Posts Tagged ‘banks’

yoThis well-researched article gives the lie to those that argue that corporate tax rates in America are too high, and continually blame the state of the economy on welfare recipients and the unemployed. If you tire of hearing this nonsense parroted daily by right wing politicians and commentators, I suggest you share this post widely with your friends.

What is bizarre is that here in Australia, and in the UK, American corporations are coming under increasing fire for not paying any taxes locally either. So one is obliged to ask, where is all the money going?

From RT.com

Twenty-six of the most powerful American corporations – such as Boeing, General Electric, and Verizon – paid no federal income tax from 2008 to 2012, according to a new report detailing how Fortune 500 companies exploit tax breaks and loopholes.

The report, conducted by public advocacy group Citizens for Tax Justice (CTJ), focuses on the 288 companies in the Fortune 500 that registered consistent profit every year from 2008 to 2012. Those 288 profitable corporations paid an “effective federal income tax rate of just 19.4 percent over the five-year period — far less than the statutory 35 percent tax rate,” CTJ states.

One-third, or 93, of the analysed companies paid an effective tax rate below 10 percent in that timespan, CTJ found.

Defenders of low corporate taxes call the US federal statutory rate of 35 percent one of the highest companies face in any nation. But the report signals how the most formidable corporate entities in the US take advantage of tax breaks, loopholes, and accounting schemes to keep their effective rates down.

“Tax subsidies for the 288 companies over the five years totaled a staggering $364 billion, including $56 billion in 2008, $70 billion in 2009, $80 billion in 2010, $87 billion in 2011, and $70 billion in 2012,” CTJ states. “These amounts are the difference between what the companies would have paid if their tax bills equaled 35 percent of their profits and what they actually paid.”

Just 25 of the 288 companies kept tax breaks of $174 billion out of the $364 billion total. Wells Fargo received the largest amount of tax subsidies – $21.6 billion – in the five-year period. The banking giant was joined in the top ten on that list by the likes of AT&T, ExxonMobil, J.P Morgan Chase, and Wal-Mart.

AFP Photo / Etienne FranchiAFP Photo / Etienne Franchi

 

About 1 in 11 of the 288 companies paid a zero percent effective federal income tax rate in the five years considered.

Pepco Holdings – which supplies utility services to Delaware, the District of Columbia, Maryland, and parts of New Jersey – paid a cumulative five-year effective rate of -33 percent, the lowest of any company in that period.

In fact, utilities came out particularly well among other industries.

Reuters / Jonathan ErnstReuters / Jonathan Ernst

 

“The sectors with the lowest effective corporate tax rates over the five-year period were utilities (2.9 percent), industrial machinery (4.3 percent), telecommunications (9.8 percent), oil, gas and pipelines (14.4 percent), transportation (16.4 percent), aerospace and defense (16.7 percent) and financial (18.8 percent),” CTJ reported.

CTJ said the companies are allowed to pay such low federal rates based on factors that include offshore tax sheltering, accelerated asset depreciation based on continued investment, stock options, and industry-specific tax breaks.

“Of those corporations in our sample with significant offshore profits, two thirds paid higher corporate tax rates to foreign governments where they operate than they paid in the U.S. on their U.S. profits,” according to CTJ.

The non-profit group says this lax taxation climate among the most powerful US corporations comes amid an aggressive push by lobby and trade groups on Capitol Hill “to reduce the federal corporate income tax rate, based on the claim that our corporate tax is uncompetitively high compared to other developed nations.”

Just this week, US House Ways and Means Committee Chairman Dave Camp (Republican) introduced a tax reform proposal that would lower the maximum federal effective tax rate to 25 percent.

Though, tellingly, this aspect of the plan – among other attempts at bipartisan consensus in the proposal – renders it no chance of even getting a hearing in the Republican-dominated House during a mid-term election year, when such a conciliatory offering can be used as a cudgel against disapproving conservatives.

House Ways and Means Committee Chairman Dave Camp (R-MI) (AFP Photo / Chip Somodevilla)House Ways and Means Committee Chairman Dave Camp (R-MI) (AFP Photo / Chip Somodevilla)

 

Companies have already disputed CTJ’s report, saying that the study only looks at federal income taxes while ignoring other tax burdens they face, such as on the state and local level. In addition, the companies say low effective rates are part of congressional attempts to offer tax relief to corporate America in order to create larger economic opportunity.

To reverse low corporate federal tax rates, CTJ recommends Congress end corporations’ ability to “defer” taxes on offshore profits; limit use of executive stock options that reduce taxes by “generating phantom ‘costs’” the companies don’t really incur; end accelerated depreciation opportunities; restore the corporate Alternative Minimum Tax; and strengthen corporate income and tax disclosure regulations.

“These findings refute the prevailing view inside the Washington, D.C. Beltway that America’s corporate income tax is more burdensome than the corporate income taxes levied by other countries, and that this purported (but false) excess burden somehow makes the U.S. ‘uncompetitive,’” CTJ concluded.

Centralised wealth creating socialists more effectively than any socialist speaker ... some things haven't changed much since the early 20th century. Indeed, the trend continues.

Centralised wealth creating socialists more effectively than any socialist speaker … some things haven’t changed much since the early 20th century. Indeed, the trend accelerates.

Researching some photos to illustrate this article, and as luck would have it, I came across Charlie Chaplin’s astonishing cry from the heart in The Great Dictator, (see below), calling in both despair and hope for a better world.

It’s a dry old subject, but cracking down on tax avoidance and more equitably sharing the burden of creating a fair and just society would be a good start to creating a world that everyone can enjoy.

The power of centralised wealth is reaching epic proportions, greater than at any time in humanity’s modern history.

One does not have to hark back to the trade union-dominated era of much of the Western world post-WWII, nor to toy with ideas of reviving nationalisation and  government-owned enterprises (although in Australia renewed Government ownership of Qantas should be considered in return for taxpayer support) to see that the current situation is a million miles from the idealistic dreams of a participatory, share-owning democracy where capitalism would produce widespread wealth.

Concepts of “trickle down” economics from low-tax regimes have been comprehensively debunked as nonsense. I am a fan of markets that are as free as practically possible, but what business needs to face up to is that with freedom comes responsibility.

Where the Directors and Boards of massive corporations devote the bulk of their time to avoiding tax rather than growing their businesses, democratic Government must intervene to correct the balance.

If they do not, the reaction will be severe. The people are beginning to work it out: machine men with machine minds and machine hearts – be warned.

 

You, the people, have the power. Look up. Look up. Naive? Perhaps. But it is wonderfully, inspirationally naive. Little wonder the “powers that be” in America hated Chaplin with a passion. If you haven’t seen it before, I warmly recommend it.

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BankingThis is just a little something for all of you who persist in believing, hoping against hope, that there is something called “a free market”.

There isn’t. It’s all a con.

The banks and their allies WANT you to think all this stuff is too hard to get your head around, so they can continue ripping us all off without any real danger to them as institutions or individuals.

Well, it isn’t. This excellent article lays it all out in a manner even the somewhat financially-challenged Wellthisiswhatithink crew can understand.

This is a very long article, but if you are even tangentially involved in politics, finance, banking, or policy development – hey, if you ever made an investment, borrowed money or exchanged money – even if you simply want to know what’s going on in the ivory towers around you – you really need to read it.

http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425

What’s at stake? I’ll give you just a taste:gandhi

After scandals involving Libor and, perhaps, ISDAfix, the question that should have everyone freaked out is this: What other markets out there carry the same potential for manipulation?

The answer to that question is far from reassuring, because the potential is almost everywhere.

From gold to gas to swaps to interest rates, prices all over the world are dependent upon little private cabals of cigar-chomping insiders we’re forced to trust.

“In all the over-the-counter markets, you don’t really have pricing except by a bunch of guys getting together,” Masters notes glumly.

That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it.

The problem in each of these markets is the same: we all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of thingslike interest rates, swaps, currencies and commodities.

Yup. Coming soon to a newsstand near you. Your favourite banker, on the cover of the Rolling Stone.

New Amnesty International ad

Let's get rid of cluster bombs - forever.

Amnesty International need your help to run an ad that will stop the Royal Bank of Scotland – rescued from its own incompetence with public money, of course – from funding companies that make cluster bombs. 98% of cluster bomb victims are civilians – 30% are children. Are you happy that your money is being used to do that? Find out more here:

http://amn.st/qFLG6G