The race to the bottom on taxes is an age old story - Bill Black
Dylan Ratigan has defined a new economic term, extraction, to be how today's financial sector sucks money out of America's pockets and invents more riches for themselves. Financial extraction is taking money from the real economy instead of adding and creating a production economy. A production economy is that ancient historical period of 35+ years ago where the United States created a strong middle class and high paying jobs.
Some of this economic extraction is done through the tax code. David Cay Johnston and Bill Black in the segment below talk about how the corporate and personal tax code is rigged to extract money from economic activity that creates a strong middle class and and instead gives it to Wall Street and the Rich.
Isn't that the bottom line? Financial incentive favors are bought by corporate lobbyists, sold by legislators and have turned this nation from a economy which created a high quality of life for most to a glorified robber baron kingdom.
When someone tries to do something about this wretched extraction, such as a Tobin tax, along comes the CBO poo pooing the idea. The CBO has backup, the Wall Street Journal. This is all in response to the growing populist appeal of taxing some high frequency trades and select derivatives per transaction.
The day after the Robin Hood protest, for example, Mr. Gates, the chairman of Microsoft and one of the world’s wealthiest men, presented a report to a closed-door meeting of the G-20 leaders that laid out his ideas on how rich countries could aid poor ones. One of his proposals was a modest tax on trades of financial instruments that could generate $48 billion or more annually from the G-20 countries.
Ms. Merkel and France’s president, Nicolas Sarkozy, quickly piped up, enthusiastically endorsing the tax. But Britain’s prime minister, David Cameron, expressed serious reservations, saying Britain would embrace it only if it were adopted globally. British officials fear that unless the tax is worldwide, trading will flee London’s huge markets to countries with no tax.
The Obama administration has also been lukewarm, expressing sympathy but saying it would be hard to execute, could drive trading overseas and would hurt pension funds and individual investors in addition to banks.
First, the Tobin tax has repeatedly been analyzed to need a global implementation. There goes most of the CBO
opinion comments in a letter. Why the sudden transactional tax poo poo? Because legislation was introduced in the House and Senate, the Wall Street Trading and Speculators Tax Act, and suggested by Economist Paul Krugman as a a very good idea.
While various Wall Street groups fret and pine away over legislation to tax speculative and high frequency flash trades, we have tax evasion costing $3.1 trillion dollars annually.
Tax evasion equals 18 percent of global tax collections, a new report by British accountant Richard Murphy shows. His report for the Tax Justice Network cleverly lined up a World Bank Report on the size of shadow economies with a Heritage Foundation report on average tax burdens by country to reach that figure.
Murphy’s $3 trillion estimate, 5 percent of the global economy, shows how a combination of weak rules on accounting and disclosure combined with inadequate budgets to enforce tax laws impose a terrible cost on honest taxpayers and the beneficiaries of government service.
While the United States has one of the most effective tax regimes, especially for on-the-books wage earners and pensioners, and one of the smallest underground or shadow economies, it has the largest amount of tax evasion measured in dollars.
What's wrong with this picture? The minute anyone suggests anything at all to move investment back into the U.S. real economy which creates jobs, all hell breaks lose, even from people who should know better.