While I've mentioned that us poor working stiffs pay taxes on 99% of our income
, that's because we have to
. Our employers are required by law to track and report the money we make, so we are not in a position where we even have the option to hide this income.
Corporations, on the hand, are another beast altogether. Not only U.S. ones, either:
Nearly two-thirds of U.S. companies and 68% of foreign corporations do not pay federal income taxes, according to a congressional report released Tuesday.
The Government Accountability Office (GAO) examined samples of corporate tax returns filed between 1998 and 2005. In that time period, an annual average of 1.3 million U.S. companies and 39,000 foreign companies doing business in the United States paid no income taxes - despite having a combined $2.5 trillion in revenue.
As a quick mathematical exercise, let's see how much money that might represent, tax wise, with a 15% corporate tax rate: $375 billion. Coincidentally, that is about the amount of the annual tax gap ($345 billion) that I mentioned in my previous post. However, this is only a coincidence
because they are unrelated. The $345 billion tax gap is, in fact, the amount that rich individuals
underpay, not what corporations don't pay, roughly speaking.
$345 billion + $375 billion = $720 billion, or roughly the size of the economic bailout plan. This is money that the government is loosing every year
, which brings to mind the old saying:
"A billion here, a billion there, and pretty soon you're talking real money"
We all know the wealth of many feeds the few. Rich folks in the U.S. have a majority stake in the countries wealth. "So what?" some may say, since they certainly pay the most taxes too, so it's fair, right?
Well, remember that little 'oopsy' that happened recently? The 'sub-prime crisis'? Ring a bell? That was, in a large part, the result of the banks over-extending themselves for the sake of profit. Holding lesser and lesser amounts of capital against larger and larger amounts of debt. It isn't exactly like not paying your taxes, but it is a big cheat, right? Well we all know the rich cheat on their taxes, too, and a 2001 IRS study pretty much proves that
Income level : $500,00 to $1 million
Avg. that adjusted gross income was understated on 2001 tax return: 21%
Income level : $50,000 to $100,000
Avg. that adjusted gross income was understated on 2001 tax return: 8%
Those with true incomes of $200,000 or more received 25% of all income, but accounted for 40% of net underreported income and 42% of underreported tax in 2001..
.. The Slemrod/Johns analysis uses unpublished data from special research audits the IRS conducted on a sample of 45,000 individual returns filed for 2001. It was the IRS' first such research effort since 1988, and it led the agency to estimate the 2001 gross "tax gap" at $345 billion.
Three Hundered and Forty-Five BILLION dollars slip through the cracks, remaining in the coffers of the rich. That's roughly half the $700 billion bailout, or well over half of the cost of Iraq war to this point.
So how do they do it? Well, when you are your own boss, it is a lot easier to fudge your W-2, so to speak:
The main reason for the income-related cheating disparity: Higher income folks receive more of their income from sources that are easier to hide, including self-employment earnings; income from rents, partnerships and S corporations; and capital gains.
"The distribution of noncompliance lines up pretty closely with who gets income that's hard (for the IRS) to keep track of,'' Slemrod says. Still, he notes, the distribution of income by source doesn't explain all the increased noncompliance at higher income levels.
In its 2001 tax gap study, the IRS estimated that individuals underreported business income by 43% overall. Sole proprietors, who report self-employment income on schedule C of their tax returns, underreported their income a stunning 57%.
By contrast, the IRS found, 99% of all wages were reported by individual tax filers. The obvious explanation is that workers have no choice--their employers report their earnings to the IRS and withhold taxes on them.
So the next time you're listening to a rich guy moan about how his creed shoulders so much of the tax burden, tell him he's a damn cheat and a liar.
Freedom’s Curse - Why Washington’s crusade against swearing on the airwaves is f*cked up
The FCC claimed that “even when the speaker does not intend a sexual meaning, a substantial part of the community … will understand the word as freighted with an offensive sexual connotation.” A brief filed earlier this year by the solicitor general in defense of the commission’s position quoted from my book The Stuff of Thought as follows: “If you’re an English speaker, you can’t hear [words such as the F-Word] without calling to mind what they mean to an implicit community of speakers, including the emotions that cling to them.” In fact, the words elided in the brief were “nigger or cunt or fucking,” and the context was an explanation of why people are offended “when an outsider refers to an African American as a nigger, or a woman as a cunt, or a Jewish person as a fucking Jew.” I was certainly not arguing that when listeners hear “It’s not so fucking simple,” their minds turn to thoughts of copulation!
On the contrary, I noted that over time, taboo words relinquish their literal meanings and retain only a coloring of emotion, and then just an ability to arouse attention. This progression explains why many speakers are unaware that sucker, sucks, bites, and blows originally referred to fellatio, or that a jerk was a masturbator. It explains why Close the fucking door, What the fuck?, Holy Fuck!, and Fuck you! violate all rules of English syntax and semantics—they presumably replaced Close the damned door, What in Hell?, Holy Mary!, and Damn you! when religious profanity lost its zing and new words had to be recruited to wake listeners up..
And hey, there is even a George Carlin video thrown in for good measure, finishing the piece with:
Take Carlin’s [Seven words you can't say on television] monologue. Carlin mentioned the word fuck not to describe sexual activities, nor to shock his audience. He mentioned it to show how people use taboo words and to advance the argument that the government should not regulate them. The ruling that restricted his language restricted public criticism of the ruling itself—mocking the very rationale for free speech.Fuck that!
In 1873, the stock market creeped out and a housing bubble caused almost complete economic meltdown
. Sound familiar? Despite the obvious
similarities in just that first sentence, let's look deeper:
Before the panic, railroad and real estate speculation had been rampant — and values had multiplied to unheard of heights. Credit was easy, and new financial instruments were created, including new types of railroad bonds whose values no one could be sure of.
As I have discussed before (and many people who are much smarter than me have done a better job than I) the lack of a market - a clearinghouse - for derivatives blanketed Wall Street with a cloud of uncertainty. Back-room dealings over the last ten plus years have, on the shoulders of the industrial worker who is treated as insignificantly as the ever-devalued dollar, sealed all of our fates.
Back in 1873, for anyone who has kept up with our current crisis, familiarity ensued:
With the credit markets frozen, at one point the overnight lending rate shot to a quarter of a percentage point, Professor Nelson said, which annualized is about 148 percent. The top national banks of New York formed a Clearing House Committee, pooling their cash and collateral into a common fund and issuing loan certificates against it that would operate like cash. This became the basis for the reconstruction of the credit markets.
So what did the government do? What was the response? Again, this might sound like something you've heard before:
The financial crisis led Congress to pass a bill in 1874 that would allow for more printing of currency to spur inflation and reduce the real value of debts. In a surprise move that was viewed by many as the most important event of his administration to that point, President Grant vetoed the bill.
Instead, something we won't see anytime soon:
In early 1875, Congress passed a bill, known as the Specie Resumption Act, which would back United States currency with gold. By pegging the dollar against hard currency, the act helped curb inflation, tame speculation and produce a stable dollar.
To quote another source
The period after the Civil War was also marked by successive financial panics and crises. Banks at that time were required to hold only a fraction of their deposits in reserve, that is, in the form of specie, vault cash or government securities, and could lend the remaining portion of the deposits to businesses and individuals. These loans were often illiquid, in the sense that although they were fundamentally sound investments in the long run, in the short run they could only be converted into cash for a fraction of their value. Such a system is prone to bank runs, in which a bank's depositors literally race each other to the bank to withdraw their deposits. Following the Panic of 1907, all political parties agreed that a mechanism had to be found to supply banks with short–term liquidity (known as an "elastic currency" at the time).
All of this, eventually in 1913, landed us with a big 'ol Federal Reserve System in our laps.
Not to be too succinct or jealous here, but the butt of the joke is the American worker. Maybe that sounds a little communist, but at the end of the day we set out to make a free democracy and we came out with a mumbo jumbo pile of over-hyped security of our rights to be broken and our money to be stolen.. but it isn't even the money, it's the sweat. Money is debt, as there ever was any. What the $700 billion dollar bailout represents is the sweat of the worker, the two week vacation, the tired drudgery of over-worked under-productive environments.
The real worth of a nation is not it's resources or it's land mass, it is what its people can make of that which counts. GDP is a measure of product, or money, but it represents what the people have reaped in a years time. It is a real measure of a countries worth (however skewed it may be). If a government chooses to create money, it directly dilutes its workforce's value. This is sometimes hidden in what they like to call "inflation". That's a subtle way of saying that you are getting a pay cut, we're just not telling you. But that's okay, everyone is getting a pay cut. That's fair, right? Well, a dollar to you might not mean the same thing it means to someone living below the poverty line - so when your gallon of milk costs a little more, how much do you think it hurts them?
This is slightly insignificant to one group of people.. the one's who created the problem in the first place - the billion-dollar-babies who marched off with piles of bonus cash and options up the wazoo. Sure, they might be "hurting" now too, what with the roller-coaster bumpy ride that the markets have been giving us recently.. But, once again, how much does a gallon of milk cost them?
When they're in the back rooms and offices chuckling about the goings-on with their buddy-buddy pals, I bet they call this the Sub-lime Crisis
A billion here, a billion there, soon it adds up to