Although the Treasury Department has barred GM from paying severance to Wagoner or any other senior executive, Wagoner is eligible to collect millions in retirement benefits from his former employer, according to the documents reviewed by ABC News.
Under Wagoner's leadership, GM lost tens of billions of dollars, took billions in taxpayer-financed aid, and announced plans to cut 47,000 employees by the end of 2009.
Those executive compensations may cause another public scrutiny. However, somehow those public scrutiny ends up wringling the upper middle class people rather than those who are the frost on the cake. The good example is to raise tax on earned income more than 250K. Those who make just over $250K are not vacationing on the yatch with champagne and hanging out with the former presidents and celebrities. Those are working round the clock days and nights sacrificing their family time and the entitled vacation. People we think rich do not have to earn the income but they sit on the inheritance and investment particularly tax free municipal bonds (Do you know how much Ruth Madoff have in the municipal bonds? Supposedly $45 million).
Some peopole argue for the incentives for those wealthy to invest in the government bonds. However, even if it tax a bit, as long as it does not tax as much on other inverstment. Those greedy rich will invest in the government bond. Maybe we can raise tax on those non government investment return on those extremely wealthy. Let's say people who makes millions or with the asset of multi-millions.
Monday, March 30, 2009
Tuesday, March 24, 2009
Why it’s a bit rich of tax-haven Bono to ask us to give to poor
Why it’s a bit rich of tax-haven Bono to ask us to give to poor
By Sharon OwensWednesday, 4 March 2009
While Bono continues to jet around the world making friends with popes and presidents and urging the little people to dig deep for Africa. To be fair to the rest of the band they’ve always been pretty quiet on the subject of charity. But I fear Bono will be wasting his time in the future, urging us to give our loose change to the starving. There won’t be any loose change, Bono. We’ll all need that to buy bread and milk for our children.
Journalists frequently ask me why I didn’t skip across the border when I became a published novelist, in order to take advantage of the Republic’s generous tax breaks for artists, writers and musicians. I understand that most artistes didn’t have to pay any tax at all in the years before the €250,000 limit came into being. Which means that the super-rich became even richer and you couldn’t throw a stone in Dublin without hitting a wealthy writer on the forehead. Fair enough, you might say, and there’s always the ‘trickle-down’ effect. But I didn’t move south for three reasons. Firstly, I was very sentimentally attached to Belfast by the time success came. Secondly, I don’t have any expensive tastes whatsoever. In fact, I’m almost religiously determined not to go down the road of fawning over some overpriced frock or piece of furniture. And thirdly, I believe very strongly in paying my way in this life. My daughter is at school here, my husband and I both got our degrees without having to pay tuition fees, and one or two members of my family have had quite a lot of medical treatment over the years. And somebody has to pay for it all so why should I get off lightly? My job is a lot more enjoyable than, say, cleaning public toilets. So why should a humble lavatory cleaner pay tax while I get a generous tax-break to sit on my backside and daydream?
Yes, it sickens me when the Government squanders our hard-earned money on red tape, pointless wars, and MPs’ travel expenses and second homes. Yes, it disgusts me when people like Fred ‘The Shred’ Goodwin can retire at 50 with almost £700,000 pension-a-year for life, as a reward for dumping more than £300bn worth of ‘toxic’ debt onto the taxpayer. Not to mention the thousands of workers he sacked along the way to gain his notorious nickname. Yes, it almost leads me to despair to think that every Press release at Stormont could pay for a couple of trainee landscape gardeners to clean up my entire neighbourhood.
But will I be running away to Donegal to batten down the hatches with my wee (five-figure) salary clutched to my chest in a locked tin box? No, I won’t. Because whatever sort of a society is left after the City boys and the Cabinet have finished playing with it, is the society that my child will have to live in. And I don’t want to be part of the reason it all fell apart, if indeed it does.
They were talking on Radio 4 last week about ‘financial Armageddon’. That is, when the UK Government (and possibly many others around the world) will be unable to borrow enough money to pay public sector workers, support the health service and the various social security agencies. Purely because so much of the income of the nation will have to go to service the toxic debts that the current property boom has engendered. So it’ll be bye-bye to that disability car, that Housing Executive flat, those NHS specs and possibly even a large percentage of nursing and teaching jobs.
People are already finding it hard to borrow money, hard to re-pay huge mortgages, hard to afford holidays abroad or new clothes or meals out. And so the domino effect begins. It’s already kicked off with a cluster of luxury restaurants going to the wall. Next will be designer clothes, middle-priced restaurants, DIY stores, small businesses, the car industry and well, the list is endless. Apparently the only things we buy more of in a recession are chocolate and cut-price paperbacks. (Even sales of hardbacks have slumped.)
And when people are cutting back on basic grocery spending to be able to afford home heating oil, they’ll have no option but to turn their heads away from TV pictures of African children dying of hunger and thirst and the lack of a mosquito net that costs £3. And they’ll probably have little time for super-rich celebrities and their luxury villas in the south of France and their Maserati sportscars and their various lectures on how important it is to give money to charity. I suspect the entire charity ball circuit will collapse as will the gossip magazine industry. Expensive resorts such as Monte Carlo and Cannes could become ghost towns. We’ll all be spending our weekends growing carrots and cabbages in the back garden instead of lapping up the outrageous extravagances of our favourite stars. Even the Oscars have allegedly done away with their six-figure goody bags.
Oh dear, Bono, if things get any worse there’ll simply be no use in letting your stubble grow, donning that sexy black waistcoat and biker boots, and begging the little people to give their money to charity. For, as the man says, charity begins at home.
By Sharon OwensWednesday, 4 March 2009
While Bono continues to jet around the world making friends with popes and presidents and urging the little people to dig deep for Africa. To be fair to the rest of the band they’ve always been pretty quiet on the subject of charity. But I fear Bono will be wasting his time in the future, urging us to give our loose change to the starving. There won’t be any loose change, Bono. We’ll all need that to buy bread and milk for our children.
Journalists frequently ask me why I didn’t skip across the border when I became a published novelist, in order to take advantage of the Republic’s generous tax breaks for artists, writers and musicians. I understand that most artistes didn’t have to pay any tax at all in the years before the €250,000 limit came into being. Which means that the super-rich became even richer and you couldn’t throw a stone in Dublin without hitting a wealthy writer on the forehead. Fair enough, you might say, and there’s always the ‘trickle-down’ effect. But I didn’t move south for three reasons. Firstly, I was very sentimentally attached to Belfast by the time success came. Secondly, I don’t have any expensive tastes whatsoever. In fact, I’m almost religiously determined not to go down the road of fawning over some overpriced frock or piece of furniture. And thirdly, I believe very strongly in paying my way in this life. My daughter is at school here, my husband and I both got our degrees without having to pay tuition fees, and one or two members of my family have had quite a lot of medical treatment over the years. And somebody has to pay for it all so why should I get off lightly? My job is a lot more enjoyable than, say, cleaning public toilets. So why should a humble lavatory cleaner pay tax while I get a generous tax-break to sit on my backside and daydream?
Yes, it sickens me when the Government squanders our hard-earned money on red tape, pointless wars, and MPs’ travel expenses and second homes. Yes, it disgusts me when people like Fred ‘The Shred’ Goodwin can retire at 50 with almost £700,000 pension-a-year for life, as a reward for dumping more than £300bn worth of ‘toxic’ debt onto the taxpayer. Not to mention the thousands of workers he sacked along the way to gain his notorious nickname. Yes, it almost leads me to despair to think that every Press release at Stormont could pay for a couple of trainee landscape gardeners to clean up my entire neighbourhood.
But will I be running away to Donegal to batten down the hatches with my wee (five-figure) salary clutched to my chest in a locked tin box? No, I won’t. Because whatever sort of a society is left after the City boys and the Cabinet have finished playing with it, is the society that my child will have to live in. And I don’t want to be part of the reason it all fell apart, if indeed it does.
They were talking on Radio 4 last week about ‘financial Armageddon’. That is, when the UK Government (and possibly many others around the world) will be unable to borrow enough money to pay public sector workers, support the health service and the various social security agencies. Purely because so much of the income of the nation will have to go to service the toxic debts that the current property boom has engendered. So it’ll be bye-bye to that disability car, that Housing Executive flat, those NHS specs and possibly even a large percentage of nursing and teaching jobs.
People are already finding it hard to borrow money, hard to re-pay huge mortgages, hard to afford holidays abroad or new clothes or meals out. And so the domino effect begins. It’s already kicked off with a cluster of luxury restaurants going to the wall. Next will be designer clothes, middle-priced restaurants, DIY stores, small businesses, the car industry and well, the list is endless. Apparently the only things we buy more of in a recession are chocolate and cut-price paperbacks. (Even sales of hardbacks have slumped.)
And when people are cutting back on basic grocery spending to be able to afford home heating oil, they’ll have no option but to turn their heads away from TV pictures of African children dying of hunger and thirst and the lack of a mosquito net that costs £3. And they’ll probably have little time for super-rich celebrities and their luxury villas in the south of France and their Maserati sportscars and their various lectures on how important it is to give money to charity. I suspect the entire charity ball circuit will collapse as will the gossip magazine industry. Expensive resorts such as Monte Carlo and Cannes could become ghost towns. We’ll all be spending our weekends growing carrots and cabbages in the back garden instead of lapping up the outrageous extravagances of our favourite stars. Even the Oscars have allegedly done away with their six-figure goody bags.
Oh dear, Bono, if things get any worse there’ll simply be no use in letting your stubble grow, donning that sexy black waistcoat and biker boots, and begging the little people to give their money to charity. For, as the man says, charity begins at home.
adding new marginal tax brackets above the current top level ($357k)
Yglesias proposes adding new marginal tax brackets above the current top level ($357k). While he minimizes the potential for raising significant revenue this way, Nate Silver starts the math and finds otherwise:
What the discussion over the top marginal tax rate ignores, however (and what Ygelsias picks up upon) is that this rate has been assessed at very different thresholds of income. In 1940, for example, the top marginal tax rate was 81.1 percent -- but this rate only kicked in once you made $5,000,000 or more in income, which is equivalent to about $75,000,000 in today's dollars.
But today, the threshold where the top tax bracket kicks in isn't $75 million, or $5 million, or even $1 million ... it's a mere $357,700. The progressivity of the tax code stops there....
The question, of course, is why there isn't a millionaires tax bracket now ... or even a multi-millionaires tax bracket. I haven't run the numbers, but I'm guessing that if you established a new tax bracket at, say, 40.5 percent, that started at incomes of $1,000,000 or more, this would bring in as much revenue to the government as restoring the $250K tax bracket (which is really $360K now given indexing to inflation) to 39.6 percent, as it was under Clinton.
Clive Crook gives the rationale for creating new upper-level brackets -- though he himself favors the regressive but broader-based VAT:
Not everybody would regard two-earner households with an income of $250,000 a year as rich; and many of the taxpayers in question have seen their retirement savings, college funds and housing equity destroyed. The scandal of widening inequality that still animates the Democrats' thinking is a story about the top fraction of one per cent of the income distribution, not the top end of the middle class.
What the discussion over the top marginal tax rate ignores, however (and what Ygelsias picks up upon) is that this rate has been assessed at very different thresholds of income. In 1940, for example, the top marginal tax rate was 81.1 percent -- but this rate only kicked in once you made $5,000,000 or more in income, which is equivalent to about $75,000,000 in today's dollars.
But today, the threshold where the top tax bracket kicks in isn't $75 million, or $5 million, or even $1 million ... it's a mere $357,700. The progressivity of the tax code stops there....
The question, of course, is why there isn't a millionaires tax bracket now ... or even a multi-millionaires tax bracket. I haven't run the numbers, but I'm guessing that if you established a new tax bracket at, say, 40.5 percent, that started at incomes of $1,000,000 or more, this would bring in as much revenue to the government as restoring the $250K tax bracket (which is really $360K now given indexing to inflation) to 39.6 percent, as it was under Clinton.
Clive Crook gives the rationale for creating new upper-level brackets -- though he himself favors the regressive but broader-based VAT:
Not everybody would regard two-earner households with an income of $250,000 a year as rich; and many of the taxpayers in question have seen their retirement savings, college funds and housing equity destroyed. The scandal of widening inequality that still animates the Democrats' thinking is a story about the top fraction of one per cent of the income distribution, not the top end of the middle class.
AIG is chump change -- let's find corporate America's hidden billions
AIG is chump change -- let's find corporate America's hidden billions
It's time to reform offshore banking, and see what untaxed wealth big business is hiding in overseas tax shelters.
By Joe Conason
From the jaded perspective of the financiers, the uproar over the AIG bonuses may provide a welcome distraction from far more important (and lucrative) abuses in the world's offshore tax havens.
So rather than continue arguing over chump change, it is long past time for the United States, with its international friends and allies, to demand accountability from the long list of tiny countries and principalities, from Andorra and the Cayman Islands to Singapore and Switzerland, where corporations, wealthy clients and unrepentant evildoers hide their assets.
The big claw-back will reach into quaint islands and mountainous principalities, because the same banks, hedge funds and private equity firms responsible for the world financial meltdown keep their profits in those "secrecy spaces" -- alongside the ill-gotten gains of numerous drug dealers, dictators and delinquents of every description.
According to the Government Accountability Office, nearly all of America's top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients' illicit secrets is considered a matter of national pride.
But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America's 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)
When the cost of these shenanigans was last estimated two years ago, the U.S. government's annual loss in revenue due to tax avoidance by major corporations and super-rich individuals was pegged at about $100 billion -- considerably more than a rounding error, even today. But of course that is only a rough assessment, as is the estimate of $12 trillion in untaxed assets hidden around the world. Nobody will know for certain until the books are opened and transparency is established.
Whatever the accurate accounting proves to be, it is certain to exceed hundreds of billions annually worldwide. That is money every country will need badly for years, to repay debt, finance reconstruction, and fund services, as the world economy struggles to revive itself. Even in the developing countries, where incomes are much lower and billionaires tend to be scarce, the annual revenue loss could be as much as $50 billion -- enough to meet the U.N.'s Millennium Development Goals (if only the money were not stolen by local elites and wired away to numbered accounts in tax havens).
None of these tax havens could exist without the connivance or at least the cooperation of the world's most powerful governments, which remain dominated by financial industry lobbyists even now. The Organization for Economic Cooperation and Development has sought greater transparency from the tax havens for years, hearing promises from most and defiance from a few.
But in reality almost nothing was accomplished until last year, when U.S. law enforcement authorities began to pursue Union Bank of Switzerland (UBS) executives with criminal indictments. The UBS probe led to a settlement last month that included a fine of $780 million and an agreement to provide information about tens of thousands of American clients maintaining secret accounts at that huge bank.
Over the past several years, however, the trend has gone the other way, with abuse of bank secrecy and the expatriation of investment and profits growing rapidly. On the tiny island of Jersey in the English Channel, for instance, the authorities responded to political pressure from hedge funds, which have placed more than $80 billion in deposits there, by establishing a "zero regulation regime" last year that literally removed all restrictions and reporting on financial transactions. Jersey's counterparts in Guernsey and the Cayman Islands responded by assuring the hedge funds that they, too, would consider abolishing all regulation.
Perhaps the UBS case indicates a change in that unwholesome trend and a renewed willingness on the part of American authorities to crack the tax havens -- which was not a priority, to put it mildly, of the Bush administration. As a senator, Barack Obama supported legislation to break open the secret financial regimes, by retaliating against countries and principalities that refuse to cooperate. Now Congress and the White House should pass such legislation and make breaking the tax havens a high priority in partnership with the European Union, the OECD and World Bank. They could start by threatening to outlaw transactions between American banks and financial institutions in any country that rejects new rules for transparency and reciprocal information.
If Americans want to make the authors of our misery pay up, then the auditors must go where the money is, as Willie Sutton might have explained -- and take hundreds of billions back.
From the jaded perspective of the financiers, the uproar over the AIG bonuses may provide a welcome distraction from far more important (and lucrative) abuses in the world's offshore tax havens.
So rather than continue arguing over chump change, it is long past time for the United States, with its international friends and allies, to demand accountability from the long list of tiny countries and principalities, from Andorra and the Cayman Islands to Singapore and Switzerland, where corporations, wealthy clients and unrepentant evildoers hide their assets.
The big claw-back will reach into quaint islands and mountainous principalities, because the same banks, hedge funds and private equity firms responsible for the world financial meltdown keep their profits in those "secrecy spaces" -- alongside the ill-gotten gains of numerous drug dealers, dictators and delinquents of every description.
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According to the Government Accountability Office, nearly all of America's top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients' illicit secrets is considered a matter of national pride.
But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America's 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)
When the cost of these shenanigans was last estimated two years ago, the U.S. government's annual loss in revenue due to tax avoidance by major corporations and super-rich individuals was pegged at about $100 billion -- considerably more than a rounding error, even today. But of course that is only a rough assessment, as is the estimate of $12 trillion in untaxed assets hidden around the world. Nobody will know for certain until the books are opened and transparency is established.
Whatever the accurate accounting proves to be, it is certain to exceed hundreds of billions annually worldwide. That is money every country will need badly for years, to repay debt, finance reconstruction, and fund services, as the world economy struggles to revive itself. Even in the developing countries, where incomes are much lower and billionaires tend to be scarce, the annual revenue loss could be as much as $50 billion -- enough to meet the U.N.'s Millennium Development Goals (if only the money were not stolen by local elites and wired away to numbered accounts in tax havens).
None of these tax havens could exist without the connivance or at least the cooperation of the world's most powerful governments, which remain dominated by financial industry lobbyists even now. The Organization for Economic Cooperation and Development has sought greater transparency from the tax havens for years, hearing promises from most and defiance from a few.
But in reality almost nothing was accomplished until last year, when U.S. law enforcement authorities began to pursue Union Bank of Switzerland (UBS) executives with criminal indictments. The UBS probe led to a settlement last month that included a fine of $780 million and an agreement to provide information about tens of thousands of American clients maintaining secret accounts at that huge bank.
Over the past several years, however, the trend has gone the other way, with abuse of bank secrecy and the expatriation of investment and profits growing rapidly. On the tiny island of Jersey in the English Channel, for instance, the authorities responded to political pressure from hedge funds, which have placed more than $80 billion in deposits there, by establishing a "zero regulation regime" last year that literally removed all restrictions and reporting on financial transactions. Jersey's counterparts in Guernsey and the Cayman Islands responded by assuring the hedge funds that they, too, would consider abolishing all regulation.
Perhaps the UBS case indicates a change in that unwholesome trend and a renewed willingness on the part of American authorities to crack the tax havens -- which was not a priority, to put it mildly, of the Bush administration. As a senator, Barack Obama supported legislation to break open the secret financial regimes, by retaliating against countries and principalities that refuse to cooperate. Now Congress and the White House should pass such legislation and make breaking the tax havens a high priority in partnership with the European Union, the OECD and World Bank. They could start by threatening to outlaw transactions between American banks and financial institutions in any country that rejects new rules for transparency and reciprocal information.
If Americans want to make the authors of our misery pay up, then the auditors must go where the money is, as Willie Sutton might have explained -- and take hundreds of billions back.
From the jaded perspective of the financiers, the uproar over the AIG bonuses may provide a welcome distraction from far more important (and lucrative) abuses in the world's offshore tax havens.
So rather than continue arguing over chump change, it is long past time for the United States, with its international friends and allies, to demand accountability from the long list of tiny countries and principalities, from Andorra and the Cayman Islands to Singapore and Switzerland, where corporations, wealthy clients and unrepentant evildoers hide their assets.
The big claw-back will reach into quaint islands and mountainous principalities, because the same banks, hedge funds and private equity firms responsible for the world financial meltdown keep their profits in those "secrecy spaces" -- alongside the ill-gotten gains of numerous drug dealers, dictators and delinquents of every description.
According to the Government Accountability Office, nearly all of America's top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients' illicit secrets is considered a matter of national pride.
But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America's 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)
When the cost of these shenanigans was last estimated two years ago, the U.S. government's annual loss in revenue due to tax avoidance by major corporations and super-rich individuals was pegged at about $100 billion -- considerably more than a rounding error, even today. But of course that is only a rough assessment, as is the estimate of $12 trillion in untaxed assets hidden around the world. Nobody will know for certain until the books are opened and transparency is established.
Whatever the accurate accounting proves to be, it is certain to exceed hundreds of billions annually worldwide. That is money every country will need badly for years, to repay debt, finance reconstruction, and fund services, as the world economy struggles to revive itself. Even in the developing countries, where incomes are much lower and billionaires tend to be scarce, the annual revenue loss could be as much as $50 billion -- enough to meet the U.N.'s Millennium Development Goals (if only the money were not stolen by local elites and wired away to numbered accounts in tax havens).
None of these tax havens could exist without the connivance or at least the cooperation of the world's most powerful governments, which remain dominated by financial industry lobbyists even now. The Organization for Economic Cooperation and Development has sought greater transparency from the tax havens for years, hearing promises from most and defiance from a few.
But in reality almost nothing was accomplished until last year, when U.S. law enforcement authorities began to pursue Union Bank of Switzerland (UBS) executives with criminal indictments. The UBS probe led to a settlement last month that included a fine of $780 million and an agreement to provide information about tens of thousands of American clients maintaining secret accounts at that huge bank.
Over the past several years, however, the trend has gone the other way, with abuse of bank secrecy and the expatriation of investment and profits growing rapidly. On the tiny island of Jersey in the English Channel, for instance, the authorities responded to political pressure from hedge funds, which have placed more than $80 billion in deposits there, by establishing a "zero regulation regime" last year that literally removed all restrictions and reporting on financial transactions. Jersey's counterparts in Guernsey and the Cayman Islands responded by assuring the hedge funds that they, too, would consider abolishing all regulation.
Perhaps the UBS case indicates a change in that unwholesome trend and a renewed willingness on the part of American authorities to crack the tax havens -- which was not a priority, to put it mildly, of the Bush administration. As a senator, Barack Obama supported legislation to break open the secret financial regimes, by retaliating against countries and principalities that refuse to cooperate. Now Congress and the White House should pass such legislation and make breaking the tax havens a high priority in partnership with the European Union, the OECD and World Bank. They could start by threatening to outlaw transactions between American banks and financial institutions in any country that rejects new rules for transparency and reciprocal information.
If Americans want to make the authors of our misery pay up, then the auditors must go where the money is, as Willie Sutton might have explained -- and take hundreds of billions back.
It's time to reform offshore banking, and see what untaxed wealth big business is hiding in overseas tax shelters.
By Joe Conason
From the jaded perspective of the financiers, the uproar over the AIG bonuses may provide a welcome distraction from far more important (and lucrative) abuses in the world's offshore tax havens.
So rather than continue arguing over chump change, it is long past time for the United States, with its international friends and allies, to demand accountability from the long list of tiny countries and principalities, from Andorra and the Cayman Islands to Singapore and Switzerland, where corporations, wealthy clients and unrepentant evildoers hide their assets.
The big claw-back will reach into quaint islands and mountainous principalities, because the same banks, hedge funds and private equity firms responsible for the world financial meltdown keep their profits in those "secrecy spaces" -- alongside the ill-gotten gains of numerous drug dealers, dictators and delinquents of every description.
According to the Government Accountability Office, nearly all of America's top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients' illicit secrets is considered a matter of national pride.
But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America's 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)
When the cost of these shenanigans was last estimated two years ago, the U.S. government's annual loss in revenue due to tax avoidance by major corporations and super-rich individuals was pegged at about $100 billion -- considerably more than a rounding error, even today. But of course that is only a rough assessment, as is the estimate of $12 trillion in untaxed assets hidden around the world. Nobody will know for certain until the books are opened and transparency is established.
Whatever the accurate accounting proves to be, it is certain to exceed hundreds of billions annually worldwide. That is money every country will need badly for years, to repay debt, finance reconstruction, and fund services, as the world economy struggles to revive itself. Even in the developing countries, where incomes are much lower and billionaires tend to be scarce, the annual revenue loss could be as much as $50 billion -- enough to meet the U.N.'s Millennium Development Goals (if only the money were not stolen by local elites and wired away to numbered accounts in tax havens).
None of these tax havens could exist without the connivance or at least the cooperation of the world's most powerful governments, which remain dominated by financial industry lobbyists even now. The Organization for Economic Cooperation and Development has sought greater transparency from the tax havens for years, hearing promises from most and defiance from a few.
But in reality almost nothing was accomplished until last year, when U.S. law enforcement authorities began to pursue Union Bank of Switzerland (UBS) executives with criminal indictments. The UBS probe led to a settlement last month that included a fine of $780 million and an agreement to provide information about tens of thousands of American clients maintaining secret accounts at that huge bank.
Over the past several years, however, the trend has gone the other way, with abuse of bank secrecy and the expatriation of investment and profits growing rapidly. On the tiny island of Jersey in the English Channel, for instance, the authorities responded to political pressure from hedge funds, which have placed more than $80 billion in deposits there, by establishing a "zero regulation regime" last year that literally removed all restrictions and reporting on financial transactions. Jersey's counterparts in Guernsey and the Cayman Islands responded by assuring the hedge funds that they, too, would consider abolishing all regulation.
Perhaps the UBS case indicates a change in that unwholesome trend and a renewed willingness on the part of American authorities to crack the tax havens -- which was not a priority, to put it mildly, of the Bush administration. As a senator, Barack Obama supported legislation to break open the secret financial regimes, by retaliating against countries and principalities that refuse to cooperate. Now Congress and the White House should pass such legislation and make breaking the tax havens a high priority in partnership with the European Union, the OECD and World Bank. They could start by threatening to outlaw transactions between American banks and financial institutions in any country that rejects new rules for transparency and reciprocal information.
If Americans want to make the authors of our misery pay up, then the auditors must go where the money is, as Willie Sutton might have explained -- and take hundreds of billions back.
From the jaded perspective of the financiers, the uproar over the AIG bonuses may provide a welcome distraction from far more important (and lucrative) abuses in the world's offshore tax havens.
So rather than continue arguing over chump change, it is long past time for the United States, with its international friends and allies, to demand accountability from the long list of tiny countries and principalities, from Andorra and the Cayman Islands to Singapore and Switzerland, where corporations, wealthy clients and unrepentant evildoers hide their assets.
The big claw-back will reach into quaint islands and mountainous principalities, because the same banks, hedge funds and private equity firms responsible for the world financial meltdown keep their profits in those "secrecy spaces" -- alongside the ill-gotten gains of numerous drug dealers, dictators and delinquents of every description.
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According to the Government Accountability Office, nearly all of America's top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients' illicit secrets is considered a matter of national pride.
But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America's 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)
When the cost of these shenanigans was last estimated two years ago, the U.S. government's annual loss in revenue due to tax avoidance by major corporations and super-rich individuals was pegged at about $100 billion -- considerably more than a rounding error, even today. But of course that is only a rough assessment, as is the estimate of $12 trillion in untaxed assets hidden around the world. Nobody will know for certain until the books are opened and transparency is established.
Whatever the accurate accounting proves to be, it is certain to exceed hundreds of billions annually worldwide. That is money every country will need badly for years, to repay debt, finance reconstruction, and fund services, as the world economy struggles to revive itself. Even in the developing countries, where incomes are much lower and billionaires tend to be scarce, the annual revenue loss could be as much as $50 billion -- enough to meet the U.N.'s Millennium Development Goals (if only the money were not stolen by local elites and wired away to numbered accounts in tax havens).
None of these tax havens could exist without the connivance or at least the cooperation of the world's most powerful governments, which remain dominated by financial industry lobbyists even now. The Organization for Economic Cooperation and Development has sought greater transparency from the tax havens for years, hearing promises from most and defiance from a few.
But in reality almost nothing was accomplished until last year, when U.S. law enforcement authorities began to pursue Union Bank of Switzerland (UBS) executives with criminal indictments. The UBS probe led to a settlement last month that included a fine of $780 million and an agreement to provide information about tens of thousands of American clients maintaining secret accounts at that huge bank.
Over the past several years, however, the trend has gone the other way, with abuse of bank secrecy and the expatriation of investment and profits growing rapidly. On the tiny island of Jersey in the English Channel, for instance, the authorities responded to political pressure from hedge funds, which have placed more than $80 billion in deposits there, by establishing a "zero regulation regime" last year that literally removed all restrictions and reporting on financial transactions. Jersey's counterparts in Guernsey and the Cayman Islands responded by assuring the hedge funds that they, too, would consider abolishing all regulation.
Perhaps the UBS case indicates a change in that unwholesome trend and a renewed willingness on the part of American authorities to crack the tax havens -- which was not a priority, to put it mildly, of the Bush administration. As a senator, Barack Obama supported legislation to break open the secret financial regimes, by retaliating against countries and principalities that refuse to cooperate. Now Congress and the White House should pass such legislation and make breaking the tax havens a high priority in partnership with the European Union, the OECD and World Bank. They could start by threatening to outlaw transactions between American banks and financial institutions in any country that rejects new rules for transparency and reciprocal information.
If Americans want to make the authors of our misery pay up, then the auditors must go where the money is, as Willie Sutton might have explained -- and take hundreds of billions back.
From the jaded perspective of the financiers, the uproar over the AIG bonuses may provide a welcome distraction from far more important (and lucrative) abuses in the world's offshore tax havens.
So rather than continue arguing over chump change, it is long past time for the United States, with its international friends and allies, to demand accountability from the long list of tiny countries and principalities, from Andorra and the Cayman Islands to Singapore and Switzerland, where corporations, wealthy clients and unrepentant evildoers hide their assets.
The big claw-back will reach into quaint islands and mountainous principalities, because the same banks, hedge funds and private equity firms responsible for the world financial meltdown keep their profits in those "secrecy spaces" -- alongside the ill-gotten gains of numerous drug dealers, dictators and delinquents of every description.
According to the Government Accountability Office, nearly all of America's top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients' illicit secrets is considered a matter of national pride.
But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America's 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)
When the cost of these shenanigans was last estimated two years ago, the U.S. government's annual loss in revenue due to tax avoidance by major corporations and super-rich individuals was pegged at about $100 billion -- considerably more than a rounding error, even today. But of course that is only a rough assessment, as is the estimate of $12 trillion in untaxed assets hidden around the world. Nobody will know for certain until the books are opened and transparency is established.
Whatever the accurate accounting proves to be, it is certain to exceed hundreds of billions annually worldwide. That is money every country will need badly for years, to repay debt, finance reconstruction, and fund services, as the world economy struggles to revive itself. Even in the developing countries, where incomes are much lower and billionaires tend to be scarce, the annual revenue loss could be as much as $50 billion -- enough to meet the U.N.'s Millennium Development Goals (if only the money were not stolen by local elites and wired away to numbered accounts in tax havens).
None of these tax havens could exist without the connivance or at least the cooperation of the world's most powerful governments, which remain dominated by financial industry lobbyists even now. The Organization for Economic Cooperation and Development has sought greater transparency from the tax havens for years, hearing promises from most and defiance from a few.
But in reality almost nothing was accomplished until last year, when U.S. law enforcement authorities began to pursue Union Bank of Switzerland (UBS) executives with criminal indictments. The UBS probe led to a settlement last month that included a fine of $780 million and an agreement to provide information about tens of thousands of American clients maintaining secret accounts at that huge bank.
Over the past several years, however, the trend has gone the other way, with abuse of bank secrecy and the expatriation of investment and profits growing rapidly. On the tiny island of Jersey in the English Channel, for instance, the authorities responded to political pressure from hedge funds, which have placed more than $80 billion in deposits there, by establishing a "zero regulation regime" last year that literally removed all restrictions and reporting on financial transactions. Jersey's counterparts in Guernsey and the Cayman Islands responded by assuring the hedge funds that they, too, would consider abolishing all regulation.
Perhaps the UBS case indicates a change in that unwholesome trend and a renewed willingness on the part of American authorities to crack the tax havens -- which was not a priority, to put it mildly, of the Bush administration. As a senator, Barack Obama supported legislation to break open the secret financial regimes, by retaliating against countries and principalities that refuse to cooperate. Now Congress and the White House should pass such legislation and make breaking the tax havens a high priority in partnership with the European Union, the OECD and World Bank. They could start by threatening to outlaw transactions between American banks and financial institutions in any country that rejects new rules for transparency and reciprocal information.
If Americans want to make the authors of our misery pay up, then the auditors must go where the money is, as Willie Sutton might have explained -- and take hundreds of billions back.
Higher tax rates on high incomes aren't going to do what you think they'll do
Beware, America. Higher tax rates on high incomes aren't going to do what you think they'll do -- because the really rich have always known how to get around paying taxes.
"Obama’s 'tax the rich' scheme," former Reagan administration assistant treasury secretary Paul Craig Roberts argued last week, "will devastate the upper middle class and leave the super rich undamaged."
"Obama’s 'tax the rich' scheme," former Reagan administration assistant treasury secretary Paul Craig Roberts argued last week, "will devastate the upper middle class and leave the super rich undamaged."
taxing on more than $250K earners
Those being hit by the proposed tax hike are overwhelmingly hundreds of thousands of honest people whose success has been based on the foundations of hard work, skill and enterprise.
Overwhelmingly they have not spent their holidays on yachts with celebrities. Or
bought peerages or favours from the Government. Yet they are being hit.
Politicians are diverting criticism from super rich to upper middle class Americans working hard.
Overwhelmingly they have not spent their holidays on yachts with celebrities. Or
bought peerages or favours from the Government. Yet they are being hit.
Politicians are diverting criticism from super rich to upper middle class Americans working hard.
Tuesday, March 10, 2009
Judicial Watch Uncovers Documents Detailing Pelosi's Repeated Requests for Military Travel
House Speaker Issued Unprecedented Demands for Military Aircraft and Wasted Taxpayer Resources with Last Minute Cancellations
Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that it has obtained documents from the Department of Defense (DOD) detailing House Speaker Nancy Pelosi's multiple requests for military air travel. The documents, obtained by Judicial Watch through the Freedom of Information Act (FOIA), include internal DOD email correspondence detailing attempts by DOD staff to accommodate Pelosi's numerous requests for military escorts and military aircraft as well as the speaker's last minute cancellations and changes. The following are a few highlights from the documents, which are linked in full below:
In response to a series of requests for military aircraft, one Defense Department official wrote, "Any chance of politely querying [Pelosi's team] if they really intend to do all of these or are they just picking every weekend?...[T]here's no need to block every weekend 'just in case'..." The email also notes that Pelosi's office had, "a history of canceling many of their past requests."
One DOD official complained about the "hidden costs" associated with the speaker's last minute changes and cancellations. "We have...folks prepping the jets and crews driving in (not a short drive for some), cooking meals and preflighting the jets etc."
The documents include a discussion of House Ethics rules and Defense Department policies as they apply to the speaker's requests for staff, spouses and extended family to accompany her on military aircraft. In May 2008, for example, Pelosi requested that her husband join her on a Congressional Delegation (CODEL) into Iraq. The DOD explained to Pelosi that the agency has a written policy prohibiting spouses from joining CODEL's into combat zones.
Documents obtained from the U.S. Army include correspondence from Speaker Pelosi's office requesting an Army escort and three military planes to transport Pelosi and other members of Congress to Cleveland, Ohio, for the funeral services of the late Rep. Stephanie Tubbs Jones. Pelosi noted in her letter of August 22, 2008, that such a request, labeled "Operation Tribute" was an "exception to standard policy."
The documents also detail correspondence from intermediaries for Speaker Pelosi issuing demands for certain aircraft and expressing outrage when requested military planes were not available. "It is my understanding there are no G5s available for the House during the Memorial Day recess. This is totally unacceptable...The speaker will want to know where the planes are..." wrote Kay King, Director of the House Office of Interparliamentary Affairs. In a separate email, when told a certain type of aircraft would not be available, King writes, "This is not good news, and we will have some very disappointed folks, as well as a very upset [s]peaker."
During another email exchange DOD staff advised Kay King that one Pelosi military aircraft request could not be met because of "crew rest requirements" and offered to help secure commercial travel. Kay King responded: "We appreciate the efforts to help the codel [sic] fly commercially but you know the problem that creates with spouses. If we can find another way to assist with military assets, we would like to do that."
Speaker Pelosi came under fire in 2007 for requesting a 42-seat Air Force carrier to ferry the Speaker and her staff back and forth between San Francisco, CA and Washington, DC. Former House Speaker Dennis Hastert was allowed access to a 12-seat commuter jet for security reasons after the events of 9/11.
"Taken together, these documents show that Speaker Pelosi treats the Air Force like her personal airline," said Judicial Watch President Tom Fitton. "Not only does Speaker Pelosi issue unreasonable requests for military travel, but her office seems unconcerned about wasting taxpayer money with last minute cancellations and other demands."
Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that it has obtained documents from the Department of Defense (DOD) detailing House Speaker Nancy Pelosi's multiple requests for military air travel. The documents, obtained by Judicial Watch through the Freedom of Information Act (FOIA), include internal DOD email correspondence detailing attempts by DOD staff to accommodate Pelosi's numerous requests for military escorts and military aircraft as well as the speaker's last minute cancellations and changes. The following are a few highlights from the documents, which are linked in full below:
In response to a series of requests for military aircraft, one Defense Department official wrote, "Any chance of politely querying [Pelosi's team] if they really intend to do all of these or are they just picking every weekend?...[T]here's no need to block every weekend 'just in case'..." The email also notes that Pelosi's office had, "a history of canceling many of their past requests."
One DOD official complained about the "hidden costs" associated with the speaker's last minute changes and cancellations. "We have...folks prepping the jets and crews driving in (not a short drive for some), cooking meals and preflighting the jets etc."
The documents include a discussion of House Ethics rules and Defense Department policies as they apply to the speaker's requests for staff, spouses and extended family to accompany her on military aircraft. In May 2008, for example, Pelosi requested that her husband join her on a Congressional Delegation (CODEL) into Iraq. The DOD explained to Pelosi that the agency has a written policy prohibiting spouses from joining CODEL's into combat zones.
Documents obtained from the U.S. Army include correspondence from Speaker Pelosi's office requesting an Army escort and three military planes to transport Pelosi and other members of Congress to Cleveland, Ohio, for the funeral services of the late Rep. Stephanie Tubbs Jones. Pelosi noted in her letter of August 22, 2008, that such a request, labeled "Operation Tribute" was an "exception to standard policy."
The documents also detail correspondence from intermediaries for Speaker Pelosi issuing demands for certain aircraft and expressing outrage when requested military planes were not available. "It is my understanding there are no G5s available for the House during the Memorial Day recess. This is totally unacceptable...The speaker will want to know where the planes are..." wrote Kay King, Director of the House Office of Interparliamentary Affairs. In a separate email, when told a certain type of aircraft would not be available, King writes, "This is not good news, and we will have some very disappointed folks, as well as a very upset [s]peaker."
During another email exchange DOD staff advised Kay King that one Pelosi military aircraft request could not be met because of "crew rest requirements" and offered to help secure commercial travel. Kay King responded: "We appreciate the efforts to help the codel [sic] fly commercially but you know the problem that creates with spouses. If we can find another way to assist with military assets, we would like to do that."
Speaker Pelosi came under fire in 2007 for requesting a 42-seat Air Force carrier to ferry the Speaker and her staff back and forth between San Francisco, CA and Washington, DC. Former House Speaker Dennis Hastert was allowed access to a 12-seat commuter jet for security reasons after the events of 9/11.
"Taken together, these documents show that Speaker Pelosi treats the Air Force like her personal airline," said Judicial Watch President Tom Fitton. "Not only does Speaker Pelosi issue unreasonable requests for military travel, but her office seems unconcerned about wasting taxpayer money with last minute cancellations and other demands."
Warren Buffett and the myth of the Laissez Faire super rich
By Christopher Dowd
Boston Libertarian Examiner
No shibboleth is as central to American progressives as the notion that super rich corporate America embraces Laissez Faire economic policies and that free market ideology inhabits a central place in the hearts of the American uber wealthy. To a lesser degree some conservatives think this is true as well.
Nothing could be further from the truth. If anything, the history of the United States is a history of corporate power growing hand in glove alongside federal government power. The two are intertwined to the point now that they are all but indistinguishable. More corporate mercenaries have drawn paychecks in Iraq than have government troops. Some 70 percent of the CIA’s “de facto workforce” is private corporate contractors. Federal political hacks jump government job to corporate job to government job and back again. And our national corporate media? Honeycombed with federal political operatives throughout. In between federal government posts and need some dollars? Hey- just get your corporate buddies to hire you as a CNN or Fox News “consultant” or “special correspondent”. Great way to get the lowdown on what our government is doing- by hiring lifelong DC political hacks, apparatchiks, and Pentagon flunkies heavily invested in our "defense" establishment huh? Yeah- they are really impartial and without conflicts of interest.
But I digress . . .
From the age of the Robber Barons down to today- the federal government has been utilized by large corporate interests and the uber wealthy to protect their wealth, eliminate or severely handicap competition, and remove their actions from the review of local powers and agencies.
What progressives refuse to admit is that large corporate entities like federal government regulations. In fact- they are the ghost authors of many laws “regulating” their businesses. Corporations and the uber wealthy like concentrated power. The more concentrated the power- the fewer hands they have to grease and the fewer the probing eyes.
The North’s industrial class supported Lincoln’s war to “save the Union” not because it liked the black man and hated slavery. They supported him because they detested dispersed power. All those annoying state legislatures and grubby little people in their town and city governments affecting their bottom lines? No. They couldn’t have that. They much rather prefer to deal with one large centrally powerful government that huge mega wealthy interests can manipulate easily and efficiently.
And so it is with Warren Buffett. He is ostensibly the embodiment of the American Capitalist in our popular culture. But look at him here and here? Here is this “free marketer” equating a recession/depression with . . . a war. Why compare the economy to a war? Because in America wars have proven to justify ever more federal government power- and specifically executive power. Buffett is all but calling on Congress to shut its mouth in this “time of war” so our new Pharaoh Obama can wave his magic economy recovery wand. Oligarchs like Buffett cheer on and applaud our super Imperial Presidency. They want a rump, powerless, show pony Congress relegated to investigating tabloid issues. One point of power? One branch of government calling all the shots for all intent and purpose? That’s the dream of people like Buffett.
Warren Buffett has access to Obama. We don’t. Whose interests do you think will be protected? Buffett and those like him will always have access to the oval office no matter which of our two fraud parties inhabits the White House and they could care less which one it is- they own both of them. The American super rich embrace no “ism” or ideology in private- they are the ultimate pragmatists and will adopt whatever rhetoric or political position they need in order to defend what they have or to get more. In fact, the American super rich spend a great deal of time and money carefully attuning their images to be palpable to both sides of the political spectrum- funding left wing foundations and causes while publically supporting conservative positions is one of their old standard numbers.
Now I don’t want to be simplistic here (but I guess a certain amount of it is unavoidable). Not all super rich people in this country are like Buffett- users of government power to enhance and protect their own wealth. Buffett more than likely didn’t even start out that way. He isn’t a “bad man” but like most people he believes that what is good for him is good for everybody. Some of the super rich are born into being “political entrepreneurs” – those whose wealth is primarily made and maintained through political connections (see the House of Rockefeller)- but others are burned by government and resign themselves to play the game to protect and preserve what they have built. Bill Gates is one such member of the super rich. Just as Microsoft was reaching its unquestioned dominance in the computer industry Gates famously boasted that his one Washington lobbyist didn’t have anything to do and that DC was not on his radar screen. He paid dearly for this brash dismissal of weasel bureaucratic Washington. For soon after uttering that boast his company was slapped around by the Justice Department and nearly split in two at the urging of his far more DC connected competitors (Sun Microsystems and Oracle). Microsoft now employs dozens of well compensated lobbyists in our Mordor on the Potomac.
The super rich don’t mind paying higher taxes. At their level of the game taxes are not factors. Who gets the worst from this parasitical corporate/government relationship? The most innovative people of our society: the upper middle class and the middle class get the shaft. The guy with 4 million dollars scratched together over a lifetime of hard work, the medium sized business owner, the guy who owns 5 gas stations . . . those are the people who lose out the most to our thieving mercantilist federal government.
The guy who owns two car washes and a moving company isn’t going to get his emails read by Barak Obama. He isn’t going to be offered sweet heart deals to pump up the stock market. He isn’t invited to sit on foreign policy advisory boards or given high level security clearances or access to and influence within whole swaths of the federal government. He can’t get billions of dollars created out of thin air for his business with a phone call to his friends in the Treasury and the Federal Reserve. He won’t be laughing off higher tax rates. He’s the guy who embraces Laissez Faire economics. He’s the guy who believes in the free market . . . not the Warren Buffetts of the world.
Boston Libertarian Examiner
No shibboleth is as central to American progressives as the notion that super rich corporate America embraces Laissez Faire economic policies and that free market ideology inhabits a central place in the hearts of the American uber wealthy. To a lesser degree some conservatives think this is true as well.
Nothing could be further from the truth. If anything, the history of the United States is a history of corporate power growing hand in glove alongside federal government power. The two are intertwined to the point now that they are all but indistinguishable. More corporate mercenaries have drawn paychecks in Iraq than have government troops. Some 70 percent of the CIA’s “de facto workforce” is private corporate contractors. Federal political hacks jump government job to corporate job to government job and back again. And our national corporate media? Honeycombed with federal political operatives throughout. In between federal government posts and need some dollars? Hey- just get your corporate buddies to hire you as a CNN or Fox News “consultant” or “special correspondent”. Great way to get the lowdown on what our government is doing- by hiring lifelong DC political hacks, apparatchiks, and Pentagon flunkies heavily invested in our "defense" establishment huh? Yeah- they are really impartial and without conflicts of interest.
But I digress . . .
From the age of the Robber Barons down to today- the federal government has been utilized by large corporate interests and the uber wealthy to protect their wealth, eliminate or severely handicap competition, and remove their actions from the review of local powers and agencies.
What progressives refuse to admit is that large corporate entities like federal government regulations. In fact- they are the ghost authors of many laws “regulating” their businesses. Corporations and the uber wealthy like concentrated power. The more concentrated the power- the fewer hands they have to grease and the fewer the probing eyes.
The North’s industrial class supported Lincoln’s war to “save the Union” not because it liked the black man and hated slavery. They supported him because they detested dispersed power. All those annoying state legislatures and grubby little people in their town and city governments affecting their bottom lines? No. They couldn’t have that. They much rather prefer to deal with one large centrally powerful government that huge mega wealthy interests can manipulate easily and efficiently.
And so it is with Warren Buffett. He is ostensibly the embodiment of the American Capitalist in our popular culture. But look at him here and here? Here is this “free marketer” equating a recession/depression with . . . a war. Why compare the economy to a war? Because in America wars have proven to justify ever more federal government power- and specifically executive power. Buffett is all but calling on Congress to shut its mouth in this “time of war” so our new Pharaoh Obama can wave his magic economy recovery wand. Oligarchs like Buffett cheer on and applaud our super Imperial Presidency. They want a rump, powerless, show pony Congress relegated to investigating tabloid issues. One point of power? One branch of government calling all the shots for all intent and purpose? That’s the dream of people like Buffett.
Warren Buffett has access to Obama. We don’t. Whose interests do you think will be protected? Buffett and those like him will always have access to the oval office no matter which of our two fraud parties inhabits the White House and they could care less which one it is- they own both of them. The American super rich embrace no “ism” or ideology in private- they are the ultimate pragmatists and will adopt whatever rhetoric or political position they need in order to defend what they have or to get more. In fact, the American super rich spend a great deal of time and money carefully attuning their images to be palpable to both sides of the political spectrum- funding left wing foundations and causes while publically supporting conservative positions is one of their old standard numbers.
Now I don’t want to be simplistic here (but I guess a certain amount of it is unavoidable). Not all super rich people in this country are like Buffett- users of government power to enhance and protect their own wealth. Buffett more than likely didn’t even start out that way. He isn’t a “bad man” but like most people he believes that what is good for him is good for everybody. Some of the super rich are born into being “political entrepreneurs” – those whose wealth is primarily made and maintained through political connections (see the House of Rockefeller)- but others are burned by government and resign themselves to play the game to protect and preserve what they have built. Bill Gates is one such member of the super rich. Just as Microsoft was reaching its unquestioned dominance in the computer industry Gates famously boasted that his one Washington lobbyist didn’t have anything to do and that DC was not on his radar screen. He paid dearly for this brash dismissal of weasel bureaucratic Washington. For soon after uttering that boast his company was slapped around by the Justice Department and nearly split in two at the urging of his far more DC connected competitors (Sun Microsystems and Oracle). Microsoft now employs dozens of well compensated lobbyists in our Mordor on the Potomac.
The super rich don’t mind paying higher taxes. At their level of the game taxes are not factors. Who gets the worst from this parasitical corporate/government relationship? The most innovative people of our society: the upper middle class and the middle class get the shaft. The guy with 4 million dollars scratched together over a lifetime of hard work, the medium sized business owner, the guy who owns 5 gas stations . . . those are the people who lose out the most to our thieving mercantilist federal government.
The guy who owns two car washes and a moving company isn’t going to get his emails read by Barak Obama. He isn’t going to be offered sweet heart deals to pump up the stock market. He isn’t invited to sit on foreign policy advisory boards or given high level security clearances or access to and influence within whole swaths of the federal government. He can’t get billions of dollars created out of thin air for his business with a phone call to his friends in the Treasury and the Federal Reserve. He won’t be laughing off higher tax rates. He’s the guy who embraces Laissez Faire economics. He’s the guy who believes in the free market . . . not the Warren Buffetts of the world.
Tuesday, March 3, 2009
IRS has become a subsidy system for super-wealthy Americans
Stroke the rich
IRS has become a subsidy system for super-wealthy Americans IRS winks at rich deadbeats
David Cay Johnston
Sunday, April 11, 2004
The federal tax system that millions of Americans are forced to deal with before April 15 is not at all what you think it is. Congress has changed it in recent decades from a progressive system in which the more one earns the more one pays in income taxes. It has become a subsidy system for the super rich.
Through explicit policies, as well as tax laws never reported in the news, Congress now literally takes money from those making $30,000 to $500,000 per year and funnels it in subtle ways to the super rich -- the top 1/100th of 1 percent of Americans.
People making $60,000 paid a larger share of their 2001 income in federal income, Social Security and Medicare taxes than a family making $25 million, the latest Internal Revenue Service data show. And in income taxes alone, people making $400,000 paid a larger share of their incomes than the 7,000 households who made $10 million or more.
While millions of Americans in the last quarter-century debated about who shot J.R. and scurried for news about who would be Jennifer Lopez's next lover, Congress quietly passed tax laws that shift the tax burden from the 28,000 Americans in households with incomes of $8 million per year or more.
One 1985 law, promoted in the Senate as relieving middle class Americans, gave a huge tax break to corporate executives who make personal use of company jets. CEOs may now fly to vacations or Saturday golf outings in luxury for a penny a mile. Congress shifted the real cost of about $6 per mile to shareholders, who pay two-thirds, and to taxpayers who suffer the rest of the cost lost as a result of reduced corporate income taxes.
Since 1988, Congress has also cut in half the Internal Revenue Service's capacity to enforce tax laws, replacing it with extra effort to reduce audits of corporations and the rich.
On March 30, Congress was told that 78 percent of known tax cheats in investment partnerships are not even asked to pay because there are not enough tax collectors to go after them. Congress and the Bush administration rejected the request by the IRS Oversight Board, a citizen panel Congress created, for extra money to pursue some of these tax cheats and stop about 1 percent of the $311 billion in estimated annual tax cheating.
In the late '90s, a crooked banker gave the IRS records on 1,600 criminal tax cheats who used his Cayman Islands bank. The Justice Department prosecuted 49 of them, but the other 1,551 were not even asked to pay, lawyers for some of them say.
Two billionaires in New York, the art dealer Alec Wildenstein and his former wife, Jocelyn, testified under oath in their divorce that for 30 years they never filed a tax return. They have not been prosecuted.
There are now seminars that show business owners how to drop out of the tax system with virtually no risk of detection by the IRS, which relies on a computer system installed when John F. Kennedy was president.
As tax law enforcement has declined, illegal tax evasion has risen, especially among the rich and more recently among the young.
All of these actions reward cheats at the expense of honest taxpayers, but because "tax" is a four letter word in Washington, nothing is done. Those who support tax law enforcement are denounced on the campaign trail as advocates of higher taxes.
While letting rich tax cheats run wild, Congress did finance a crackdown on the poor. The working poor, most of whom make less than $16,000, are eight times more likely to be audited than millionaire investors in partnerships.
The audits of low-income taxpayers found little cheating. Two-thirds of the poor get either their full refund or more than they sought.
These and other unseen changes in the tax system are major factors in profound economic changes that have caused so many in America to lurch from job to job, a fourth of which pay less than $8 an hour, while helping a very few grow very rich.
Because the news media focus on what politicians say about the tax system, rather than how it actually operates, few Americans realize that:
-- Corporate income tax laws reward companies that move jobs offshore, allowing them to earn untaxed profits as long as the money stays offshore.
-- Widespread cuts in health insurance and pensions for the rank-and- file are driven by a special law that lets top executives defer paying taxes for years, in a way that adds 35 percent to the cost of their bloated pay.
-- The 2001 Bush tax cuts included a stealth tax increase on the middle class and upper-middle class that will cost them a half trillion dollars in the first 10 years and, for 35 million families, wiping out part or all of their Bush tax cuts.
-- The stealth tax boost on people making $30,000 to $500,000 was explicitly used to make sure that the super rich would get their entire Bush tax cuts.
-- A California couple who make $75,000 to $100,000 and have two children face a 97 percent chance of losing part of their Bush tax cuts to this stealth tax increase and overall will lose 42 percent of their Bush tax cuts by next year.
-- If your child becomes seriously ill, Congress, under this same law, will raise your income taxes if you spend more than 7.5 percent of your income trying to keep your child alive.
-- Since 1983, under a plan devised by Alan Greenspan, Americans have paid $1.8 trillion more in Social Security taxes than have been paid out in benefits, money that is used to finance tax cuts for the super rich while robbing the middle class of their capacity to save.
-- A family earning $50,000 this year will have about $1,500 of its money funneled to the super rich because of the Greenspan plan.
-- Since 1993, the income tax burden on the 400 highest-income Americans has been cut 40 percent when measured the way that President Bush prefers, which is by counting how many pennies out of each dollar go to income taxes. In 1993 the top 400 paid 30 cents out of each dollar in federal income taxes. By the end of the Clinton administration in 2000 they were down to 22 cents. Under Bush, their burden is less than 18 cents. Everyone else felt their tax bite rise to 15 cents on the dollar from an average of 13 cents.
Over time, the impact of tax relief for the super rich and more taxes for everyone else is profound. The rich can save and invest more and more, increasing their incomes and political power over time through the magic of compound interest, while everyone else has less of their money to spend or save and millions of people are mired in debt.
While wage earners have every dollar of income reported to the government, the super rich control what the IRS knows about their incomes. But the rich are rarely audited anymore. Congress also gives them many perfectly legal devices to defer reporting income for years or decades. That means that the real incomes of the super rich are much larger than the IRS data show and their tax burden is even lighter.
IRS data, adjusted for inflation, show that the poor are really getting poorer and the super rich are getting fabulously richer, a trend enhanced by their falling tax burden. In 1970, the poorest third of Americans had more than 10 times as much income as the super rich, the top 1/100th of one percent. Back then the poor had more than 10 percent of all income and the super rich had one percent.
By 2000 the two groups were equal -- the 28,000 Americans at the top had as much income as the 96 million at the bottom. The poor's share of income fell by half while the super rich's share rose to more than 5 percent of all income.
Not only did the poorest third's share of income shrink, they actually had less money. The average 25-year-old man in 1970 made $2 per hour more, adjusted for inflation, than in 2000.
Over those three decades the bottom 99 percent of Americans had an average increase in total income of $2,710. That is an annual raise of less than $100 per year, the equivalent of a nickel an hour raise each year for 30 years. The super rich did fabulously better, their average incomes rising $20. 3 million to an average of $24 million each.
Plot these figures on a chart and the results astound. If the increase for 99 percent of Americans is a bar 1-inch high, the bar for the super rich soars heavenward 625 feet.
All of this is having a devastating impact on America, which the preamble to our Constitution says was created to "promote the general welfare." Until Americans decide to take back their democracy and become actively engaged in politics, the super rich will continue to rig the tax system for their benefit only.
David Cay Johnston is a Pulitzer Prize-winning reporter for the New York Times and author of "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich -- and Cheat Everybody Else," from which this article is adapted.
IRS has become a subsidy system for super-wealthy Americans IRS winks at rich deadbeats
David Cay Johnston
Sunday, April 11, 2004
The federal tax system that millions of Americans are forced to deal with before April 15 is not at all what you think it is. Congress has changed it in recent decades from a progressive system in which the more one earns the more one pays in income taxes. It has become a subsidy system for the super rich.
Through explicit policies, as well as tax laws never reported in the news, Congress now literally takes money from those making $30,000 to $500,000 per year and funnels it in subtle ways to the super rich -- the top 1/100th of 1 percent of Americans.
People making $60,000 paid a larger share of their 2001 income in federal income, Social Security and Medicare taxes than a family making $25 million, the latest Internal Revenue Service data show. And in income taxes alone, people making $400,000 paid a larger share of their incomes than the 7,000 households who made $10 million or more.
While millions of Americans in the last quarter-century debated about who shot J.R. and scurried for news about who would be Jennifer Lopez's next lover, Congress quietly passed tax laws that shift the tax burden from the 28,000 Americans in households with incomes of $8 million per year or more.
One 1985 law, promoted in the Senate as relieving middle class Americans, gave a huge tax break to corporate executives who make personal use of company jets. CEOs may now fly to vacations or Saturday golf outings in luxury for a penny a mile. Congress shifted the real cost of about $6 per mile to shareholders, who pay two-thirds, and to taxpayers who suffer the rest of the cost lost as a result of reduced corporate income taxes.
Since 1988, Congress has also cut in half the Internal Revenue Service's capacity to enforce tax laws, replacing it with extra effort to reduce audits of corporations and the rich.
On March 30, Congress was told that 78 percent of known tax cheats in investment partnerships are not even asked to pay because there are not enough tax collectors to go after them. Congress and the Bush administration rejected the request by the IRS Oversight Board, a citizen panel Congress created, for extra money to pursue some of these tax cheats and stop about 1 percent of the $311 billion in estimated annual tax cheating.
In the late '90s, a crooked banker gave the IRS records on 1,600 criminal tax cheats who used his Cayman Islands bank. The Justice Department prosecuted 49 of them, but the other 1,551 were not even asked to pay, lawyers for some of them say.
Two billionaires in New York, the art dealer Alec Wildenstein and his former wife, Jocelyn, testified under oath in their divorce that for 30 years they never filed a tax return. They have not been prosecuted.
There are now seminars that show business owners how to drop out of the tax system with virtually no risk of detection by the IRS, which relies on a computer system installed when John F. Kennedy was president.
As tax law enforcement has declined, illegal tax evasion has risen, especially among the rich and more recently among the young.
All of these actions reward cheats at the expense of honest taxpayers, but because "tax" is a four letter word in Washington, nothing is done. Those who support tax law enforcement are denounced on the campaign trail as advocates of higher taxes.
While letting rich tax cheats run wild, Congress did finance a crackdown on the poor. The working poor, most of whom make less than $16,000, are eight times more likely to be audited than millionaire investors in partnerships.
The audits of low-income taxpayers found little cheating. Two-thirds of the poor get either their full refund or more than they sought.
These and other unseen changes in the tax system are major factors in profound economic changes that have caused so many in America to lurch from job to job, a fourth of which pay less than $8 an hour, while helping a very few grow very rich.
Because the news media focus on what politicians say about the tax system, rather than how it actually operates, few Americans realize that:
-- Corporate income tax laws reward companies that move jobs offshore, allowing them to earn untaxed profits as long as the money stays offshore.
-- Widespread cuts in health insurance and pensions for the rank-and- file are driven by a special law that lets top executives defer paying taxes for years, in a way that adds 35 percent to the cost of their bloated pay.
-- The 2001 Bush tax cuts included a stealth tax increase on the middle class and upper-middle class that will cost them a half trillion dollars in the first 10 years and, for 35 million families, wiping out part or all of their Bush tax cuts.
-- The stealth tax boost on people making $30,000 to $500,000 was explicitly used to make sure that the super rich would get their entire Bush tax cuts.
-- A California couple who make $75,000 to $100,000 and have two children face a 97 percent chance of losing part of their Bush tax cuts to this stealth tax increase and overall will lose 42 percent of their Bush tax cuts by next year.
-- If your child becomes seriously ill, Congress, under this same law, will raise your income taxes if you spend more than 7.5 percent of your income trying to keep your child alive.
-- Since 1983, under a plan devised by Alan Greenspan, Americans have paid $1.8 trillion more in Social Security taxes than have been paid out in benefits, money that is used to finance tax cuts for the super rich while robbing the middle class of their capacity to save.
-- A family earning $50,000 this year will have about $1,500 of its money funneled to the super rich because of the Greenspan plan.
-- Since 1993, the income tax burden on the 400 highest-income Americans has been cut 40 percent when measured the way that President Bush prefers, which is by counting how many pennies out of each dollar go to income taxes. In 1993 the top 400 paid 30 cents out of each dollar in federal income taxes. By the end of the Clinton administration in 2000 they were down to 22 cents. Under Bush, their burden is less than 18 cents. Everyone else felt their tax bite rise to 15 cents on the dollar from an average of 13 cents.
Over time, the impact of tax relief for the super rich and more taxes for everyone else is profound. The rich can save and invest more and more, increasing their incomes and political power over time through the magic of compound interest, while everyone else has less of their money to spend or save and millions of people are mired in debt.
While wage earners have every dollar of income reported to the government, the super rich control what the IRS knows about their incomes. But the rich are rarely audited anymore. Congress also gives them many perfectly legal devices to defer reporting income for years or decades. That means that the real incomes of the super rich are much larger than the IRS data show and their tax burden is even lighter.
IRS data, adjusted for inflation, show that the poor are really getting poorer and the super rich are getting fabulously richer, a trend enhanced by their falling tax burden. In 1970, the poorest third of Americans had more than 10 times as much income as the super rich, the top 1/100th of one percent. Back then the poor had more than 10 percent of all income and the super rich had one percent.
By 2000 the two groups were equal -- the 28,000 Americans at the top had as much income as the 96 million at the bottom. The poor's share of income fell by half while the super rich's share rose to more than 5 percent of all income.
Not only did the poorest third's share of income shrink, they actually had less money. The average 25-year-old man in 1970 made $2 per hour more, adjusted for inflation, than in 2000.
Over those three decades the bottom 99 percent of Americans had an average increase in total income of $2,710. That is an annual raise of less than $100 per year, the equivalent of a nickel an hour raise each year for 30 years. The super rich did fabulously better, their average incomes rising $20. 3 million to an average of $24 million each.
Plot these figures on a chart and the results astound. If the increase for 99 percent of Americans is a bar 1-inch high, the bar for the super rich soars heavenward 625 feet.
All of this is having a devastating impact on America, which the preamble to our Constitution says was created to "promote the general welfare." Until Americans decide to take back their democracy and become actively engaged in politics, the super rich will continue to rig the tax system for their benefit only.
David Cay Johnston is a Pulitzer Prize-winning reporter for the New York Times and author of "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich -- and Cheat Everybody Else," from which this article is adapted.
Super-rich donations are just a drop in the ocean
Super-rich donations are just a drop in the ocean
Alison Benjamin The Guardian, Wednesday 5 July 2006 Article historyIf I had £1 for every excitable word that's been written about Warren Buffett's $37 billion (£20bn) donation to the Bill and Melinda Gates Foundation, I, too, could give away a lot of money to charity. Guardian columnist Simon Jenkins' verdict on this once-in-a-lifetime, never-seen-before munificence by the world's second richest man was that it could herald a new "age of charity".
While I'm not in any way belittling Buffett's unusual decision to hand over 80% of his £44bn fortune to a charitable foundation run by another man - the world's richest as it goes - pronouncements that such largesse will persuade the mega-rich to follow suit are decidedly premature, at least in Britain.
According to the 2006 trends in charitable giving published last week by the Charities Aid Foundation (Caf), the super-wealthy are also the super-tight. The richest 1% of the population in Britain, despite owning a quarter of all wealth, contribute a miserly 7% of the £8.2bn given to charities by individuals. And the top 10% - which includes that mega-rich 1% - own more than half of all of wealth but fare little better in the generosity stakes, contributing just over a fifth of giving, amounting to a parsimonious £1.1bn.
That leaves the vast bulk (79%) of the £8.2bn coming from the benevolent pockets of the rest of the population. But this is no surprise. Previous studies by Caf and the Institute of Fiscal Studies have calculated that the richest 10% give less than 1% of their income to charity. In contrast, the poorest 10% hand over 3%.
Cathy Pharoah, Caf's research director, says the latest findings show no signs of a wave of philanthropy sweeping through the upper echelons of society. Yet signs of a change are afoot in the shape of a new breed of financial adviser called a "planned giving adviser" (PGA), whose job is to help the mega-wealthy divest themselves of some of their fortune charitably. PGA's herald from the welfare state-less United States, where people who amass riches are expected to prop up education and healthcare.
If Salvatore LaSpada, the new US chief executive of the UK Institute for Philanthropy (Money matters, page 5) has his way, that culture of giving - which he says is still more of a nice idea than a concrete reality this side of the Atlantic - will soon be spreading across these shores.
But to get our new dotcom entrepreneurs and hedge fund millionaires signed up to the Buffett school of philanthropy requires more than a few role models. What LaSpada failed to mention was that the highly favourable US tax regime helps to focus the minds of the mega-rich on altruism.
But even if there was a sudden proliferation of foundations and large-scale donations, would it even make a dent in the spectrum of social need? It is easy to understand why commentators have got carried away by Buffet's big bucks. His unprecedented bounteousness will allow the Gates foundation to spend $3bn a year. Yet juxtaposed with UK government spending, these sums of money are a drop in the ocean.
Although gargantuan by charitable giving standards, Buffet's billions would not even keep half of the NHS - with a £90bn annual budget - afloat for one year. Social care, which costs the taxpayer £17bn, would benefit for little over 12 months. In a more global context, the Gates Foundation endowment is about the same as a year's worth of official UK development aid.
That is not to say that charitable giving is little more than a PR stunt or a tax dodge. But neither should it be viewed as somehow "better" than money spent by a democratically elected government. It has a different role. At its best, it funds risk taking or unfashionable projects; at its worst it promotes the whims and values of the super-rich. Even the great philanthropist Andrew Carnegie recognised this. He warned that 95% of philanthropy was at best useless or at worst actively harmful.
Given Buffett's investment record, his gift will no doubt fall into the 5% well spent. But far from ushering in the age of charity, all his actions really signify is that we have entered the age of colossal wealth.
· Alison Benjamin is deputy editor of Society Guardian.
Alison Benjamin The Guardian, Wednesday 5 July 2006 Article historyIf I had £1 for every excitable word that's been written about Warren Buffett's $37 billion (£20bn) donation to the Bill and Melinda Gates Foundation, I, too, could give away a lot of money to charity. Guardian columnist Simon Jenkins' verdict on this once-in-a-lifetime, never-seen-before munificence by the world's second richest man was that it could herald a new "age of charity".
While I'm not in any way belittling Buffett's unusual decision to hand over 80% of his £44bn fortune to a charitable foundation run by another man - the world's richest as it goes - pronouncements that such largesse will persuade the mega-rich to follow suit are decidedly premature, at least in Britain.
According to the 2006 trends in charitable giving published last week by the Charities Aid Foundation (Caf), the super-wealthy are also the super-tight. The richest 1% of the population in Britain, despite owning a quarter of all wealth, contribute a miserly 7% of the £8.2bn given to charities by individuals. And the top 10% - which includes that mega-rich 1% - own more than half of all of wealth but fare little better in the generosity stakes, contributing just over a fifth of giving, amounting to a parsimonious £1.1bn.
That leaves the vast bulk (79%) of the £8.2bn coming from the benevolent pockets of the rest of the population. But this is no surprise. Previous studies by Caf and the Institute of Fiscal Studies have calculated that the richest 10% give less than 1% of their income to charity. In contrast, the poorest 10% hand over 3%.
Cathy Pharoah, Caf's research director, says the latest findings show no signs of a wave of philanthropy sweeping through the upper echelons of society. Yet signs of a change are afoot in the shape of a new breed of financial adviser called a "planned giving adviser" (PGA), whose job is to help the mega-wealthy divest themselves of some of their fortune charitably. PGA's herald from the welfare state-less United States, where people who amass riches are expected to prop up education and healthcare.
If Salvatore LaSpada, the new US chief executive of the UK Institute for Philanthropy (Money matters, page 5) has his way, that culture of giving - which he says is still more of a nice idea than a concrete reality this side of the Atlantic - will soon be spreading across these shores.
But to get our new dotcom entrepreneurs and hedge fund millionaires signed up to the Buffett school of philanthropy requires more than a few role models. What LaSpada failed to mention was that the highly favourable US tax regime helps to focus the minds of the mega-rich on altruism.
But even if there was a sudden proliferation of foundations and large-scale donations, would it even make a dent in the spectrum of social need? It is easy to understand why commentators have got carried away by Buffet's big bucks. His unprecedented bounteousness will allow the Gates foundation to spend $3bn a year. Yet juxtaposed with UK government spending, these sums of money are a drop in the ocean.
Although gargantuan by charitable giving standards, Buffet's billions would not even keep half of the NHS - with a £90bn annual budget - afloat for one year. Social care, which costs the taxpayer £17bn, would benefit for little over 12 months. In a more global context, the Gates Foundation endowment is about the same as a year's worth of official UK development aid.
That is not to say that charitable giving is little more than a PR stunt or a tax dodge. But neither should it be viewed as somehow "better" than money spent by a democratically elected government. It has a different role. At its best, it funds risk taking or unfashionable projects; at its worst it promotes the whims and values of the super-rich. Even the great philanthropist Andrew Carnegie recognised this. He warned that 95% of philanthropy was at best useless or at worst actively harmful.
Given Buffett's investment record, his gift will no doubt fall into the 5% well spent. But far from ushering in the age of charity, all his actions really signify is that we have entered the age of colossal wealth.
· Alison Benjamin is deputy editor of Society Guardian.
America's Super-Rich Aren't Big On Sharing
America's Super-Rich Aren't Big On Sharing
By GREGG EASTERBROOK Special to the Los Angeles Times
Published: Mar 25, 2007
There are hundreds of people in the United States with so much money that they will never be able to spend their net worth, no matter how many Picassos or mansions or personal jets they buy.
Last year, for the first time, everyone in the Forbes 400 index of the super-wealthy was a billionaire. Sales of 200-foot-plus yachts and other indulgences of extreme wealth are at record highs. Income for the top 1 percent of Americans has more than doubled in the past quarter of a century, while that of the bottom fifth barely budged. The rich, in short, are getting steadily richer, in absolute terms and compared with the rest of society.
Yet with the sainted exception of Warren Buffett and maybe Bill Gates, virtually all of them refuse to give any meaningful fraction of their wealth to the less fortunate - or even to give a decent fraction to such endeavors as art or medical research, which they would benefit from.
Consider the numbers (which are based on current estimates in the recent Slate 60 index of the year's leading philanthropic donors and the net-worth estimates in the Forbes 400). The 60 leading American donors gave away $51 billion in 2006, according to Slate. They were led by Buffett, whose spectacular $44-billion donation - mainly to the Bill & Melinda Gates Foundation, whose primary cause is health care in the developing world - was the largest gift anyone has ever given. These donors had an estimated combined net worth of $630 billion last year, meaning that they gave away 8 percent of their money, on average. Sounds magnanimous, until you consider that the Dow Jones industrial average rose 16 percent in 2006 - which suggests that, as a group, the leading donors contributed less than they gained.
Now subtract Buffett and his generous gift from the group, and the rest of them begin to look downright miserly, handing to others a mere $7 billion of a combined net worth of $584 billion - or slightly more than 1 percent. Numbers from the philanthropy watch organization Giving USA show that Americans as a whole annually give away about 0.5 percent of their net worth. So, except for Buffett, society's top givers donate to others at only a tad higher rate than the population as a whole. That's, well, pathetic. And that's just counting top givers, not the super-rich who give away little or nothing.
Microsoft mogul Paul Allen, net worth $16 billion, gave away $53 million in 2006, according to Slate - one-third of 1 percent of his fortune. Software magnate Lawrence Ellison, net worth $20 billion, gave away $100 million - half of 1 percent. Pierre Omidyar, founder of eBay, net worth $7.7 billion, gave away $67 million - less than 1 percent. Nike tycoon Philip Knight, net worth $7.9 billion, gave away $105 million - slightly more
than 1 percent.
Donations of this sort, in the multimillion-dollar range, inevitably mean a lot to charities or schools, and of course it is certainly preferable that the super-rich give millions rather than nothing at all. But for those whose net worth soars into the billions, even $100 million is a pittance compared with what they have the means to give.
Gates, one of history's richest men, has given $26.2 billion to the Gates Foundation, according to a spokesperson, and for this he has been widely praised. Gates and his wife were two of Time's Persons of the Year in 2005, exalted in a cover story as grand philanthropists. Yet $26.2 billion is crumbs from the table compared to what Gates might give. Even after the donations, his net worth is about $53 billion, according to Forbes.
Converting to today's dollars, during his lifetime the industrialist Andrew Carnegie gave away $8 billion of his $10.3 billion net worth, or 78 percent, according to Carnegie Corp. figures.
Why do the super-rich hoard? Certainly not because they need money to spend. As economist Christopher Carroll of Johns Hopkins University points out in an upcoming paper, the super-rich save far more than they could ever spend, even with Dionysian indulgence. Gates' fortune must throw off, even by conservative estimations, about $6 million a day after taxes.
Carroll speculates that the super-rich won't give away money they know they will never use for two reasons: because they love money and because extreme wealth confers power. We know already that people who give their lives over to loving money surrender their humanity in the process. As for clout, Carroll quotes Howard Hughes: "Money is the measuring rod of power." Runaway wealth accumulation by zillionaires, combined with the rising share of national income claimed by the top 1 percent, often inspires calls to soak the rich. But I disagree. The magnificent productivity and innovation of the U.S. economy is fostered by the same market forces that cause big fortunes. This leaves us with one final question: What is the effect of wealth on the wealthy themselves? Psychologist Edward Diener of the University of Illinois interviewed members of the Forbes 400 and found them only slightly happier than the population as a whole.
Ebenezer Scrooge discovered that giving money away is life's most pleasurable act. Why do today's super-rich devote so little of their wealth to engaging in life's most pleasurable act?
Gregg Easterbrook is a fellow of the Brookings Institution and author of "The Progress Paradox" and a novel, "The Here and Now."
By GREGG EASTERBROOK Special to the Los Angeles Times
Published: Mar 25, 2007
There are hundreds of people in the United States with so much money that they will never be able to spend their net worth, no matter how many Picassos or mansions or personal jets they buy.
Last year, for the first time, everyone in the Forbes 400 index of the super-wealthy was a billionaire. Sales of 200-foot-plus yachts and other indulgences of extreme wealth are at record highs. Income for the top 1 percent of Americans has more than doubled in the past quarter of a century, while that of the bottom fifth barely budged. The rich, in short, are getting steadily richer, in absolute terms and compared with the rest of society.
Yet with the sainted exception of Warren Buffett and maybe Bill Gates, virtually all of them refuse to give any meaningful fraction of their wealth to the less fortunate - or even to give a decent fraction to such endeavors as art or medical research, which they would benefit from.
Consider the numbers (which are based on current estimates in the recent Slate 60 index of the year's leading philanthropic donors and the net-worth estimates in the Forbes 400). The 60 leading American donors gave away $51 billion in 2006, according to Slate. They were led by Buffett, whose spectacular $44-billion donation - mainly to the Bill & Melinda Gates Foundation, whose primary cause is health care in the developing world - was the largest gift anyone has ever given. These donors had an estimated combined net worth of $630 billion last year, meaning that they gave away 8 percent of their money, on average. Sounds magnanimous, until you consider that the Dow Jones industrial average rose 16 percent in 2006 - which suggests that, as a group, the leading donors contributed less than they gained.
Now subtract Buffett and his generous gift from the group, and the rest of them begin to look downright miserly, handing to others a mere $7 billion of a combined net worth of $584 billion - or slightly more than 1 percent. Numbers from the philanthropy watch organization Giving USA show that Americans as a whole annually give away about 0.5 percent of their net worth. So, except for Buffett, society's top givers donate to others at only a tad higher rate than the population as a whole. That's, well, pathetic. And that's just counting top givers, not the super-rich who give away little or nothing.
Microsoft mogul Paul Allen, net worth $16 billion, gave away $53 million in 2006, according to Slate - one-third of 1 percent of his fortune. Software magnate Lawrence Ellison, net worth $20 billion, gave away $100 million - half of 1 percent. Pierre Omidyar, founder of eBay, net worth $7.7 billion, gave away $67 million - less than 1 percent. Nike tycoon Philip Knight, net worth $7.9 billion, gave away $105 million - slightly more
than 1 percent.
Donations of this sort, in the multimillion-dollar range, inevitably mean a lot to charities or schools, and of course it is certainly preferable that the super-rich give millions rather than nothing at all. But for those whose net worth soars into the billions, even $100 million is a pittance compared with what they have the means to give.
Gates, one of history's richest men, has given $26.2 billion to the Gates Foundation, according to a spokesperson, and for this he has been widely praised. Gates and his wife were two of Time's Persons of the Year in 2005, exalted in a cover story as grand philanthropists. Yet $26.2 billion is crumbs from the table compared to what Gates might give. Even after the donations, his net worth is about $53 billion, according to Forbes.
Converting to today's dollars, during his lifetime the industrialist Andrew Carnegie gave away $8 billion of his $10.3 billion net worth, or 78 percent, according to Carnegie Corp. figures.
Why do the super-rich hoard? Certainly not because they need money to spend. As economist Christopher Carroll of Johns Hopkins University points out in an upcoming paper, the super-rich save far more than they could ever spend, even with Dionysian indulgence. Gates' fortune must throw off, even by conservative estimations, about $6 million a day after taxes.
Carroll speculates that the super-rich won't give away money they know they will never use for two reasons: because they love money and because extreme wealth confers power. We know already that people who give their lives over to loving money surrender their humanity in the process. As for clout, Carroll quotes Howard Hughes: "Money is the measuring rod of power." Runaway wealth accumulation by zillionaires, combined with the rising share of national income claimed by the top 1 percent, often inspires calls to soak the rich. But I disagree. The magnificent productivity and innovation of the U.S. economy is fostered by the same market forces that cause big fortunes. This leaves us with one final question: What is the effect of wealth on the wealthy themselves? Psychologist Edward Diener of the University of Illinois interviewed members of the Forbes 400 and found them only slightly happier than the population as a whole.
Ebenezer Scrooge discovered that giving money away is life's most pleasurable act. Why do today's super-rich devote so little of their wealth to engaging in life's most pleasurable act?
Gregg Easterbrook is a fellow of the Brookings Institution and author of "The Progress Paradox" and a novel, "The Here and Now."
Does Foundations Really Serve A Great Purpose?
Does Foundations Really Serve A Great Purpose?
Under current law, an estate owner can establish a private foundation while living or at death and any contributions made to a private foundation are tax deductible. Although highly regulated to stem and prevent "self-dealing" strategies, the tax benefits are indeed tempting.
The tax deduction allowed for contributions to a private foundation cannot exceed 30% of your adjusted gross income while living. On the other hand, there is no limit on the deduction your estate can make after your death.
Reduce Estate Taxes, Buy a Piece of Immortality, and Serve a Great Cause
Let's look at an example. Let's say a husband and wife has a $10,000,000 dollar estate. Today, they elect to establish a private foundation designed to benefit under privileged children and single mothers.
Of the $10,000,000, they take $4,000,000 and contribute it to the private foundation. As far as the IRS is concerned, their taxable estate is now only $6,000,000 and they've saved over $2,000,000 in estate taxes by this one simple maneuver.
The husband and wife placed their children as the directors of the foundation, of which they will draw annual salaries.
Each year, the foundation is required to distribute 5% of its assets to known charities. This give the donors and the children who run it great leverage and prestige in the community in which they reside.
Quintuple Tax Play
Again, let's look at another example of how to use a private foundation combined with some of the other strategies we've examined earlier in our site.
Let's say Bob and his wife who are now in there late 60's. Bob starting buy stock in his late 20's and was a buy and hold, valued-oriented investor. Today, their stock portfolio is valued at over $6,000,000. If they were to sell their shares, they would incur huge capital gains tax liability. If they elect to continue holding the shares until he and the wife pass away, estate taxes will consume over 55%.
To avoid the inevitable, Bob and his wife established a charitable remainder income trust, a tax free inheritance (insurance) trust and a private family foundation.
Bob and his wife donated the $6,000,000 of stock to the charitable remainder trust and as acting trustees, they liquidated the stock holding and incurred no capital gains taxes. The proceeds were invested in government paper, which earned approximately 7%. The charitable remainder trust paid Bob and his wife $420,000 annually.
As you may recall, assets donated to a charitable remainder trust eventually wind up in the possession of a charitable organization or foundation. Hence, at their death, the $6,000,000 dollars that remained went to the Bob Johnson Foundation, which he and his wife created long ago.
The foundation distributes 5% of it's income annually ($300,000), which leaves another $120,000 to pay for the foundation's expenses including salaries to the children who serve as directors.
The one drawback to this strategy lies in the fact that Bob's children stand to lose $3,000,000 dollars, assuming he and his wife held his stock instead of transferring it to the charitable trust.
To ensure that his children get their share, he used the Tax-Free Inheritance (insurance) trust to purchase a $3,000,000 million dollar Survivorship Life insurance plan on he and his wife. The deduction that Bob and his wife received for making the original contribution to the charitable trust is more than enough to cover the cost of the insurance premiums.
In Summary
Bob and his wife established a charitable trust and transferred the stock to avoid the capital gains taxes and estate taxes.
They established a private family foundation to serve as the eventual recipient of the charitable trust proceeds.
The foundation is run by his children/grandchildren at they are paid handsomely for doing so.
The children receive the death benefit from the tax free inheritance (insurance) trust 100% income and estate tax free.
And the foundation distributes 5% of its assets to charitable causes it supports.
Under current law, an estate owner can establish a private foundation while living or at death and any contributions made to a private foundation are tax deductible. Although highly regulated to stem and prevent "self-dealing" strategies, the tax benefits are indeed tempting.
The tax deduction allowed for contributions to a private foundation cannot exceed 30% of your adjusted gross income while living. On the other hand, there is no limit on the deduction your estate can make after your death.
Reduce Estate Taxes, Buy a Piece of Immortality, and Serve a Great Cause
Let's look at an example. Let's say a husband and wife has a $10,000,000 dollar estate. Today, they elect to establish a private foundation designed to benefit under privileged children and single mothers.
Of the $10,000,000, they take $4,000,000 and contribute it to the private foundation. As far as the IRS is concerned, their taxable estate is now only $6,000,000 and they've saved over $2,000,000 in estate taxes by this one simple maneuver.
The husband and wife placed their children as the directors of the foundation, of which they will draw annual salaries.
Each year, the foundation is required to distribute 5% of its assets to known charities. This give the donors and the children who run it great leverage and prestige in the community in which they reside.
Quintuple Tax Play
Again, let's look at another example of how to use a private foundation combined with some of the other strategies we've examined earlier in our site.
Let's say Bob and his wife who are now in there late 60's. Bob starting buy stock in his late 20's and was a buy and hold, valued-oriented investor. Today, their stock portfolio is valued at over $6,000,000. If they were to sell their shares, they would incur huge capital gains tax liability. If they elect to continue holding the shares until he and the wife pass away, estate taxes will consume over 55%.
To avoid the inevitable, Bob and his wife established a charitable remainder income trust, a tax free inheritance (insurance) trust and a private family foundation.
Bob and his wife donated the $6,000,000 of stock to the charitable remainder trust and as acting trustees, they liquidated the stock holding and incurred no capital gains taxes. The proceeds were invested in government paper, which earned approximately 7%. The charitable remainder trust paid Bob and his wife $420,000 annually.
As you may recall, assets donated to a charitable remainder trust eventually wind up in the possession of a charitable organization or foundation. Hence, at their death, the $6,000,000 dollars that remained went to the Bob Johnson Foundation, which he and his wife created long ago.
The foundation distributes 5% of it's income annually ($300,000), which leaves another $120,000 to pay for the foundation's expenses including salaries to the children who serve as directors.
The one drawback to this strategy lies in the fact that Bob's children stand to lose $3,000,000 dollars, assuming he and his wife held his stock instead of transferring it to the charitable trust.
To ensure that his children get their share, he used the Tax-Free Inheritance (insurance) trust to purchase a $3,000,000 million dollar Survivorship Life insurance plan on he and his wife. The deduction that Bob and his wife received for making the original contribution to the charitable trust is more than enough to cover the cost of the insurance premiums.
In Summary
Bob and his wife established a charitable trust and transferred the stock to avoid the capital gains taxes and estate taxes.
They established a private family foundation to serve as the eventual recipient of the charitable trust proceeds.
The foundation is run by his children/grandchildren at they are paid handsomely for doing so.
The children receive the death benefit from the tax free inheritance (insurance) trust 100% income and estate tax free.
And the foundation distributes 5% of its assets to charitable causes it supports.
Secret Lives of the Super Rich
According to the DSTG, the professional association for German tax experts, tax evasion has become a national pastime in Germany. The head of the association, Dieter Ondracek, estimates that the amount of money involved in annual tax evasion reaches 30 million euro ($43.7 million).
Secret Lives of the Super Rich
By John Goetz, Conny Neumann and Barbara Schmid
Prosecutors and tax investigators are once again going after millionaires who have hidden their assets in foundations with Lichtenstein's LGT Treuhand in what has become the biggest tax-evasion scandal in German history. After years of hide-and-seek, many are relieved to have been discovered.
DPA
Liechtenstein's LGT Bank: "Simply knowing that they are rich gives them the greatest pleasure."
The investigators were more discreet this time -- no cameras, no flurry of flashbulbs, no live broadcasts from the scene of the crime. In fact, authorities were anxious to avoid repeating the sort of spectacle that had unfolded when officials searched the home of Deutsche Post CEO Klaus Zumwinkel in Cologne back in February.
There were no streets being sealed off in the early morning hours last week, nor were there any flashing lights or even officers in uniform. Instead, about a dozen men and women arrived in inconspicuous cars, rang doorbells during normal business hours and disappeared into several Munich villas and commercial buildings without even attracting the neighbors' attention.
For their latest wave of house searches, prosecutors and tax investigators from the western German city of Bochum have set their sights on a handful of Munich millionaires. Authorities believed that the would-be suspects, like Zumwinkel, could be guilty of tax evasion in Germany, illegally parking their money with foundations operated by the LGT Treuhand bank in Liechtenstein.
The investigators' suspicions are based on the data on DVDs that Heinrich Kieber, a former LGT employee, sold to the BND, Germany's foreign intelligence service, for €4.6 million ($7.1 million) in mid-2007. The damaging collection of data contains up to 900 files with information about the hidden assets of German investors.
An Investment with Golden Returns
Including the Munich finds, there were close to 200 cases against LGT customers noted on the Kieber DVDs. More than 200 tax evaders have turned themselves in, as have another 330 people who erroneously believed that they were on the list. Purchasing the DVDs turned out to be a worthwhile investment for the government, with tax authorities already collecting up to €250 million ($390 million) in advance payments.
In their latest series of raids in Munich, investigators focused on several "especially hard nuts to crack." The names on the list are not part of the Bavarian capital's flashy jet set, but instead belong to the more dignified, inconspicuous old-money aristocracy. Those who don't cooperate and confess could face tough penalties, possibly even jail time. Prosecutors plan to take drastic action in the case.
A few of the suspects attempted to avert disaster at the last minute. One extremely rich Munich resident allegedly turned himself in. He is believed to have hidden at least €1 million in one of LGT's foundations.
But the man was out of luck. Tax authorities apparently received his amended tax return exactly four minutes too late. At precisely the time recorded on the tax office's fax machine, investigators were already inside his Munich mansion.
One Hamburg heir, who is also believed to have stashed away millions in a Liechtenstein foundation, apparently submitted his amended tax return in time. From faraway Mallorca, where he officially resides, he can now breathe a sigh of relief as German investigators continue their crusade.
The owner of a luxury hotel in one of Bavaria's most appealing vacation regions was also quick to repent. In time to avoid prosecution, the man confessed that he had used a Liechtenstein foundation to conceal millions of his assets from German tax authorities.
DPA
Bavarian privacy commissioner Karl Michael Betzl: One of the southern German state's most respected officials has become embroiled in the country's biggest-ever tax evasion scandal.
But Karl Michael Betzl, the Bavarian government's commissioner for privacy protection, can expect to face a more lengthy investigation. Betzl, one of the most respected senior government officials in Bavaria, is alleged to have hidden about €700,000 in assets in a family foundation under the LGT Treuhand umbrella. State prosecutors in the western German city of Bochum in North Rhine-Westphalia have since been forced to transfer the case to their Bavarian counterparts in Munich. Betzl, who has been temporarily suspended from his position, also stands accused of being an accessory to social security insurance fraud.
When they searched Betzl's residence, authorities found large numbers of envelopes, each containing between €300 and €500 in cash. Betzl apparently claimed that he was holding onto the cash for a young woman living on government assistance. But the woman, he added, was living with a wealthy acquaintance and didn't need the money at the moment. Betzl told Alois Glück, the president of the Bavarian state parliament, that he was innocent and would clear all the accusations against him. He also claims that he no longer has the alleged €700,000.
Moving Billions to Liechtenstein
For the Bochum investigators, the suspects' stories paint an odd picture of the habits of wealthy Germans. The smallest fish among them have "only" taken €150,000 across the border, while a handful of the ultra-rich have stashed away up to €35 million in Liechtenstein foundations. The biggest fish caught in the investigations conducted to date is a northern German textile manufacturer who allegedly owes €800 million in back taxes. To owe that much, he would have to have moved several billion euros to Liechtenstein.
Some LGT customers seem practically relieved that the game of hide-and-seek has finally come to an end. Many felt hounded by the thought of their illegal millions. Munich attorney Klaus Höchstetter says that some of his clients have even suffered from sleeplessness and cardiac arrhythmia as a result of their family secrets.
The constant fear of being discovered has settled over their lives like a dark shadow, preventing them from enjoying their expensive cars, luxury vacations and lakeside villas. Many consider their situation to be so hopeless that they have not touched fortunes that their grandfathers once parked in a Liechtenstein foundation for decades. "Many don't even know how much they have in the accounts now. They say to themselves: Let my children worry about it," says Höchstetter.
Some of the tax evaders are so relieved that they have literally welcomed investigators with open arms. In March, when Bochum Public Prosecutor Margrit Lichtinghagen paid a visit to a wealthy Munich resident who had hidden roughly €1 million at LGT, he served her coffee and cake before opening his file cabinets. "I am honored that you are coming to me personally," the man confessed, "now I will be able to sleep well again."
Investigators have been as surprised by the tax evaders' bad conscience as they have been by the suspects' insatiable greed. During the course of the LGT investigations, Munich tax expert Jan Olaf Leisner met clients who, loath to buy a briefcase, carried the account statements for their Liechtenstein millions into his office in shopping bags from the discount supermarket Aldi. Apparently they felt file folders would have been too expensive. Others had been living in depressing apartment buildings on the city's outskirts for years, with plastic chairs on their balconies and threadbare furniture in their small, poorly ventilated living rooms. One tax evader, who is believed to have several million euros hidden away in Vaduz accounts, even collects German welfare payments for the long-term unemployed.
One of the first things that struck investigators about Zumwinkel, the former CEO of Deutsche Post, was his frugality. A multimillionaire, he lived in a large mansion, and yet when officials searched the house they encountered threadbare carpets, dilapidated cabinets and a neglected swimming pool. Bonn attorney Karsten Randt is one of a handful of lawyers representing clients in the LGT case. He refers to their behavior as the Scrooge McDuck Principle. "Simply knowing that they are rich gives them the greatest pleasure," he says.
But it is a pleasure that few are eager to share, not even with their own families. One of Randt's clients was a parsimonious mid-level civil servant who showed up in his office one day with securities worth €500,000 ($775,000). The man told Randt that he was plagued by his bad conscience and wanted to turn himself in for tax evasion. He had one problem, though: He was afraid to go home alone. For years his wife, who had no knowledge of his financial dealings, had been forced to live in a small rented apartment in the Rhineland region. The man had even denied his wife the money for a cheap vacation. The attorney had to help the man confess his secret fortune to his wife. "But his fears of divorce," says Randt, never materialized.
Stashing Unclaimed Cash in Socks and Panties
In the wake of the Kieber revelations, an 80-year-old man from Bavaria, fearing that he would lose his fortune, hid his millions in his socks and made countless trips to bring them back to Germany from Liechtenstein.
Meanwhile, the panic among tax evaders is driving up legal fees. According to one lawyer, tax evaders are willing to pay even the most astronomical of fees to avoid trouble with the tax authorities. After the Bochum investigators had conducted their first searches, the number of clients at respected law firms specializing in tax issues began growing week after week. "We are earning a living on the basis of people having believed that they would never be caught," says one attorney.
TAX EVASION IN GERMANYAmount
According to the DSTG, the professional association for German tax experts, tax evasion has become a national pastime in Germany. The head of the association, Dieter Ondracek, estimates that the amount of money involved in annual tax evasion reaches 30 million euro ($43.7 million).
Foundations in Liechtenstein
Unlike in Germany, where foundations serve a specific not-for-profit purpose , the law in Liechtenstein allows the founders of a foundation to benefit themselves and their dependents. Tax rates for foundations in Liechtenstein are also very low and are exempt from property, earned income and profit taxes. Only an annual capital tax needs to be paid, which amounts to 0.1 percent of the paid capital or 1,000 Swiss francs (620 euro/$904), whichever is greater. For capital valued between 2 million Swiss francs and 10 million Swiss francs, the tax rate is 0.075 percent. Capital valued above 10 million Swiss francs is taxed at a rate of 0.05 percent.
Cover-Ups
German tax authorities have no problem with interest made in Liechtenstein as long as it is declared in tax filings. To keep the money hidden from German financial officials , according to the DSTG, many people start foundations using a name that doesn't identify the founder and entrust the foundation's management to a trustee. According to DSTG estimates, within Liechtenstein's 160 sq km, there are roughly 80,000 letterbox companies , many of which share an official address with many foundations. To hide even more tracks from the tax investigators, the foundation's capital can be deposited in a Swiss bank account.
Bank Secrecy
Unlike Germany, Switzerland and especially Liechtenstein have very strict bank secrecy . This is supposedly part of Liechtenstein's "basic attitude and tradition," as the country's Web site says. Financial institutions in Liechtenstein strictly reject all requests for account information even from German tax investigators.
The panic is justified. The rule of thumb for anyone who doesn't cooperate with the investigators is one year in prison for each million in unpaid taxes. But even without a prison sentence, many could still face financial ruin. In the interest of simplicity, investigators have developed a flat-rate table to compute tax debts. A fine of €2 million ($3.1 million) is imposed funor each million in evaded taxes, bringing the total amount due to €3 million ($4.65 million). Tax evaders who turn themselves in voluntarily and those who submit extensive confessions are given a discount. In many cases, tax evaders stand to lose one-third or more of assets parked illegally abroad.
A few of the tax evaders named on the Kieber DVDs are no longer in a position to pay such large amounts. They invested in a special product that LGT Treuhand had offered: black funds, which acquired the name because no financial statements are published. The customers were led to believe that these investments were especially safe. Accordingly, the fees were high.
But under German law, such funds are subject to especially high punitive taxes that can amount to up to 90 percent of the invested capital. Almost all of the LGT customers now known to authorities invested in black funds and find themselves faced with a 90-percent tax, on top of the double penalty. Many have no idea how they can come up with the money to pay the fines.
The more the details become known, the greater is the astonishment among experts over how amateurishly these assets were managed in the Liechtenstein foundations. "Their main concern was to hide the money from the tax authorities. Nothing else mattered," says attorney Randt. According to Randt, investors no longer cared what the bank was doing with their money.
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The tax evaders would only occasionally contact their bankers in Liechtenstein, and when they did they were required to state a password, like "Alpenglow" or "Pussycat." Fearing that they would forget their passwords, most of the owners of foundation shares carefully entered them into their address books -- to the delight of investigators.
Caution was of little use for one especially nervous Bavarian retiree. Fearing discovery, she had her Liechtenstein account registered in a friend's name. After that, she paid no further attention to her hidden assets. But when she decided to turn herself in, she found that both her account information and her money had become inaccessible. The friend refused to provide the information to tax authorities, claiming that it was her money. It will be difficult to prove her wrong.
A well-to-do Munich pharmacist considered herself above suspicion. A few years ago, the 65-year-old had inherited about €2.75 million from her husband and deposited it abroad. Whenever she needed money, she would take a train to the bank, make a withdrawal and hide the cash in her panties. But customs investigators from Germany's southern Allgäu region became suspicious. While traveling on the Eurocity 93 train between the two Bavarian towns of Lindau and Memmingen, she was asked to remove everything she was carrying on her person -- including the €150,000 she had been smuggling.
Insurance Packages and Office 'Mock Dawn Raids'
Although it has long been clear that the Bochum investigations have already mushroomed into Germany's biggest tax scandal ever, the number of possible suspects is apparently much larger than anticipated. "Private companies are getting ready," says Roswitha Müller-Piepenkötter, the justice minister for the state of North Rhine-Westphalia. Some have their employees play the board game "Razzia" to prepare them for visits by tax inspectors.
Linklaters, a high-end Düsseldorf law firm, even offers its clients "mock dawn raids." "Agitated employees are quick to make mistakes," says attorney Anne Federle, explaining that there is growing interest for programs that offer professional preparation for unannounced government raids.
Roland, a German insurance company, even offers a "Detention While Awaiting Trial Package," including per diem and a pickup service for the company limousine. The package also includes a good defense attorney -- and high blood pressure tablets.
Translated from the German by Christopher Sultan.
Secret Lives of the Super Rich
By John Goetz, Conny Neumann and Barbara Schmid
Prosecutors and tax investigators are once again going after millionaires who have hidden their assets in foundations with Lichtenstein's LGT Treuhand in what has become the biggest tax-evasion scandal in German history. After years of hide-and-seek, many are relieved to have been discovered.
DPA
Liechtenstein's LGT Bank: "Simply knowing that they are rich gives them the greatest pleasure."
The investigators were more discreet this time -- no cameras, no flurry of flashbulbs, no live broadcasts from the scene of the crime. In fact, authorities were anxious to avoid repeating the sort of spectacle that had unfolded when officials searched the home of Deutsche Post CEO Klaus Zumwinkel in Cologne back in February.
There were no streets being sealed off in the early morning hours last week, nor were there any flashing lights or even officers in uniform. Instead, about a dozen men and women arrived in inconspicuous cars, rang doorbells during normal business hours and disappeared into several Munich villas and commercial buildings without even attracting the neighbors' attention.
For their latest wave of house searches, prosecutors and tax investigators from the western German city of Bochum have set their sights on a handful of Munich millionaires. Authorities believed that the would-be suspects, like Zumwinkel, could be guilty of tax evasion in Germany, illegally parking their money with foundations operated by the LGT Treuhand bank in Liechtenstein.
The investigators' suspicions are based on the data on DVDs that Heinrich Kieber, a former LGT employee, sold to the BND, Germany's foreign intelligence service, for €4.6 million ($7.1 million) in mid-2007. The damaging collection of data contains up to 900 files with information about the hidden assets of German investors.
An Investment with Golden Returns
Including the Munich finds, there were close to 200 cases against LGT customers noted on the Kieber DVDs. More than 200 tax evaders have turned themselves in, as have another 330 people who erroneously believed that they were on the list. Purchasing the DVDs turned out to be a worthwhile investment for the government, with tax authorities already collecting up to €250 million ($390 million) in advance payments.
In their latest series of raids in Munich, investigators focused on several "especially hard nuts to crack." The names on the list are not part of the Bavarian capital's flashy jet set, but instead belong to the more dignified, inconspicuous old-money aristocracy. Those who don't cooperate and confess could face tough penalties, possibly even jail time. Prosecutors plan to take drastic action in the case.
A few of the suspects attempted to avert disaster at the last minute. One extremely rich Munich resident allegedly turned himself in. He is believed to have hidden at least €1 million in one of LGT's foundations.
But the man was out of luck. Tax authorities apparently received his amended tax return exactly four minutes too late. At precisely the time recorded on the tax office's fax machine, investigators were already inside his Munich mansion.
One Hamburg heir, who is also believed to have stashed away millions in a Liechtenstein foundation, apparently submitted his amended tax return in time. From faraway Mallorca, where he officially resides, he can now breathe a sigh of relief as German investigators continue their crusade.
The owner of a luxury hotel in one of Bavaria's most appealing vacation regions was also quick to repent. In time to avoid prosecution, the man confessed that he had used a Liechtenstein foundation to conceal millions of his assets from German tax authorities.
DPA
Bavarian privacy commissioner Karl Michael Betzl: One of the southern German state's most respected officials has become embroiled in the country's biggest-ever tax evasion scandal.
But Karl Michael Betzl, the Bavarian government's commissioner for privacy protection, can expect to face a more lengthy investigation. Betzl, one of the most respected senior government officials in Bavaria, is alleged to have hidden about €700,000 in assets in a family foundation under the LGT Treuhand umbrella. State prosecutors in the western German city of Bochum in North Rhine-Westphalia have since been forced to transfer the case to their Bavarian counterparts in Munich. Betzl, who has been temporarily suspended from his position, also stands accused of being an accessory to social security insurance fraud.
When they searched Betzl's residence, authorities found large numbers of envelopes, each containing between €300 and €500 in cash. Betzl apparently claimed that he was holding onto the cash for a young woman living on government assistance. But the woman, he added, was living with a wealthy acquaintance and didn't need the money at the moment. Betzl told Alois Glück, the president of the Bavarian state parliament, that he was innocent and would clear all the accusations against him. He also claims that he no longer has the alleged €700,000.
Moving Billions to Liechtenstein
For the Bochum investigators, the suspects' stories paint an odd picture of the habits of wealthy Germans. The smallest fish among them have "only" taken €150,000 across the border, while a handful of the ultra-rich have stashed away up to €35 million in Liechtenstein foundations. The biggest fish caught in the investigations conducted to date is a northern German textile manufacturer who allegedly owes €800 million in back taxes. To owe that much, he would have to have moved several billion euros to Liechtenstein.
Some LGT customers seem practically relieved that the game of hide-and-seek has finally come to an end. Many felt hounded by the thought of their illegal millions. Munich attorney Klaus Höchstetter says that some of his clients have even suffered from sleeplessness and cardiac arrhythmia as a result of their family secrets.
The constant fear of being discovered has settled over their lives like a dark shadow, preventing them from enjoying their expensive cars, luxury vacations and lakeside villas. Many consider their situation to be so hopeless that they have not touched fortunes that their grandfathers once parked in a Liechtenstein foundation for decades. "Many don't even know how much they have in the accounts now. They say to themselves: Let my children worry about it," says Höchstetter.
Some of the tax evaders are so relieved that they have literally welcomed investigators with open arms. In March, when Bochum Public Prosecutor Margrit Lichtinghagen paid a visit to a wealthy Munich resident who had hidden roughly €1 million at LGT, he served her coffee and cake before opening his file cabinets. "I am honored that you are coming to me personally," the man confessed, "now I will be able to sleep well again."
Investigators have been as surprised by the tax evaders' bad conscience as they have been by the suspects' insatiable greed. During the course of the LGT investigations, Munich tax expert Jan Olaf Leisner met clients who, loath to buy a briefcase, carried the account statements for their Liechtenstein millions into his office in shopping bags from the discount supermarket Aldi. Apparently they felt file folders would have been too expensive. Others had been living in depressing apartment buildings on the city's outskirts for years, with plastic chairs on their balconies and threadbare furniture in their small, poorly ventilated living rooms. One tax evader, who is believed to have several million euros hidden away in Vaduz accounts, even collects German welfare payments for the long-term unemployed.
One of the first things that struck investigators about Zumwinkel, the former CEO of Deutsche Post, was his frugality. A multimillionaire, he lived in a large mansion, and yet when officials searched the house they encountered threadbare carpets, dilapidated cabinets and a neglected swimming pool. Bonn attorney Karsten Randt is one of a handful of lawyers representing clients in the LGT case. He refers to their behavior as the Scrooge McDuck Principle. "Simply knowing that they are rich gives them the greatest pleasure," he says.
But it is a pleasure that few are eager to share, not even with their own families. One of Randt's clients was a parsimonious mid-level civil servant who showed up in his office one day with securities worth €500,000 ($775,000). The man told Randt that he was plagued by his bad conscience and wanted to turn himself in for tax evasion. He had one problem, though: He was afraid to go home alone. For years his wife, who had no knowledge of his financial dealings, had been forced to live in a small rented apartment in the Rhineland region. The man had even denied his wife the money for a cheap vacation. The attorney had to help the man confess his secret fortune to his wife. "But his fears of divorce," says Randt, never materialized.
Stashing Unclaimed Cash in Socks and Panties
In the wake of the Kieber revelations, an 80-year-old man from Bavaria, fearing that he would lose his fortune, hid his millions in his socks and made countless trips to bring them back to Germany from Liechtenstein.
Meanwhile, the panic among tax evaders is driving up legal fees. According to one lawyer, tax evaders are willing to pay even the most astronomical of fees to avoid trouble with the tax authorities. After the Bochum investigators had conducted their first searches, the number of clients at respected law firms specializing in tax issues began growing week after week. "We are earning a living on the basis of people having believed that they would never be caught," says one attorney.
TAX EVASION IN GERMANYAmount
According to the DSTG, the professional association for German tax experts, tax evasion has become a national pastime in Germany. The head of the association, Dieter Ondracek, estimates that the amount of money involved in annual tax evasion reaches 30 million euro ($43.7 million).
Foundations in Liechtenstein
Unlike in Germany, where foundations serve a specific not-for-profit purpose , the law in Liechtenstein allows the founders of a foundation to benefit themselves and their dependents. Tax rates for foundations in Liechtenstein are also very low and are exempt from property, earned income and profit taxes. Only an annual capital tax needs to be paid, which amounts to 0.1 percent of the paid capital or 1,000 Swiss francs (620 euro/$904), whichever is greater. For capital valued between 2 million Swiss francs and 10 million Swiss francs, the tax rate is 0.075 percent. Capital valued above 10 million Swiss francs is taxed at a rate of 0.05 percent.
Cover-Ups
German tax authorities have no problem with interest made in Liechtenstein as long as it is declared in tax filings. To keep the money hidden from German financial officials , according to the DSTG, many people start foundations using a name that doesn't identify the founder and entrust the foundation's management to a trustee. According to DSTG estimates, within Liechtenstein's 160 sq km, there are roughly 80,000 letterbox companies , many of which share an official address with many foundations. To hide even more tracks from the tax investigators, the foundation's capital can be deposited in a Swiss bank account.
Bank Secrecy
Unlike Germany, Switzerland and especially Liechtenstein have very strict bank secrecy . This is supposedly part of Liechtenstein's "basic attitude and tradition," as the country's Web site says. Financial institutions in Liechtenstein strictly reject all requests for account information even from German tax investigators.
The panic is justified. The rule of thumb for anyone who doesn't cooperate with the investigators is one year in prison for each million in unpaid taxes. But even without a prison sentence, many could still face financial ruin. In the interest of simplicity, investigators have developed a flat-rate table to compute tax debts. A fine of €2 million ($3.1 million) is imposed funor each million in evaded taxes, bringing the total amount due to €3 million ($4.65 million). Tax evaders who turn themselves in voluntarily and those who submit extensive confessions are given a discount. In many cases, tax evaders stand to lose one-third or more of assets parked illegally abroad.
A few of the tax evaders named on the Kieber DVDs are no longer in a position to pay such large amounts. They invested in a special product that LGT Treuhand had offered: black funds, which acquired the name because no financial statements are published. The customers were led to believe that these investments were especially safe. Accordingly, the fees were high.
But under German law, such funds are subject to especially high punitive taxes that can amount to up to 90 percent of the invested capital. Almost all of the LGT customers now known to authorities invested in black funds and find themselves faced with a 90-percent tax, on top of the double penalty. Many have no idea how they can come up with the money to pay the fines.
The more the details become known, the greater is the astonishment among experts over how amateurishly these assets were managed in the Liechtenstein foundations. "Their main concern was to hide the money from the tax authorities. Nothing else mattered," says attorney Randt. According to Randt, investors no longer cared what the bank was doing with their money.
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The tax evaders would only occasionally contact their bankers in Liechtenstein, and when they did they were required to state a password, like "Alpenglow" or "Pussycat." Fearing that they would forget their passwords, most of the owners of foundation shares carefully entered them into their address books -- to the delight of investigators.
Caution was of little use for one especially nervous Bavarian retiree. Fearing discovery, she had her Liechtenstein account registered in a friend's name. After that, she paid no further attention to her hidden assets. But when she decided to turn herself in, she found that both her account information and her money had become inaccessible. The friend refused to provide the information to tax authorities, claiming that it was her money. It will be difficult to prove her wrong.
A well-to-do Munich pharmacist considered herself above suspicion. A few years ago, the 65-year-old had inherited about €2.75 million from her husband and deposited it abroad. Whenever she needed money, she would take a train to the bank, make a withdrawal and hide the cash in her panties. But customs investigators from Germany's southern Allgäu region became suspicious. While traveling on the Eurocity 93 train between the two Bavarian towns of Lindau and Memmingen, she was asked to remove everything she was carrying on her person -- including the €150,000 she had been smuggling.
Insurance Packages and Office 'Mock Dawn Raids'
Although it has long been clear that the Bochum investigations have already mushroomed into Germany's biggest tax scandal ever, the number of possible suspects is apparently much larger than anticipated. "Private companies are getting ready," says Roswitha Müller-Piepenkötter, the justice minister for the state of North Rhine-Westphalia. Some have their employees play the board game "Razzia" to prepare them for visits by tax inspectors.
Linklaters, a high-end Düsseldorf law firm, even offers its clients "mock dawn raids." "Agitated employees are quick to make mistakes," says attorney Anne Federle, explaining that there is growing interest for programs that offer professional preparation for unannounced government raids.
Roland, a German insurance company, even offers a "Detention While Awaiting Trial Package," including per diem and a pickup service for the company limousine. The package also includes a good defense attorney -- and high blood pressure tablets.
Translated from the German by Christopher Sultan.
"We don't pay taxes. Only the little people pay taxes."
"We don't pay taxes. Only the little people pay taxes."
By Joseph Horgan, Project Director TJN-USA
For most of us "little people," we can be sure of two things: Death and taxes. For Leona Helmsley and the wealthiest few, death is the only sure thing. Helmsley's death this past week reminded us of her conviction for evading $4 million in taxes. And the infamous quote.1
The trial also increased the statures of then US Attorney Rudy Giuliani, who prosecuted the case, and Judge Walker, whose cousin, President George Hebert Walker Bush, would shortly name him to the Federal Appeals Court.
Compare the Helmsleys' evasion of $4 million to the $2 billion in legally unpaid taxes of 25 hedge fund managers (an average of $80 million each). Rather than pay 35% in income tax, they only paid 15% because they called their income "capital gains." That's putting lipstick on a pig, then claiming her as dependent.
Or, compare the Helmsleys' evasion of $4 million to the billions legally evaded by corporations in 2006. For example, Pharma companies Pfizer, Lily and Merck set aside, as a percentage of reported profits 2% ($233 million), 6% ($198 million) and 19% ($1.2 billion), respectively, for their tax payments to the United States treasury, significantly less than the 35% tax rate ($4.55 billion, $1.19 billion and $2.17 billion, respectively) that they should have paid.
Or, compare the Helmsleys' tax evasion of $4 million to the conservatively estimated $100 billion hidden in some 70 tax haven jurisdictions, each year by dozens of corporations, some wealthy individuals, terrorists, drug dealers, human traffickers, and their ilk.
Taxes are price we pay for a civil society. They pay for important programs like national defense, Medicare, Social Security, roads, bridges, and other basic infrastructure that makes for a civil society. We need to enforce our tax laws. We also need to encourage tax havens to provide transparency and allow investigations of tax evasion and illegally obtained wealth in their jurisdictions. And, we need to have a national discussion on the fairness of the top half of one percent paying less, as a percentage of their income, than the bottom 90%.
The harmful effects of tax avoidance and evasion and the lack of transparency in tax havens, need to become major talking points for candidate Giuliani and his fellow Presidential candidates, a primary issue in all debates, and a cause for vigorous enforcement, regardless of who wins in November, 2008.
--------------------------------------------------------------------------------
[1] Attributed to Leona Helmsley by her former housekeeper in Helmsley's trial for tax evasion.
By Joseph Horgan, Project Director TJN-USA
For most of us "little people," we can be sure of two things: Death and taxes. For Leona Helmsley and the wealthiest few, death is the only sure thing. Helmsley's death this past week reminded us of her conviction for evading $4 million in taxes. And the infamous quote.1
The trial also increased the statures of then US Attorney Rudy Giuliani, who prosecuted the case, and Judge Walker, whose cousin, President George Hebert Walker Bush, would shortly name him to the Federal Appeals Court.
Compare the Helmsleys' evasion of $4 million to the $2 billion in legally unpaid taxes of 25 hedge fund managers (an average of $80 million each). Rather than pay 35% in income tax, they only paid 15% because they called their income "capital gains." That's putting lipstick on a pig, then claiming her as dependent.
Or, compare the Helmsleys' evasion of $4 million to the billions legally evaded by corporations in 2006. For example, Pharma companies Pfizer, Lily and Merck set aside, as a percentage of reported profits 2% ($233 million), 6% ($198 million) and 19% ($1.2 billion), respectively, for their tax payments to the United States treasury, significantly less than the 35% tax rate ($4.55 billion, $1.19 billion and $2.17 billion, respectively) that they should have paid.
Or, compare the Helmsleys' tax evasion of $4 million to the conservatively estimated $100 billion hidden in some 70 tax haven jurisdictions, each year by dozens of corporations, some wealthy individuals, terrorists, drug dealers, human traffickers, and their ilk.
Taxes are price we pay for a civil society. They pay for important programs like national defense, Medicare, Social Security, roads, bridges, and other basic infrastructure that makes for a civil society. We need to enforce our tax laws. We also need to encourage tax havens to provide transparency and allow investigations of tax evasion and illegally obtained wealth in their jurisdictions. And, we need to have a national discussion on the fairness of the top half of one percent paying less, as a percentage of their income, than the bottom 90%.
The harmful effects of tax avoidance and evasion and the lack of transparency in tax havens, need to become major talking points for candidate Giuliani and his fellow Presidential candidates, a primary issue in all debates, and a cause for vigorous enforcement, regardless of who wins in November, 2008.
--------------------------------------------------------------------------------
[1] Attributed to Leona Helmsley by her former housekeeper in Helmsley's trial for tax evasion.
Tax dodger Bono doesn't deserve Constitution Center "Liberty Medal"
Tax dodger Bono doesn't deserve Constitution Center "Liberty Medal"
By Lucy Komisar
Co-chair TJN-USA
Rock star tax dodger Bono (Paul Hewson) and his anti-African-poverty organization last week were given the "Liberty Medal" by The National Constitution Center in Philadelphia, a nonprofit organization established by Congress in 1988 through the Constitution Heritage Act. The award to Bono was extremely inappropriate.
The Center is dedicated to increasing awareness about the Constitution and its relevance in Americans' daily lives. According to the Center's press release, the Liberty Medal reflects the values of the U.S. Constitution - a belief in justice, fairness, self-governance, and a balance between individual rights and communal responsibility.
It is an insult to the Constitution and its values to award a medal to someone who
* Ignores his communal responsibility in his own country to pay his taxes.
* By dishonoring national tax laws and participating in the international tax evasion system dishonors the US Constitution, which in 1913 was amended to provide for the federal income tax.
(The 16th amendment: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.")
Center President and CEO Joseph M. Torsella said at the medal ceremony Sept. 27, "We honor Bono and DATA for leading an urgent conversation, challenging the world's richest nations to do better by Africa, and challenging African nations to do better by their own people. And we honor the way the great conversation about human liberty connects us all, across places and times."
Bono is getting $100,000 which he will donate to his organization, DATA (Debt, AIDS, Trade, Africa). Before you marvel at his generosity, think about the fact that
* Bono participates in the world-wide offshore tax evasion system that is to a large extent responsible for the poverty of Africa. The African Union says tax dodging by foreign companies costs it $150 billion a year - three times what it receives in aid.
The Irish Bono ran his music publishing company in Ireland, where he and his partners took advantage of a law that exempted musicians and artists from taxes on royalties. To dodge taxes on non-royalty income, Bono's interests had the help of offshore nominee directors.
The Irish royalty exemption was begun to aid and reward creative artists, in hopes of encouraging the struggling kind, not to further enrich mega-millionaires like Bono. Last year, the law was changed. From 2007, artists who earn more than $625,450 must pay tax on half their creative income. It hardly seems a harsh measure.
Bono's Dublin company earned $110 million in 2005. Taking profits through the company rather than individually, Bono would have had to pay only 12.5 percent corporate tax, a rate still below that of the local bus conductor or plumber or school teacher.
But that apparently was too much for the man who has homes on the Irish Coast and in the South of France and New York City. So, last year, Bono "moved" the registration of his business to the Netherlands, where it will pay about 5 percent tax on royalties.
Center President and CEO Joseph M. TorsellaThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it ought to consider the inappropriateness of this award. So should Senior Director of Public Relations Denise Venuti FreeThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it and Public Relations Manager Ashley BerkeThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it . The Center's phone numbers are (215) 409-6600 and toll free (866) 917-1787.
Letters to The Independent, an Irish newspaper
Taxing times for Bono
U2 frontman should cop on
Sunday November 25 2007
Sir -- Bono's bizarre predicament was on embarrassing display in Cork last Friday when he sought to defend the decision to move the most profitable part of U2's business out of Ireland to avoid tax after participating in a meeting about tackling world hunger. Mind you, it was more like the theatre of the absurd as the "anti-poverty campaigner" emerged from a meeting of Ireland's Hunger Task Force to face journalists' questions about off-shore tax avoidance, when such activities on a global basis have such a devastating effect on the lives of the world's poor.
Indeed, would millions be dying every year of hunger and preventable diseases if tax havens used by the very rich, including Bono and U2, did not exist? The Tax Justice Network has estimated that the amount of funds held by wealthy individuals in tax havens could generate a staggering $255 billion dollars in additional tax revenue annually -- enough alone to finance the Millennium Development Goals -- which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education by 2015. That raises a very important question: will the Task Force of which Bono is now a member address how tax havens undermine efforts to fund the life-saving needs of the world's poorest people in preventing hunger?
More specifically, how hundreds of billions are siphoned out of government coffers every year by very rich individuals and multi-national companies using tax havens to avoid tax?
This is especially serious in Africa, where the African Union has estimated that as much as $150bn is lost every year through this form of fiscal abuse -- three times what it receives in aid!
These questions are not presented here as clever debating points. We are entitled to know if the Hunger Task Force will address the fiscal side of the equation in addressing world hunger -- the very real difficulties governments have, in both rich and poor countries, in raising tax revenue to help the poor.
Ronan Tynan,
Booterstown,
Co Dublin
Sir -- Bono the Great is again advising the Irish Government on how to spend the hard earned taxes of the Irish people.
He should cop himself on; as he has avoided paying tax to the Irish Revenue, he should keep his nose out of Irish affairs.
Harry Boland,
Dundalk,
Co Louth
By Lucy Komisar
Co-chair TJN-USA
Rock star tax dodger Bono (Paul Hewson) and his anti-African-poverty organization last week were given the "Liberty Medal" by The National Constitution Center in Philadelphia, a nonprofit organization established by Congress in 1988 through the Constitution Heritage Act. The award to Bono was extremely inappropriate.
The Center is dedicated to increasing awareness about the Constitution and its relevance in Americans' daily lives. According to the Center's press release, the Liberty Medal reflects the values of the U.S. Constitution - a belief in justice, fairness, self-governance, and a balance between individual rights and communal responsibility.
It is an insult to the Constitution and its values to award a medal to someone who
* Ignores his communal responsibility in his own country to pay his taxes.
* By dishonoring national tax laws and participating in the international tax evasion system dishonors the US Constitution, which in 1913 was amended to provide for the federal income tax.
(The 16th amendment: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.")
Center President and CEO Joseph M. Torsella said at the medal ceremony Sept. 27, "We honor Bono and DATA for leading an urgent conversation, challenging the world's richest nations to do better by Africa, and challenging African nations to do better by their own people. And we honor the way the great conversation about human liberty connects us all, across places and times."
Bono is getting $100,000 which he will donate to his organization, DATA (Debt, AIDS, Trade, Africa). Before you marvel at his generosity, think about the fact that
* Bono participates in the world-wide offshore tax evasion system that is to a large extent responsible for the poverty of Africa. The African Union says tax dodging by foreign companies costs it $150 billion a year - three times what it receives in aid.
The Irish Bono ran his music publishing company in Ireland, where he and his partners took advantage of a law that exempted musicians and artists from taxes on royalties. To dodge taxes on non-royalty income, Bono's interests had the help of offshore nominee directors.
The Irish royalty exemption was begun to aid and reward creative artists, in hopes of encouraging the struggling kind, not to further enrich mega-millionaires like Bono. Last year, the law was changed. From 2007, artists who earn more than $625,450 must pay tax on half their creative income. It hardly seems a harsh measure.
Bono's Dublin company earned $110 million in 2005. Taking profits through the company rather than individually, Bono would have had to pay only 12.5 percent corporate tax, a rate still below that of the local bus conductor or plumber or school teacher.
But that apparently was too much for the man who has homes on the Irish Coast and in the South of France and New York City. So, last year, Bono "moved" the registration of his business to the Netherlands, where it will pay about 5 percent tax on royalties.
Center President and CEO Joseph M. TorsellaThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it ought to consider the inappropriateness of this award. So should Senior Director of Public Relations Denise Venuti FreeThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it and Public Relations Manager Ashley BerkeThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it . The Center's phone numbers are (215) 409-6600 and toll free (866) 917-1787.
Letters to The Independent, an Irish newspaper
Taxing times for Bono
U2 frontman should cop on
Sunday November 25 2007
Sir -- Bono's bizarre predicament was on embarrassing display in Cork last Friday when he sought to defend the decision to move the most profitable part of U2's business out of Ireland to avoid tax after participating in a meeting about tackling world hunger. Mind you, it was more like the theatre of the absurd as the "anti-poverty campaigner" emerged from a meeting of Ireland's Hunger Task Force to face journalists' questions about off-shore tax avoidance, when such activities on a global basis have such a devastating effect on the lives of the world's poor.
Indeed, would millions be dying every year of hunger and preventable diseases if tax havens used by the very rich, including Bono and U2, did not exist? The Tax Justice Network has estimated that the amount of funds held by wealthy individuals in tax havens could generate a staggering $255 billion dollars in additional tax revenue annually -- enough alone to finance the Millennium Development Goals -- which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education by 2015. That raises a very important question: will the Task Force of which Bono is now a member address how tax havens undermine efforts to fund the life-saving needs of the world's poorest people in preventing hunger?
More specifically, how hundreds of billions are siphoned out of government coffers every year by very rich individuals and multi-national companies using tax havens to avoid tax?
This is especially serious in Africa, where the African Union has estimated that as much as $150bn is lost every year through this form of fiscal abuse -- three times what it receives in aid!
These questions are not presented here as clever debating points. We are entitled to know if the Hunger Task Force will address the fiscal side of the equation in addressing world hunger -- the very real difficulties governments have, in both rich and poor countries, in raising tax revenue to help the poor.
Ronan Tynan,
Booterstown,
Co Dublin
Sir -- Bono the Great is again advising the Irish Government on how to spend the hard earned taxes of the Irish people.
He should cop himself on; as he has avoided paying tax to the Irish Revenue, he should keep his nose out of Irish affairs.
Harry Boland,
Dundalk,
Co Louth
Incomes for Super Rich Grow Faster Than Their Taxes
Incomes for Super Rich Grow Faster Than Their Taxes
By Robert Frank
Wall St. Journal, March 5, 2008,
A new report by the IRS on America's top 400 income-tax payers shows that the super-wealthy are gaining a larger share of the income pie, but are paying a lower share of taxes.
The report, obtained by my Journal colleague Tom Herman, profiles the so-called Fortunate 400 (as measured by adjusted gross income or AGI). The last time the IRS released such a report, it sparked a heated war of words between the right and left over inequality.
This time, the data are even more provocative.
In 2005, you needed at least $100.3 million in AGI to make the list - more than triple the amount needed in 1995. This is roughly in keeping with the increases in the Forbes 400 list, where the wealth needed to make the 400 has more than tripled since 1992 to $1.3 billion. Of course, this doesn't necessarily mean that the same rich people are getting richer, since the income list tends to be fluid. It just means that the fortunes being made today are much greater than those of the past.
What's most striking however is the income and tax shares. The IRS report shows that the Fortunate 400 now control 1.15% of the nation's income - twice the share they controlled in 1995. Over the same period, however, the average income tax paid by this same group has fallen from 30% to 18%. That's due mainly to the Bush tax cuts.
Many argue that the super-rich pay a disproportionately high share of taxes. And that's true to a degree, according to the report. The Fortunate 400 paid 1.67% of the nation's total income tax bill, even though they account for 1.15% of the income.
Yet the the growth in incomes by the super-rich has far surpassed their growth in their income taxes paid, since their tax rates have fallen. Their share of total income has more than doubled since 1995; yet their share of taxes has only gone up less than 50%. Whether this is good or bad will be up to partisan pundits and economists to fight over. But one thing is certain: The report will likely provide new ammunition for both sides of the wealth wars.
By Robert Frank
Wall St. Journal, March 5, 2008,
A new report by the IRS on America's top 400 income-tax payers shows that the super-wealthy are gaining a larger share of the income pie, but are paying a lower share of taxes.
The report, obtained by my Journal colleague Tom Herman, profiles the so-called Fortunate 400 (as measured by adjusted gross income or AGI). The last time the IRS released such a report, it sparked a heated war of words between the right and left over inequality.
This time, the data are even more provocative.
In 2005, you needed at least $100.3 million in AGI to make the list - more than triple the amount needed in 1995. This is roughly in keeping with the increases in the Forbes 400 list, where the wealth needed to make the 400 has more than tripled since 1992 to $1.3 billion. Of course, this doesn't necessarily mean that the same rich people are getting richer, since the income list tends to be fluid. It just means that the fortunes being made today are much greater than those of the past.
What's most striking however is the income and tax shares. The IRS report shows that the Fortunate 400 now control 1.15% of the nation's income - twice the share they controlled in 1995. Over the same period, however, the average income tax paid by this same group has fallen from 30% to 18%. That's due mainly to the Bush tax cuts.
Many argue that the super-rich pay a disproportionately high share of taxes. And that's true to a degree, according to the report. The Fortunate 400 paid 1.67% of the nation's total income tax bill, even though they account for 1.15% of the income.
Yet the the growth in incomes by the super-rich has far surpassed their growth in their income taxes paid, since their tax rates have fallen. Their share of total income has more than doubled since 1995; yet their share of taxes has only gone up less than 50%. Whether this is good or bad will be up to partisan pundits and economists to fight over. But one thing is certain: The report will likely provide new ammunition for both sides of the wealth wars.
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