Tuesday, January 29, 2019
The Fall of Davos Man
The Fall of Davos Man: Global elites must either commit to pushing for broader prosperity and democracy, or watch as trade wars, capital controls, and isolationism erode global prosperity.
Robert Reich
Robert Reich
Robert Reich’s survival guide to 2 more years of Trump
Robert Reich’s survival guide to 2 more years of Trump: It's doubtful Trump will be leaving anytime soon. Even an impeachment will drag out for a long time. Here are 7 suggestions for what to do to survive in the meantime.
Thursday, January 24, 2019
Elizabeth Warren's Tax Plan
here's something to think about:
Right now, an heir with $500 million in yachts and fine art and a public school teacher with no savings can pay the same amount in federal taxes. The reason? Because people pay federal taxes on their income, not on their wealth. So if that heir and that teacher both make $50,000 in a year, the federal government sees no difference between them. This isn’t an oversight, it’s on purpose. It’s because the rich and powerful run Washington, and they make sure the rules are written to benefit themselves. The top 0.1% of American families – the richest 1 in 1,000 – now have nearly the same amount of wealth as the bottom 90% of American families combined. Meanwhile, for everyone else, opportunity is slipping away. This is bad for our society, bad for our economy, and bad for our democracy. We need structural change to fix it.
A lot of rich and powerful people won’t like it, but I don’t work for them. We’ll only get this done if this grassroots movement demands it. Sign our petition if you agree: It’s time to tax the wealth of the top 0.1%. |
Tuesday, January 22, 2019
The Rich grow richer.
The top 26 billionaires own $1.4 trillion — as much as 3.8 billion other people
Monday, January 21, 2019
Thursday, January 17, 2019
Wednesday, January 16, 2019
Taxing the Rich and Philosophy /Economics
The Philosophical Roots of Alexandria Ocasio-Cortez’s 70 Percent Tax Plan
By Micah Johnson
January 16, 2019
Slate
AOC’s tax proposal finds inspiration not in Karl Marx, but in mainstream American political philosophy. How we tax the rich depends on why we tax the rich, and AOC’s proposal reflects a surprisingly moderate view of economic justice.
Alexandria Ocasio-Cortez outside the Capitol in Washington on Jan. 4. , Saul Loeb/AFP/Getty Images
Earlier this month, Alexandria Ocasio-Cortez floated the idea of a 70 percent tax rate on incomes over $10 million. Critics piled on to call the tax “astronomical,” “higher than Communist China”—some even likened it to slavery. On Tuesday, former Wisconsin Gov. Scott Walker comparedthe multimillionaires’ tax to taking money from fifth-graders after doing their chores, then referenced the fall of the Soviet Union as evidence that “socialism” doesn’t work.
The irony of all this is that AOC’s tax proposal finds inspiration not in Karl Marx, but in mainstream American political philosophy. How we tax the rich depends on why we tax the rich, and AOC’s proposal reflects a surprisingly moderate view of economic justice.
Sunday, January 13, 2019
Free Trade” Is Today’s Imperialism by the 1 Percent
PUBLISHED
January 13, 2019
Opposition to “free” trade is clearly growing — both the progressive and the corporate elements of the Democratic Party are now critical of agreements like the North American Free Trade Agreement and the Trans-Pacific Partnership. Less clear are the alternatives to free trade that might emerge. As progressives continue to build power inside and outside of the Democratic Party, we must clarify our understanding of the international political economy, and imagine and begin to build real alternatives to free trade. Building these alternatives must become an essential component of a more progressive US foreign policy.
The conventional wisdom says that if you oppose free trade, you must support protectionism or economic nationalism. This is misleading. There is no such thing as “free” trade. People create all of the systems that govern our political economy. These systems inevitably favor certain human activities over others, and we can design them to act any way that we want. The important question is: For whom are trade policies “free”? Put another way: Who do trade policies favor?
Debunking “Free” Trade
“Free” trade is free only for capital owners: the plutocratic fewwho own and control multinational corporations. When countries enter into free trade agreements, the governments of both countries effectively agree that their laws will not favor businesses from their country over businesses from any other countries. The main way that free trade does this is by attempting to reduce all tariffs to as close to 0 percent as possible, to eliminate import quotas that countries can use to limit the amount and types of goods imported from specified countries, and to discourage countries from more directly subsidizing their own businesses.
Read the entire piece: https://truthout.org/articles/free-trade-is-todays-imperialism-by-the-1-percent/
Friday, January 11, 2019
Top charts of 2018: Twelve charts that show how policy could reduce inequality—but is making it worse instead
Top charts of 2018: Twelve charts that show how policy could reduce inequality—but is making it worse instead: This year’s edition of Top Charts highlights how policy choices continue to exacerbate inequality and how we can achieve more broadly shared prosperity through better policy choices.
Thursday, January 10, 2019
Pentagon Accounting Fraud
Pentagon Accounting Fraud
On november 15, ernst & young and the other private firms hired to audit the pentagon announced that they couldn’t complete the job. Congress had ordered an independent audit of the Department of Defense, the government’s largest discretionary-cost center—which receives 54 cents out of every dollar in federal appropriations—because the Pentagon had failed for decades to audit itself. The firms concluded, however, that the DOD’s financial records were so
riddled with bookkeeping deficiencies, irregularities, and errors that a reliable audit was simply impossible.
Deputy Secretary of Defense Patrick Shanahan tried to put the best face on things, telling reporters, “We
failed the audit, but we never expected to pass it.” Shanahan suggested that the department should get credit for
the effort, saying, “It was an audit on a $2.7 trillion organization, so the fact that we did the audit is substantial.”
The truth, however, is that the DOD was dragged kicking and screaming to this audit by bipartisan frustration in
Congress—and had this been a major corporation, the result likely would have been a crashed stock.
Monday, January 7, 2019
Wall Street, Banks, and Angry Citizens: The Inequality Gap on a Planet Growing More Extreme
Nomi Prins
December 13, 2018
TomDispatch
In today's global economy, financial security is increasingly the property of the 1%.
,
As we head into 2019, leaving the chaos of this year behind, a major question remains unanswered when it comes to the state of Main Street, not just here but across the planet. If the global economy really is booming, as many politicians claim, why are leaders and their parties around the world continuing to get booted out of office in such a sweeping fashion?
One obvious answer: the post-Great Recession economic “recovery” was largely reserved for the few who could participate in the rising financial markets of those years, not the majority who continued to work longer hours, sometimes at multiple jobs, to stay afloat. In other words, the good times have left out so many people, like those struggling to keep even a few hundred dollars in their bank accounts to cover an emergency or the 80% of American workers who live paycheck to paycheck.
In today's global economy, financial security is increasingly the property of the 1%. No surprise, then, that, as a sense of economic instability continued to grow over the past decade, angst turned to anger, a transition that -- from the U.S. to the Philippines, Hungary to Brazil, Poland to Mexico -- has provoked a plethora of voter upheavals. In the process, a 1930s-style brew of rising nationalism and blaming the “other” -- whether that other was an immigrant, a religious group, a country, or the rest of the world -- emerged.
This phenomenon offered a series of Trumpian figures, including of course The Donald himself, an opening to ride a wave of “populism” to the heights of the political system. That the backgrounds and records of none of them -- whether you’re talking about Donald Trump, Viktor Orbán, Rodrigo Duterte, or Jair Bolsonaro (among others) -- reflected the daily concerns of the “common people,” as the classic definition of populism might have it, hardly mattered. Even a billionaire could, it turned out, exploit economic insecurity effectively and use it to rise to ultimate power.
Alexandria Ocasio-Cortez Is Floating a 70 Percent Top Tax Rate — Here’s the Research That Backs Her Up
https://portside.org/2019-01-06/alexandria-ocasio-cortez-floating-70-percent-top-tax-rate-heres-research-backs-her
Portside Date:
Author: Matthew Yglesias
Date of source:
Vox
In an interview scheduled to air Sunday on 60 Minutes, America’s most widely covered new House member Alexandria Ocasio-Cortez (D-NY) floats the idea of a top marginal income tax rate as high as 70 percent as part of a plan to finance a “Green New Deal” that would aim to drastically curb America’s carbon dioxide emissions.
This is not a formal policy proposal. Indeed, the whole idea of offsetting the budgetary cost of decarbonization with taxes is somewhat at odds with the main currents of thought in the Green New Deal universe, which lean more toward the idea that deficits don’t matter and the costs shouldn’t be paid for at all.
Seventy percent is a lot higher than the current rate and will doubtless fuel the conservative effort to paint AOC as a know-nothing, but the number is in line with one prominent strain of recent economics research and is at least moderately well supported by America’s historical experience.
Top tax rates used to be much higher
Historically, the United States used to have many more tax brackets, and the top marginal tax rates were extremely high. Under Eisenhower, the top earners paid a 91 percent marginal rate, falling to Ocasio-Cortez’s proposed 70 percent under Kennedy and Johnson, before falling to 50 percent after Ronald Reagan’s first big tax cut, and then down to 38 percent after the 1986 tax reform.
One big part of that story is that before 1986 the tax base was considerably narrower. Rich people used to have a lot more loopholes and deductions of which they could avail themselves. The 1986 law closed a lot of those loopholes, but also cut the top rate.
But another part of the story is that there used to be more tax brackets. Right now a single person earning $550,000 a year pays the same marginal rate as a person earning 10 or 50 times as much. Under the old tax code, the top rate was reserved its top rate for the super-duper rich.
Ocasio-Cortez seems to have something like this in mind when she tells Cooper, “Once you get to the tippy-tops, on your $10 millionth dollar, sometimes you see tax rates as high as 60 percent or 70 percent. That doesn’t mean all $10 million dollars are taxed at an extremely high rate. But it means that as you climb up this ladder, you should be contributing more.”
In other words, she’s not saying that everyone who pays the current top rate should see their taxes raised to 60 or 70 percent. Rather, a small number of ultra-rich people should pay at that rate. This is obviously a controversial proposition that will strike some as unfair and others as counterproductive to the economy. But it’s pretty much in line with the cutting-edge work of progressive-minded tax economists.
The empirical and theoretical case for higher taxes
MIT’s Peter Diamond and Berkeley’s Emmanuel Saez relaunched this debate with a landmark 2012 paper that argued for a 73 percent top income tax rate in the United States.
This conclusion relies on two subsidiary points. One is the notion that for the very rich, the subjective value of an extra dollar is essentially $0. In other words, while a poor person’s life may get a lot better if he gets a little bit of extra money, someone like Mark Zuckerberg isn’t going to care at all.
It follows that regardless of how much money we think the government should spend, we should be squeezing the richest people as much as possible to keep taxes lower on the less wealthy who will miss the money more. They then do empirical calculations that lead them to estimate that a rate of 73 percent or so would maximize revenue — higher than that and taxation becomes counterproductive because people work less.
In a separate paper that Saez wrote with Thomas Piketty and Stefanie Stantcheva, the authors argue for an even higher rate on somewhat different grounds.
Their argument is that, empirically, CEO pay and pretax inequality is higher in countries with lower top marginal tax rates. In lower tax countries, they believe, CEOs work really hard to maximize their own pay whereas in higher tax countries they accept lesser compensation, which leaves more money left over for other people.
An even more aggressive 2016 paper from Benjamin Lockwood, Charles Nathanson, and Glen Weyl argues that confiscatory taxation would be good for the economy because it would discourage talented people from entering lucrative lines of work. In a world of low taxes, they show, talented people have strong incentives to work in legal or financial professions rather than be teachers or research scientists. But the social reward to having really good traders or corporate lawyers is either low or negative, whereas the social reward to having excellent teachers and scientists is high.
So while Ocasio-Cortez’s proposal is certainly extreme relative to the policy status quo — and unquestionably something many economists would denounce as economically ruinous — it’s actually moderate compared to what Saez, Piketty, and Stantcheva, or Lockwood, Nathanson, and Weyl call for since she’s sticking with the “mere” goal of raising revenue.
The Green New Deal is supposed to rely on deficit spending
A separate question from all of this tax policy is whether a super high tax rate could raise enough money to finance a Green New Deal. That, in turn, depends in part on what exactly you think such a deal should entail.
Sunday, January 6, 2019
Saturday, January 5, 2019
Friday, January 4, 2019
Nancy Pelosi Joins With Austerity Crowd
( Like Obama before her. Look at how that turned out.)
http://inthesetimes.com/article/21658/PAYGO-government-spending-raising-taxes-modern-monetary-theory-pelosi …
Trump Tax Cut : Worse Than You Heard
The 2017 tax cut has received pretty bad press, and rightly so. Its proponents made big promises about soaring investment and wages, and also assured everyone that it would pay for itself; none of that has happened.
Yet coverage actually hasn’t been negative enough. The story you mostly read runs something like this: The tax cut has caused corporations to bring some money home, but they’ve used it for stock buybacks rather than to raise wages, and the boost to growth has been modest. That doesn’t sound great, but it’s still better than the reality: No money has, in fact, been brought home, and the tax cut has probably reduced national income. Indeed, at least 90 percent of Americans will end up poorer thanks to that cut.
Let me explain each point in turn.
First, when people say that U.S. corporations have “brought money home” they’re referring to dividends overseas subsidiaries have paid to their parent corporations. These did indeed surge briefly in 2018, as the tax law made it advantageous to transfer some assets from the books of those subsidiaries to the home companies; these transactions also showed up as a reduction in the measured stake of the parents in the subsidiaries, i.e., as negative direct investment (Figure 1).
Figure 1CreditBureau of Economic Analysis
Image
Figure 1CreditBureau of Economic Analysis
But these transactions are simply rearrangements of companies’ books for tax purposes; they don’t necessarily correspond to anything real. Suppose that Multinational Megacorp USA decides to have its subsidiary, Multinational Mega Ireland, transfer some assets to the home company. This will produce the kind of simultaneous and opposite movement in dividends and direct investment you see in Figure 1. But the company’s overall balance sheet – which always included the assets of MM Ireland – hasn’t changed at all. No real resources have been transferred; MM USA has neither gained nor lost the ability to invest here.
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If you want to know whether investable funds are really being transferred to the U.S., you need to look at the overall balance on financial account – or, what should be the same (and is more accurately measured), the inverse of the balance on current account. Figure 2 shows that balance as a share of GDP – and as you can see, basically nothing has happened.
Figure 2CreditBureau of Economic Analysis
So the tax cut induced some accounting maneuvers, but did nothing to promote capital flows to America.
The tax cut did, however, have one important international effect: We’re now paying more money to foreigners.
Bear in mind that the one clear, overwhelming result of the tax cut is a big break for corporations: Federal tax receipts on corporate income have plunged (Figure 3).
Figure 3CreditBureau of Economic Analysis
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Figure 3CreditBureau of Economic Analysis
The key point to realize is that in today’s globalized corporate system, a lot of any country’s corporate sector, our own very much included, is actually owned by foreigners, either directly because corporations here are foreign subsidiaries, or indirectly because foreigners own American stocks. Indeed, roughly a third of U.S. corporate profits basically flow to foreign nationals – which means that a third of the tax cut flowed abroad, rather than staying at home. This probably outweighs any positive effect on GDP growth. So the tax cut probably made America poorer, not richer.
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And it certainly made most Americans poorer. While 2/3 of the corporate tax cut may have gone to U.S. residents, 84 percent of stocks are held by the wealthiest 10 percent of the population. Everyone else will see hardly any benefit.
Meanwhile, since the tax cut isn’t paying for itself, it will eventually have to be paid for some other way – either by raising other taxes, or by cutting spending on programs people value. The cost of these hikes or cuts will be much less concentrated on the top 10 percent than the benefit of the original tax cut. So it’s a near-certainty that the vast majority of Americans will be worse off thanks to Trump’s only major legislative success.
As I said, even the mainly negative reporting doesn’t convey how bad a deal this whole thing is turning out to be.
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To see the graphics, go to the Opinion piece in the Times.
Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman
To see the graphics, go to the Opinion piece in the Times.
Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman
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