, and their rate dropped to 29.5. You can even get more granular than that if you look at the top 400 households: their rate from 26.4 percent in '92-- this is a somewhat later number-- to 16.6 percent just recently.

...MOON: Now what about the tax on the super rich? I've heard that that was up to around 90 percent during the Eisenhower years.

THORNDIKE: It was over 90 percent during the Eisenhower years, even higher than that during World War II. And actually, those very high wartime rates stuck around for all of the '50s and into the '60s. They start down in the '60s, but only into the 70 percent, and then they keep coming down. So at the very top, the rates were very high, and they've gradually come down quite a long way.

MOON: Now I think it's fit to say that there's a reluctance on Capitol Hill to tax the super rich. The politics have changed, maybe on both sides. But in the Republican Party, commitment to low taxes among them, how is that working out?

THORNDIKE: I think the Republican Party today is quite a different party than it was in, say, the 1970s or even the 1980s. There is a real commitment to limiting taxes and to tax rate reductions, and perhaps less of a commitment to deficit reduction. It used to be that Republicans, who have always been suitably enthusiastic about reducing tax rates, were more afraid of unchecked red ink. I mean, that fear may be returning now, but I think for the last 20 years or so, we've seen a politics where deficit worries just did not quite to the level of importance that rate cuts did.

AP ran a feature by Stephen Ohlemacher that brought up the same kinds of conclusions: "The super rich pay a lot less in taxes than they did a couple of decades ago, and nearly half of U.S. households pay no income taxes at all. The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992... The top income tax rate is 35 percent, so how can people who make so much pay so little in taxes?... [T]he top rate on capital gains is only 15 percent."

And corporations, it turns out, pay even less. In return for generous subsidies to the careers of politicians, corporations are able to get away with paying almost no taxes. Due in part to complex tax avoidance schemes, nearly two-thirds of corporations doing business in the U.S. pay no income taxes at all, according to a 2008 report from the Government Accountability Office (GAO).. The GAO also found, in 2008, that 83 of the 100 largest publicly traded U.S. corporations have subsidiaries in tax haven countries or financial privacy jurisdictions.  Companies that received taxpayer-funded bailout money or receive lucrative government contracts and use tax havens include American Express, A.I.G, Exxon Mobil, Goldman Sachs and Pfizer. Over $100 billion a year is lost to the federal treasury through off-shoring.
According to Tax Shell Game: How Much Did OffShore Tax Havens Cost You In 2010?, a new U.S. Public Interest Research Group report, the use of offshore tax havens results in $434 in additional tax burden for taxpayers around the country. 

“Main street businesses and ordinary taxpayers without access to an army of accountants to devise elaborate tax avoidance schemes are forced to pick up the tab every year. We’ve already paid to bail out the banks and other big corporations-- is it fair to ask us to pay their taxes as well?” said U.S. PIRG Legislative Office Director Gary Kalman.

A Gallup poll from a few days ago showed that a majority of Americans reject the idea that the distribution of money and wealth in the U.S. is fair. They instead agree with the broad sentiment that "money and wealth in this country should be more evenly distributed among a larger percentage of the people."

78% of Democrats and 55% of Independents are in accord here. Only 36% of self-professed Republicans are on the same page. It's a difference in philosophy about the role of government in the lives of people. Conservatives (that includes most Republicans) tend to believe in the law of the jungle. Everyone else sees that government should act as a balance between individuals and the immense power of the dark and very real forces Chris Hedges is talking about in his speech above.

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At 7:37 AM, Anonymous John Evan Miller said...

It is great to see that someone understands the current state of our country. Greed and envy does drive most people and that corruptness is one of the biggest problems in our country right now (and why the housing market is in it's current state).

I completely agree with this:
"It is a temple where greed and profit are the highest good, where self-worth is determined by the ability to amass wealth and power at the expense of others"

At 10:03 AM, Blogger Taylor Wray said...

Great post. That tax history analysis is very enlightening.

It's high time the rich sucked it up and shelled out some cash for the frigging bonanza they've had for the last 30 years on the backs of everyone else. Not to mention the blank-check bailout we just gave them.


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