Obama/Geithner/Summers Betray America's Trust

The chorus of naysayers to the Obama administration's response to our economic crisis must be raised to deafening levels. There is little time to waste, even if our government may already be bought and paid for by the financial elites. That does not mean that the citizens must go down quietly or meekly.

Earlier today, Robert Oak highlighted an effort to urge Obama to reconsider his policies with respect to the mega-bank bailouts. For me, one of the most important parts of this appeal is:

Scholars will debate the true causes for decades, but let me offer this as a plausible explanation. Pension funds, endowments, and trusts have financial obligations that are met by targeting a given level of return on investments made over a period of time. When the Federal Reserve, in conjunction with global counterparts, brought interests rates below 4% in 2001, these pension funds, endowments, and trusts found it increasingly difficult to meet their obligations. This forced them to move away from traditional safe investments such as Treasury bonds and into other investments that appeared safe, yet paid higher rates of return. In fact, many investors were restricted to securities that were christened the coveted AAA rating from ratings agencies such as Moodys, S&P, and Fitch.

That's what I hear from family and friends, "We all played by the rules and did what we thought you were supposed to do. We worked, we saved, we put off necessities and planned for the kids future, our future . . . we believed that we were living prudently." Truth is, we were being gamed all along.

Over the weekend, Marcy Wheeler wrote an article about tax /secrecy havens that was absolutely infuriating. Here's an excerpt:

But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America's 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)

Today, there is a related article from Stormy, which left me thinking, Yeah! Why not? WTF? I mean, what is so wrong with thinking like this:

We worry and fret about how we should approach those with obscene amounts of money. Do we dare raise their taxes? Will we offend them? Will we be accused of trampling on the divine entrepreneurial spirit? Does not every individual have the right to amass billions? Hell, no. Every billionaire has countless little people to thank. He sits upon a mountain of struggling poor--top dog, indefinably noble, a testament to the principle we seem to hold dear: Greed.

Here is the taxation principle I would propose: No one should walk away with more than one million dollars a year after taxation. I think one million is more than generous. Money garnered from these silk purses would go a long way towards creating a more equitable world. Ask the world's poor who now rummage through the world's garbage heaps for a bit to eat or something to wear.

Hopefully, we have not reached a tipping point in the ongoing financial power grab. Maybe the ideas of fairness, economic justice and representative democracy still have meaning in Washington. We had better hope so, but at the very least we should be demanding it.

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oh yeah tax havens!

Never a mention! Nice focus on that one.

And so it goes.....

It is interesting to note that the GAO's study back in the '90s (covering 1996-2000) demonstrated that 61% of America's corporations paid NO federal taxes (that figure skyrocketed during 2001-2008, some 71-73%), through the process of "profit laundering" via those offshore tax havens, also referred to as "offshore finance centers."

The head of the economics department at the University of Maryland (I believe it was Prof. Tilly) along with Prof. Morici did a landmark study on such tax avoidance, also back in the '90s.

Thus, those corporations which once accounted for around 30% to 35% of the federal tax revenue base, now account for approximately 7%.

No wonder this economy is hurting: missing taxation, offshored jobs, Leveraged-buyout raping & pillaging of employment and companies, and that little old derivatives scam, accounting for trillions and trillions.

corporate tax rate

that classic corporate GOP argument of "lower corporate tax rates" as well as the rhetoric "we're going to stop loopholes in the tax code to encourage offshore outsourcing" is something we need to dig into and write about.

If there is ever a place to screw the American people because it's so complex and confusing, it's the corporate tax code and international tax havens by these multinational corporations.

Paul Volcker got shuffled off to "lead a team on examining the US tax code", which many are saying he is being marginalized by the Obama administration. That's probably true, yet on the other hand if someone can stop these tax avoidance, play each nation-state against each other by bouncing around the globe money, locations, profits and workers....that would be quite a feat!