GE Doesn’t Pay Taxes — Taxpayers Pay GE

In 1983 NY hotel-chain-owning billionaire Leona Helmsley said, “We don’t pay taxes. Only the little people pay taxes…” As our country migrates from democracy to plutocracy, this more and more appears to be official policy. Again and again we see tax cuts for the wealthy few, tax breaks and subsidies for the big corporations that operate as fronts for those wealthy few, and budget cuts for the things We, the People (government) do to empower and protect each other. Just a few weeks ago we watched as an extension of the Bush tax cuts and a huge cut in the estate tax rate was pushed through. Now we watch as the discussion turns to cuts in Social Security and the rest of the so-called “safety net.”

Another indicator of plutocracy (government of, by and for the wealthy) is impunity for those at the top. Leona Helmsley actually went to jail for tax evasion. Even as recently as the early-90s Savings and Loan Crisis our government investigated, prosecuted and jailed more than a thousand bad actors for fraud and other crimes. This time, well, … not so much. Well … actually not at all. Times have changed. Don’t look back. Deal with it. Suck it up. Let’s all get on the same team and keep this ball moving forward down the field at the end of the day. Whatever. Hey, look over there!

Today’s Plutocracy Indicator

From the NY Times, G.E.’s Strategies Let It Avoid Taxes Altogether

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

So not only did GE, the highly-profitable recipient of federal contracts and bailout money, not pay taxes, we paid them $3.2 billion!

Revolving Door Writes The Loopholes

How does GE accomplish this? By taking advantage of the “revolving door” where people move back-and-forth from government agencies to the corporations those agencies are supposed to oversee. From the NY Times story,

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

While Congressional staffers they write the loopholes into the laws. Then they go to their reward at corporate headquarters for very high pay. Then they go work in the agencies to make sure the rulings go their way. They then go collect again. It is a lucrative game. They’re the winners — they call themselves “producers.” We’re the losers — they call us … “losers.”

Who Really Benefits?

The use of the general term “corporations” to describe the beneficiaries of these policies is really a smokescreen that masks the fact that really a very few people are benefiting. Yesterday’s post, Lobbyists Admit Corporate Tax “Holiday” Didn’t Work, But Demand It Again, pointed out that it is a very few actual people that we are really talking about here,

Corporate wealth is really just personal wealth, held at arms length from the person to mask what is going on. The wealthiest 1% own 50.9% of all stocks, bonds, and mutual fund assets. The wealthiest 10 percent own more than 90 percent. The bulk of us own less than 1 percent. When you hear about “corporate” holdings, think about this chart from the Working Group on Extreme Inequality:

At The Expense Of The Rest Of Us

These benefits accrue to the wealthy few at the expense of the rest of us. What many people don’t understand is that it is also at the expense of other companies. Our infrastructure and public structures – roads, education, courts, customers – are the soil in which good companies can grow. When tax dodgers are able to avoid contributing to our communities and country, the overall environment for the rest of our businesses deteriorates and our worldwide competitiveness declines. We see it all around us every day.

Ungrateful Bastards

For all the benefits huge multinational companies like GE get from We, the People — subsidies, contracts, bailouts, tax breaks and customers, they aren’t very rateful and certainly are not about to give anything back. Barry Ritholtz at The Big Picture writes,

Yet another reason why you don’t bailout companies whose inability to manage risk allowed themselves to become destroyed: They not only do not deserve to continue with the same management/shareholders/creditors who all created the insolvency in the first place, but they are ungrateful bastards as well.

Even Reagan

Even tax-cutter Ronald Reagan balked when he learned that GE (for which he had been spokesman) didn’t pay its taxes. From the NY Times story,

In the mid-1980s, President Ronald Reagan overhauled the tax system after learning that G.E. — a company for which he had once worked as a commercial pitchman — was among dozens of corporations that had used accounting gamesmanship to avoid paying any taxes.

“I didn’t realize things had gotten that far out of line,” Mr. Reagan told the Treasury secretary, Donald T. Regan, according to Mr. Regan’s 1988 memoir. The president supported a change that closed loopholes and required G.E. to pay a far higher effective rate, up to 32.5 percent.

Isaiah Poole, in Rewriting Eric Cantor’s Cant On Jobs,

“So let’s stop the demagoguery about overtaxed corporations and have a dialogue instead about a tax code that taxes all people fairly. A tax system in which a billionaire like Warren Buffett pays taxes at a lower rate than his secretary is not fair, and an unfair tax code, one that’s riddled with loopholes, perverse incentives and ways to game the system, keeps us limping and unproductive.”

Terrance Heath has been writing a series on The Truth About Tax & Spend Conservatism,

… the truth about “Tax & Spend Conservatism” is that it isn’t about raising or cutting taxes, but about whose taxes are raised and whose taxes are cut. It’s about, as Robert Borsage put it, who gets hit with the tab for the great recession.

Resources

Public Campaign fact sheet titled, GE’s Corporate Tax Dodging that begins,

General Electric spent $235.2 million in political money since 2000–paid no federal income taxes in 2008, 2009, and 2010.

and points out:

G.E. cut American jobs and exported them overseas.

The New York Times reports “[since] 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment.”

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am also a Fellow with CAF.

NYT On Jerry Brown

In The New York Times today Maureen Dowd writes about Governor Jerry Brown in Governor Brown Redux: The Iceman Melteth. Some notable excerpts,

The shock of dark hair is gone, but Jerry Brown is still Jerry Brown. The prickliness, bluntness, questioning, calculating. That against-the-grain attitude; disdain for materialism, emptiness and politics as usual; that Jesuit-Buddhist outlook.
And yet, Jerry Brown is very different. The Howard Beale rants have become amiable riffs. Instead of tossing off insults, as when he called the Clintons the Bonnie and Clyde of American politics, he offers dry wit. He is less coiled.

On the Tea Party,

He was a precursor to the Tea Party, and he admits he tends to be a “tear-it-apart guy.” “But I feel I’m in a more constructive mode at this time of my life,” he said. “I understand hostility and alienation from the soulless bureaucratic state, but the Tea Party is a tear-it-apart group. We have to have continuity along with change if we’re going to hold the place together.”

On spending,

Was he cheap as a child? “During World War II, to get butter, we had little ration tickets,” he says. “I thought it was kind of fun.” His uncle Frank, he says, was so tight he had a pay phone in his house.

Saturday Rallies In Sacramento, SF, LA, San Diego

We are all under attack, from public employees in Wisconsin and several other states, to the DC budget-cutters (just a few weeks after giving a huge tax cut to the rich) killing off NPR, slashing the EPA, consumer protections and so many other things government does for We, the People. Turn out tomorrow – Egypt-style – and demand that We, the People be heard from.
According to MoveOn’s Rally to Save the American Dream site There is now a San Francisco event as well as a Sacramento event, a Los Angeles and San Diego are also planning major rallies.
This is a chance to show your support for public employees in Wisconsin and everywhere, and for working people everywhere, and for ourselves. a href=”http://pol.moveon.org/event/americandream/?rc=rsad_bg_caf”>Click here to locate an event near you. In addition the US Uncut site shows even more events planned Click through to see what is nearyou. (Follow the US Uncut Twitter feed here.)
From the Rally to Save the American Dream site:

  

Rally to Save the American Dream
In Wisconsin and around our country, the American Dream is under fierce attack. Instead of creating jobs, Republicans are giving tax breaks to corporations and the very rich–and then cutting funding for education, police, emergency response, and vital human services.
On Saturday, February 26, at noon local time, we are organizing rallies in front of every statehouse and in every major city to stand in solidarity with the people of Wisconsin. We demand an end to the attacks on worker’s rights and public services across the country. We demand investment, to create decent jobs for the millions of people who desperately want to work. And we demand that the rich and powerful pay their fair share.
We are all Wisconsin. We are all Americans.
This Saturday, we will stand together to Save the American Dream. Be sure to wear Wisconsin Badger colors–red and white–to show your solidarity. Sign up today to join in!

Wisconsin Comes To California: Republican Bill Bans Collective Bargaining

On the heels of Wisconsin, Ohio, Indiana, Michigan, Iowa, Tennessee, Florida and other states, California Republicans have introduced a Wisconsin-style bill to strip public employees of the right to union bargaining.
San Francisco Chronicle, yesterday, Showdown brewing over CA state employee pensions,

   

On Tuesday, Assemblyman Allan Mansoor, R-Costa Mesa (Orange County), introduced a bill that would strip public employees of their ability to collectively bargain for retirement benefits.

But what else would you expect? What is interesting is the rest of the story

The recent Speak Out California post, Discover The Network Out To Crush Our Public Workers looked into who is behind the attack on public employees, tracing back from an LA Times op-ed by Marcia Fritz of the California Foundation for Fiscal Responsibility. Fritz pops up again in the Chronicle story,
   

That [pension reform] “isn’t just a state problem, it’s far worse in cities,” said Marcia Fritz, president of the California Foundation for Fiscal Responsibility, a nonprofit pension reform group. … “We need the leader of California to stand up and lead on this issue,” Fritz said. “And if he doesn’t, we’ll go around him, just like people did on Proposition 13 (in 1978 during Brown’s first stint as governor). And I don’t think he wants that.”

Also popping up in the Chronicle story,

“I don’t think Brown wants to take on his union pals,” said Steven Greenhut, author of “Plunder! How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.”

From Speak Out California’s Discover The Network Out To Crush Our Public Workers,

   

The Pacific Research Institute has a mission to “champion freedom, opportunity, and personal responsibility for all individuals by advancing free-market policy solutions.”
The Director of PRI’s Journalism Center wrote a book called, “Plunder: How Public Employee Unions are Raiding Treasuries, Controlling our Lives and Bankrupting the Nation.”

In the “Network” post I wrote about “Cookie-Cutter Think Tanks,”

   

These are just a few of the network of conservative “institutes,” etc. around the country. Just a very few. (Here is a list of 185 organizations purporting to be conservative state think tanks, a list of 40 conservative national organizations with state networks and a list of 306 organizations purporting to be conservative national think tanks and 65 conservative “family policy” organizations. There are other lists with other criteria.) 

As you follow these threads you discover layer upon layer of corporate/conservative front groups, masking their activities and funders with more layers of front groups. They all have similar mission statements, have similar people on their Boards with similar backgrounds, cover the same issues the same way, and even use remarkably similar language. They seem to be not just connected but interconnected. The sheer number of these similar “think tanks” make it appear that there must be a machine somewhere that stamps these things from a template. That machine is named “Scaife/Coors/Koch…” (Please read also and spend some time here.)

I haven’t written Part II of the post yet, but in the research I found a “think tank” that had no purpose except to release one “study” by Lanny Ebenstein of the California Center for Public Policy, which is not to be confused with with the California Public Policy Center, of Pension Tsunami, which is discussed in the post.
In today’s Santa Ynez Valley Journal story, END APPROACHING FOR PUBLIC UNIONS?, Ebenstein pops up, with a new organization:

   

… a new group called Californians for Public Union Reform has spearheaded an effort to place an initiative on next year’s state ballot that would end employee collective bargaining, the behind-closed-doors process by which unions negotiate salaries, health care and other retirement benefits on behalf of employees. 

Lanny Ebenstein, chairman of the group and a professor of economics at UCSB, said the proposal to curtail collective bargaining is a key component to fiscal reform, and one that he believes will help solve California’s budgetary woes the same way Walker thinks the decertification of all public-sector unions will balance Wisconsin’s budget. … 

 “Something is fundamentally wrong with the system, and it’s obvious what the elephant in the room is: Public sector employees are receiving too much compensation,” he said.

That’s the ticket, public employees — teachers, police, DMV workers — caused the recession. THEY are the reason states are out of money. Tax cuts for the rich had nothing to do with it.

Right. Blame the workers, who have already taken pay cuts, increased retirement age, foreclosures, etc.  Certainly not Wall Street or the wealthy who are taking an ever greater share of the country’s income and wealth


P.S. There is a Rally to Save the American Dream in Sacramento this Saturday, being organized by MoveOn.org and others to support working people, details here.

Will Republicans Allow Public To Vote?

Sacramento is still stuck.  George Skelton lays it out in the LA Times, in, California lawmakers need to get moving,

   

Republicans can’t get out of their fix without angering the anti-tax crowd they cower to. Either they compromise and allow a tax extension measure to be placed on a special election ballot or they’re seen as obstructionists or, worse, irrelevant, doing nothing in Sacramento except drawing their public pay and perks.
. . . Democrats seem to be moving at a brisk pace on spending cuts, but Republicans still are crawling on tax negotiations.
. . . The Legislature needs to pass a compromise package within the next three or four weeks in order for Brown to call a special election in June. If that deadline is missed, the earliest balloting would be in late September, because voters tend to ignore political pitches during the summer vacation season.

Republicans hold just over 1/3 of the votes in Sacramento. That is just enough to block everything, including allowing the public to express their wishes. And that is what they are doing. A shutdown seems to be their goal.
Update — Dick Morris lays out the Republican strategy nationally, and it clearly is the same as in California: Create a budget deadlock on purpose, never mind the effect on citizens, use it to increase your own political power:
A Budget Deadlock Will Defeat Obama, But a Compromise Might Save Him,

A budget deadlock, played out over months, will doom President Obama and assure his defeat. But an easily won compromise will help him get re-elected.
. . . If the Republicans hold firm in demanding huge spending cuts and Obama does not give in, the question of whether or not to cut spending will dominate the nation’s political discourse for months on end and will spill over into the 2012 election.
To assure that it will, the Republicans should hold firm to their budget spending cuts without surrender or compromise. If necessary, it is OK to vote a few very short term continuing resolutions to keep the government open for a few weeks at a time, always keeping on the pressure.
. . . If Obama offers a half a loaf, the GOP should spurn it for weeks and months.

Does this or does it not sound exactly like the Republican plan in California, too?

Discover The Network Out To Crush Our Public Workers

It is difficult to read, watch or listen to the news without hearing that public employees are paid too much and get “lucrative” pensions and this is “bankrupting” your state, county or city. Public officials are “in bed” with “union bosses” and state and local government; taxpayer dollars are wasted to pay for people who don’t do much work but live the good life. “Reports” and “studies” confirm this.
People hear the same story over and over and over and over, seemingly coming from everywhere: public employees have it good, with extravagant pay and “lavish” or “plush” pensions, while taxpayers are taking it in the shorts. Public-employee pensions are “bankrupting” the state/county/city. “Unfunded liabilities” are “out of control” and it is time to do something about it before it is too late.
This is part of a broad, nationwide attack on public employees and their unions, and through them, on government and democracy itself.

Continue reading

Democracy Vs Plutocracy: Public Transportation

Here is a letter in a recent “Mr. Roadshow” column in the San Jose Mercury News. The letter illustrates the problems in plutocratic/libertarian thinking vs democracy. (Note: Caltrain is the commuter-rail line serving towns between San Francisco and San Jose.)

Your recent article on Caltrain’s $30 million deficit is once again showing your socialist leanings. Saying Larry Ellison of Oracle or Sergey Brin and Larry Page of Google or Steve Jobs of Apple should rescue Caltrain is one of your famous inane ideas. If Caltrain cannot operate without taxpayer funding, it should go out of business. Just how much taxpayer money is used to fund the likes of Southwest Airlines, Greyhound Bus or any taxi services? As a taxpayer, I have never received a billing statement from any of these companies for not using their business! If you want the rich to pay for Caltrain, I suggest you tax rich athletes, actors, entertainers, the major news network anchors and, of course, rich politicians such as Dianne Feinstein, Barbara Boxer, Nancy Pelosi and John Kerry, to name a few. Private business is the heart of America! Not government! Maybe you should quit the Mercury News and go to work for Gov. Jerry “Moonbeam” Brown and become director of Caltrans.

Let’s look at the assumptions in this letter:

  • If XXXX cannot operate without taxpayer funding, it should go out of business. (Insert Caltrain, Public Radio, schools, libraries, health clinic for the poor, etc., as needed.)
  • Private business is the heart of America! Not government!
  • No taxpayer money goes to help airlines, bus companies, etc. operate.
  • Never mind the idea of public infrastructure, courts, etc. that provide the underpinnings of all business. An airline can’t operate without an airport, air traffic control, weather forecasting, etc. A bus or taxi company cannot operate without roads, police, and the rest of the system. No business would exist without courts and the financial system…
    I want to explore a deeper question. What are we, as citizens in a democracy, entitled to? Yes, that word, “entitled.” There are things we are entitled to because we are human beings and citizens. We are supposedly still a one-person-one-vote system and not a one-dollar-one-vote system, and we are supposedly entitled to equal opportunity, equal access and an equal voice.
    But for-profit systems only respect those with lots of money. In a democracy is it right to require people to have a lot of money have access to transportation? To health care? To information?
    What are your thoughts?
    This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

    Jerry Brown’s State of the State Speech

    Today’s State of the State speech lasted about 15 minutes. This was actually a speech that regular people would enjoy listening to:

    The interesting thing about this speech is that it was clearly not “crafted” by speechwriters. It was Jerry being Jerry, straightforward, open, and to the point.
    Summary: he said we need to get the budget straightened out, that we have a great opportunity to really go places as a state if we do this, that he has presented a plan to do this and wants to take the plan to the voters, and if anyone has a better idea please tell us what it is.
    One notable thing about the speech was it was entirely about trying to get the Republicans to cooperate with anything at all. Republicans are trying to prevent taking Brown’s plan to the voters, prevent passing anything with any taxes, prevent any budget that allows the government to operate as a government, and prevent … everything.
    So Brown spent most of the speech outlining why it is wrong to prevent the public from being allowed to vote. Following are a few notes paraphrasing what he said:

    Under our form of government it would be unconscionable to tell the voters they can’t decide.
    The state’s Constitution says all political power is inherent in the people.
    “When democratic ideals and calls for the right to vote are stirring the imagination of young people in Egypt and Tunisia and other parts of the world, we in California can’t say now is the time to block a vote of the people,”
    The only way forward is to go back to the people and seek their guidance.
    If you want to block the people’s right to vote, stand up to say block that vote. (No one stood up.)
    My plan to rebuild California requires a vote of the people, and frankly, I believe it would be irresponsible to exclude the people from this process. They have a right to vote on this plan. This state belongs to all of us, not just those in this chamber. Given the unique nature of the crisis and the serious impact our decisions will have on millions of Californians, whether it’s more cuts, extend taxes, the voters deserve to be heard.
    It’s the best budget I can devise, if any of you have any suggestions on how it can be better please share them with me. No one has offered even one alternative solution.
    If we can get our budget in order we are in a good position to take advantage of our assets.

    Democracy, Plutocracy Chart

    DEMOCRACY

    PLUTOCRACY

    We, the People

    Wealthy Few

    One Person One Vote

    One Dollar One Vote

    Government

    Limited Government

    Majority

    Supermajority

    Information

    Propaganda

    Taxes on the Wealthy

    Tax Cuts for the Wealthy

    Budgets

    Budget Cuts

    Jobs programs

    Bank Bailouts

    Welfare

    Warfare

    Express Lanes for 2 or More People

    Express Lanes for 2 or More Dollars

    Security Lines at Airports

    Special First-Class Security Lanes at Airports

    Public Schools

    Private Schools

    Public Investment

    Private Investment

    Update:

    Public Transportation Private Jets
    Accountability Impunity
    Rule Of Law Above The Law
    Transparency Secrecy
    Sustainable growth Polluter Growth
    Medicare-For-All Healthcare For Profit
    Clean Elections Rigged Elections
    Savings Accounts Offshore Accounts
    Credit Card Debt Credit Default Swaps
    Union members Serfs

    Feel free to add additional contrasts in the comments.

    George Will’s Problem With Government By We, The People

    In a column today, Hubris heading for a fall, George Will lays out his problem with America’s system of decision-making by We, the People.

    The idea that America’s problem of governance is one of inadequate resources misses this lesson of the last half-century: No amount of resources can prevent [decision-making by We, the People] from performing poorly when it tries to perform too many tasks, or particular tasks for which it is inherently unsuited.*

    Will continues, saying that the problem with democracy is “the bell-shaped curve.” He says we should be ruled by the class of people who “achieve eminence” by superior performance, like surgeons, and not the regular people currently allowed to vote.

    Actually, decision-making by We, the People is not sufficiently demoralized. The hubris that is the occupational hazard and defining trait of the political class continues to cause decision-making by We, the People to overpromise and underperform. This class blithely considers itself exempt from the tyranny of the bell-shaped curve – the fact that in most occupations a few people are excellent, a few are awful, and most are average.
    In fact, the bell curve is particularly pertinent to government. Surgeons achieve eminence by what they do “in office” – in operating rooms, performing surgery. Politicians achieve eminence simply by securing office – by winning elections, a skill often related loosely, if at all, to their performance in office.

    Will goes on to complain about the “pathologies” of expanded decision-making by We, the People, saying that public-sector jobs like teaching, nursing, the performing arts are inferior because they are labor-intensive and inherently do not increase their productivity, and are thus “stagnant” with rising relative costs. He says We, the People should not provide these services to people.
    I vote for democracy. But, if Will has his way I won’t be able to vote.
    * I substituted “decision-making by We, the People” for Will’s use of the word “government.”
    This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.