Wealth For Common Good

Risks of High Frequency Trading

2012-05-10T11:15:40Z

Wealth for the Common Good has had a campaign to put some brakes on high frequency trading for quite some time. Though it’s not gotten a lot of attention lately, it is certainly one of the high risk, “Wall Street as Casino,” problems we face in our economic system. Sarah Anderson, in her May 7 article, Wall Street’s Speed Freaks says:

The power suits making billions off the stock market are always trying to assure us that their trading serves a socially redeeming purpose. They steer money to companies and industries that make our economy more productive, they claim.

In reality, the majority of stock trading today has absolutely nothing to do with helping companies raise capital to innovate and create jobs. Thoughtful investors don’t drive today’s Wall Street. Computers do.

A sustainable, robust New Economy requires us to think more consciously about investing in the ‘good,’ e.g., what we value and need in society and avoiding investing in the ‘bad,’ which computers do because they are just programmed to make money — and occasionally end up crashing the system as they did in May 2010.

As the debate over taxes and revenues heats up this summer along with the temperatures, keep in mind this is not only an important source of potential new revenue but could save us all from another painful crash.

Risks of High Frequency Trading is an article on Wealth For Common Good.

Corporate Tax Rates Take Center Stage

2012-05-05T23:48:46Z

In a response to the recent New York Times April 28, 2012 article about Apple’s ability to avoid national and state taxes, Citizens for Tax Justice noted they now have $74 Billion in untaxed earnings sitting offshore, of which nearly 90% has never been taxed by any governing institution. And, of course, Apple is not the only one.

There are so many things wrong with public policies that allow this to happen:

The inequity it creates for the many domestic companies that do not have big offshore accounts in which to ‘park’ their earnings creates a very unlevel playing field
It contributes greatly to our underfunded governments that can no longer provide for the needs of the people and the planet to live healthy, sustainable lives.

As Chuck Collins and Scott Klinger point out in their recent article, Shortchanging America:

When the U.S. economy was healthier, corporations had multiple responsibilities. They provided their employees with good jobs, paid taxes that sustained their communities, and offered valued services to customers. Then, as now, they delivered dividends and profits to shareholders. Corporate leaders and managers understood that meeting these obligations were necessary for long-term success. They built their companies to last.

So much of what needs to be done to create a 21st Century nation can only be done as a community–at the local, state and federal level. Who doesn’t want a water system that provides clean drinking water, an electric grid that doesn’t fail constantly and schools with 21st Century technology, green energy and non-toxic environments where our children can learn and become 21st Century citizens of the world? We can only do that together.

Many corporations are finding angry protesters at their shareholders meeting and there are many reasons for this. Verizon is another recent example coming to light of a low/no tax corporation. Collins and Klinger point out that hopefully citizens will continue to protest until we all face the truth of what we need to do to turn things around:

The angry citizens who are raising their voices at annual shareholder meetings this spring understand that shifting the American business model back to “built-to-last” mode will require new rules that promote dignified work, fair taxes, and a smaller gap between CEO compensation and workers’ paychecks. Unless we change these rules, built-to-loot companies will be a national wrecking ball.

The public is far ahead of politicians in knowing we must end these distortions in our tax code. Let’s hope more of our political leaders begin to heed our voices.

Corporate Tax Rates Take Center Stage is an article on Wealth For Common Good.

The Nation: Six Unfair Corporate Tax Rules

2012-04-25T21:14:41Z

Originally published on NPR.org, April 25, 2012

By Scott Klinger and Sarah Anderson

Many American families will have paid more in federal income taxes than some of America’s largest and most profitable corporations. AT&T, Boeing, Citigroup, Duke Energy and Ford collectively reported more than $20 billion of US pre-tax income last year, yet none of them paid a dime in federal income taxes. Instead, they claimed refunds of more than $1.3 billion from the IRS.

These corporations are not alone in turning tax dodging into a competitive sport. Last year, US corporations paid an effective tax rate of just 12.1 percent, the lowest level in the last forty years, according to the Congressional Budget Office. Sixty years ago, when Republican President Dwight Eisenhower lived in the White House, corporations paid 32 percent of federal government’s tax receipts; last year they paid 9 percent.

Below are six examples of how large corporations have rigged the tax rules to ensure that those who have the most get to amass even more, at the expense of everyone else. Figuring out how to unrig them is not rocket science, but it will require strong public pressure on lawmakers to ensure that America’s most prosperous corporations pay their fair share.

Boeing’s Double Dip

In each of the past nine years, Boeing has reported at least $1 billion in pre-tax profits, yet in only one did it pay any US corporate income taxes. In fact, the aerospace giant got so much money in tax subsidies that it had an effective tax rate of -7.8 percent during this period.

One of the main reasons Boeing has avoided the taxman is that the rest of us subsidize their research and development spending. Last year this amounted to $137 million. Congress first passed the research and experimentation tax credit during the 1981 recession, intending to provide a temporary boost to America’s sagging economy. Though it has expired for short periods over the years, it has been renewed thirteen times, and Congress is presently considering making the tax credit permanent.

Government investment in basic research and development can be valuable, but the way the current tax credit is structured, much of the support goes to large well-resourced high-tech firms like Boeing that would have conducted the research anyway as a part of maintaining a vibrant business.

What’s particularly disturbing about the Boeing subsidies, however, is that the company already bills the Pentagon for research costs. The third largest defense contractor, Boeing has landed more than $54 billion in government contracts in the past nine years. So essentially, taxpayers are paying for the company’s research — twice.

GE’s Tax-Free Offshore Profits

General Electric employs 975 people to mine the tax code for every possible deduction. One of their IRS returns ran an awe-inspiring 57,000 pages. As a result, GE paid an effective tax rate of just 2.3 percent on more than $81 billion of US income over the last decade.

One of GE’s most lucrative tax breaks is dubbed “the active financing exception.” Under US tax law income earned from interest anywhere in the world is taxable in the United States. That is because interest is consider a “passive business activity” that is easily transferred from country to country. The active financing exception allows corporation that establish captive foreign finance subsidiaries to exclude interest they earn offshore from their US taxes. The 1997 subsidy was meant as a temporary measure to help US banks and manufacturers compete internationally.

General Electric’s lobbyists, who led the fight to create the subsidy, have made sure the “temporary” part was just a joke. Congress has renewed the exemption multiple times over the last fifteen years. And in the meantime, active financing has allowed GE to legally shift much of its US profits to overseas jurisdictions with lower taxes.

The active financing exception is one of sixty tax breaks, known as “tax extenders,” that expired last year. Congress is actively considering reauthorizing them, even while they also consider dramatic cuts to social programs.

AIG’s Stealth Bailout

In 2008, American International Group’s reckless uncovered bets helped lead the global economy to the brink of collapse. Taxpayers bailed out the rogue insurer to the tune of $182 billion.

Less well-known is a perk the US Treasury made available to AIG that allowed the company to retain its losses to offset against future profits. Tapping these tax losses allowed AIG to report more than $17 billion in tax-free profits in 2011, a move Elizabeth Warren, who chaired the TARP oversight panel, labeled a “stealth bailout.” “When the government bailed out AIG, it should not have allowed the failed insurance giant to duck taxes for years to come,” wrote Warren in a statement co-signed by three other panel members.

“This corporate tax break transfers public money to AIG’s private shareholders and inflates executive pay at AIG — both at the public’s expense,” added Damon Silvers, another member of the oversight panel. At least four of the executives who stand to benefit financially from the tax break were leading the company at the time of the massive failure.

Continued At The Nation

The Nation: Six Unfair Corporate Tax Rules is an article on Wealth For Common Good.

Bank CEOs gain as millions lose dreams, retirement to foreclosure

2012-04-25T21:28:00Z

Originally published by Newark Star-Ledger on April 25, 2012

by Scott Klinger and John Cavanagh

Inside and outside of Wells Fargo’s annual meeting in San Francisco yesterday, thousands of angry protesters decried the bank’s leading role in the loss of millions of American homes to foreclosure.

(Dan Honda/Contra Costa Times/MCT)

If you want to know why the protesters are so angry, consider this double standard. For most Americans, retirement security lies in the value of their homes. Millions of these people have been losing that security as the nation’s largest banks have foreclosed on them. Yet the CEOs of these banks are reaping giant pay packages and padding their own retirement security with profits squeezed from ordinary people.

For many American families, a paid-off home is part of the dream of a secure retirement. The roof over their heads has long comprised the largest element of most families’ net worth. The housing crisis brought to us by the country’s biggest bankers has stolen the dreams of the nearly 4 million families who have lost their homes to foreclosure since the housing crisis began in 2007.

Of those who continue to live in their homes, more than a quarter have lost so much equity that they now owe more on their mortgage than their residence is worth. Even those who have never missed a payment on these underwater mortgages have found it all but impossible to refinance their loans to take advantage of record low rates that would cut hundreds of dollars from their monthly payments.

As American families struggle with their shrinking equity, Wells Fargo is enjoying record profits. Its earnings clocked in at more than $4 billion during the first quarter of 2012.

Wells Fargo and Bank of America are the country’s two largest mortgage servicers. Over the past three years, the number of homes foreclosed upon by the two giant banks has steadily grown. At the end of 2011, they reported to federal banking regulators that they held $22.5 billion and $19 billion worth of foreclosed houses, respectively.

While foreclosures have devastated the financial security of millions of American families, the CEOs of Wells Fargo and Bank of America have seen their retirement packages balloon.

The pension assets of Wells Fargo CEO John Stumpf stand at $16 million, according to the company’s proxy statement. The vast majority of these assets came from a special plan available only to the company’s top executives. As high as Stumpf’s retirement assets have soared, they’re exceeded by those of another Wells Fargo executive. Mark Oman oversees the company’s consumer lending division, where most of its ill-fated subprime loans were made and where many customers have lost their homes to foreclosure. His retirement assets top $17 million.

Bank of America CEO Brian Moynihan’s pension assets now total $6.8 million. His nest egg came mainly from a special “supplemental” pension plan.

It’s long past time that banking regulators stopped these dream-stealers from laughing their way to their gold-plated retirements. Protesters are insisting that the corporate funds diverted to prop up the lavish lifestyles of those responsible for upending the lives of the millions of American families who have lost their homes be redirected toward principal relief for homeowners devastated by these banks’ actions.

The Wells Fargo action was just the start. Don’t be surprised when thousands more protesters show up when Bank of America shareholders gather on May 9 in Charlotte, N.C.

Scott Klinger is an associate fellow and John Cavanagh is the director of the Washington-based Institute for Policy Studies (ips-dc.org). This article was distributed by OtherWords. For more like this one, visit OtherWords.org.

Bank CEOs gain as millions lose dreams, retirement to foreclosure is an article on Wealth For Common Good.

Repatriation Tax Lobbying Campaign Said to Disband

2012-04-24T19:53:59Z

A lobbying coalition advocating for a tax holiday for repatriating offshore profits has disbanded, said a lobbyist who worked on the effort who wouldn’t publicly discuss the reasons for the decision.

The Win America Campaign, which included Cisco Systems Inc., Microsoft Corp. and Apple Inc., ended its relationship with two of its three lobbying firms in March, according to forms filed with the U.S. Senate last week. The group spent more than a year and $760,000 on the effort, according to public filings.

The group wanted Congress to repeat a 2004 tax holiday that let companies bring home offshore profits at a discount. Critics, including the Obama administration, said the proposal would cost the government money, encourage companies to move profits offshore and undermine efforts to overhaul the U.S. tax code.

The lobbyist said prospects for the legislation weren’t promising, which contributed to the decision to disband the group.

Doug Thornell, who had been a spokesman for the campaign, declined to comment.

The bill is H.R. 1834.

Repatriation Tax Lobbying Campaign Said to Disband is an article on Wealth For Common Good.

Rich American Freeloaders

2012-04-24T22:20:27Z

Like too many Americans, I’m unemployed. But in my case, the reason isn’t that I can’t find work — it’s that I don’t need it. I’m among the lucky few who can live comfortably off their wealth. And this isn’t wealth I earned through hard work. I did it the easy way: I inherited it.

As the tax filing deadline approaches, you should keep people like me in mind when you hear politicians denounce higher taxes on the wealthy as “class warfare” or an attack on “job creators.” I don’t create jobs. Does it make sense for me to pay lower taxes than someone who works hard all day and makes a lot less than I do?

The richest Americans have hired lobbyists to influence the political process and hide an unpleasant reality: wealthy people have become freeloaders. I’m a freeloader, and I don’t like it.

Conservative ideology doesn’t support free markets. Instead, it protects the wealthy. Conservatives have waged this war for 30 years, obtaining tax cuts for the rich while cutting spending on the public institutions that made this country great.

bright strangely / Flickr

Ronald Reagan reduced the top marginal tax rate from 69 percent in 1981 to just 28 percent in 1989. Then, a decade later, the wealthy got the government to cut tax rates on capital gains and dividends. These rates are now a mere 15 percent.

Why is this a big deal? Dividends and capital gains are two of the top sources of income generated by wealth. Over and over these past 30 years, the wealthy have persuaded presidents and Congress to tax this income at lower rates. Sure, many working-class and middle-class Americans also make some investment income. But it’s typically an insignificant part of their household budget.

Simply put, the vast majority of this tax giveaway benefits the very richest people in our country.

Most of us are now aware of how this works, thanks to some high-profile examples. Low tax rates on unearned income allow Warren Buffett to pay a lower rate than his assistant. It also knocks multi-millionaire Mitt Romney’s rate down to 14 percent. The hypocrisy is now out in the open.

The same lobbyists who tirelessly protect these tax breaks for the wealthy often bemoan the debt we’re passing on to our children. Yet you never hear them bemoan the deteriorating public infrastructure, such as our public schools, roads, and bridges. That’s a tragic deficit we’re also passing along to future generations. Where’s their outrage about that irresponsible legacy?

I want to be a patriotic citizen, yet when I file my taxes accurately, the tax codes are structured to give me preferential treatment over those who work — teachers, firefighters, managers, soldiers, nurses, and doctors. As a patriot, let me say loud and clear: the system needs to change!

I’m grateful for all I’ve been given. Yet I want to leave my children more than money. I want to leave them a better world. Our nation needs resources to invest in a better future for all of our children. It’s time for wealthy people like me to become more responsible and pay our fair share of taxes.

I imagine a future in which each American child gets a good public education and can compete for the world’s best jobs, our transportation system is the finest in the world, and government invests in basic research to keep our economy vibrant and jumpstart new industries. I’m willing to play my part in that future. Isn’t that only fair?

Betsy Malcolm serves on the organizing committee of Act Now and is a member of Wealth for the Common Good. wealthforthecommongood.org

Distributed via OtherWords (OtherWords.org)

Rich American Freeloaders is an article on Wealth For Common Good.

Our Voices Were Heard – April Actions

2012-04-24T22:55:46Z

We had a busy week with lots of media events around the country for Tax Day. We want to share a few activities where Wealth for Common Good members and staff were involved:

April 10: 28 Patriotic Millionaires support the Buffett Rule at the White House

April 11: Elspeth Gilmore with our partner, Resource Generation, participates in panel hosted by Congressional Progressive Caucus

Click here to view video

April 13: Chuck Collins interviewed on Buffett Rule

April 16: Chuck Collins: US News & World Report Buffett Rule Debate

April 17: Tax Day! Lots of Action around the country!

Pie Day video captures our campaign with Resource Generation in actions around the country in 1 min 32 seconds! RG Members in NYC: “Read All About It”.

Chuck Collins speaks out at “Stop the Pledge” Rally outside Grover Norquist’s office in DC.

Chuck Collins at Grover Norquist office: Stop the Pledge Rally

Ann Manning in Minneapolis:

Ann Manning standing with 99% in Minneapolis 2012

Our Voices Were Heard – April Actions is an article on Wealth For Common Good.

1% for the 99%: Young NYC Philanthropists Demand Rich Pay Fair Share of Taxes

2012-04-25T20:15:35Z

(Photo: Liz Borda)

Armed with pies and pie charts on Sunday afternoon in Prospect Park, a group of self-identified 1%ers set out to educate neighborhood residents about the role of the tax system in increasing wealth inequality in the United States. Purposefully staged ahead of this year’s Tax Day and an attempt by the U.S. Senate to vote on the Buffett Rule, the action aimed to raise awareness among affluent young people in the Park Slope and Prospect Heights neighborhoods of how the current tax structure favors and protects people with wealth.

A joint project of a pair of non-profits – Resource Generation and Wealth for the Common Good - the group campaigns for reforms of the current tax system to include higher taxes on the rich and an equal taxation on wealth and work. Under present law, the top tax rate is 35% but the tax rate on income earned from investments is only 15%.

“We want to be taxed, and we want our families to be taxed,” said Sophie Hagen, one of the participants. “We believe that the security of our families does not depend on how much wealth we have, and we want to re-imagine what safety, security, and community means.”

Concretely, this means leveraging their financial resources and positions of privilege to support social justice movements and affect institutional change, and Resource Generation supports them in doing so.

“Wealthy people actually have a key role to play in organizing for social change,” said Jessie Spector, program director at Resource Generation. “To have wealthy people saying that they don’t want wealth disparity either is such an important thing, especially because their voices have a lot of power in that space.”

Many Resource Generation members now publicly self-identify as the 1% standing in solidarity with the 99%, although it wasn’t always that way. Resource Generation was founded in 1995 and for most of its history worked discreetly – focusing its work either internally, on the education of its members in social change philanthropy, or on collaboration with like-minded grassroots organizations.

The Occupy movement has provided both an opportunity for Resource Generation to create a public face and a language with which to speak out. “I think many activists who are 1%ers feel that talking about the wealth that they come from is actually going to act counter to their activism,” said Hagen.

“We’re showing that that’s actually not true, that it is important to be honest and open about the privilege that we come from, because then we can really move the dialogue forward.”

For these 1%ers, or in some cases, actually 5%ers or 20%ers, coming to be involved with Resource Generation was a process of coming to terms with their class identity. “All of these feelings come up, about what is my worth and what is my role,” Spector explained. “Resource Generation really provides a community where I can work through some of that, and also not be quiet about my money but actually give it to organizations that I care about and say, ‘Yes, I’m a donor and I’m an activist and I care about these issues.’”

In describing the issue of tax justice, the Tax Team used pies – in lemon, chocolate, and deliciously melting “messy chocolate” varieties – to illustrate the current distribution of U.S. wealth and stock market wealth. The numbers: the top 1% owns 35% of wealth and 38% of stock market wealth, while the top 19% owns 52 and 53%, respectively.

At the end of the demonstration, the pies were cut up evenly and shared out between presenters and onlookers.

“It’s interesting, there’s definitely a growing inequality involved, but it’s hard to gauge how you feel about that,” said Charles Roberts, a neighborhood resident who sampled some pie. “The idea is to aspire to be on that other half or that 1%, so it’s hard to balance the idea of equality and the incentive to work really hard in order to make, hopefully, millions of dollars.”

In conjunction with the New York City event, local chapters of Resource Generation held similar pie actions April 15 and April 17 in cities around the country, including Washington, D.C., Boston, Philadelphia, Seattle, Denver, Los Angeles, Chicago, Durham, and Portland, Maine.

1% for the 99%: Young NYC Philanthropists Demand Rich Pay Fair Share of Taxes is an article on Wealth For Common Good.