I recently saw yet another study that attempted to quantify just how much money is lost to national treasuries by reason of what is politely called “tax avoidance.”
The report, from an organization named the “Tax Justice Network,” is touted as the first study to thoroughly measure how much money each country loses each year to corporate tax abuse and private tax evasion. Its calculations were based upon data that had been self-reported by corporations to tax authorities.
I realize that one person’s loophole is another person’s policy choice, but with that caveat…
The research found–unsurprisingly–that wealthy countries are the primary drivers of tax revenue loss. (I say “unsurprisingly” because you have to have money to evade taxes.) Wealthy countries contributed most to the total of $427 billion in losses annually. Those losses, as the report noted, affect the ability of countries all over the world to provide services to the public.
This report puts numbers to the problem, but any sentient citizen is aware of the arguably pathological aversion to taxes displayed by many wealthy citizens and corporate entities. Certainly that’s true in the United States, where politicians with straight faces equate taxation with theft, and bemoan the extraction of dollars from presumed self-made “makers” to support those they dismiss as “takers.”
Probably the best response to this mischaracterization was Elizabeth Warren’s smackdown a few years ago:
There is nobody in this country who got rich on their own. Nobody. You built a factory out there – good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory… Now look. You built a factory and it turned into something terrific or a great idea – God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.
Economists are quick to point out that economic growth–and the ability of wealthy Americans to prosper in an economy heavily dependent on consumption–requires that those at the bottom of the income distribution have disposable income sufficient to spend in the marketplace. Corporate bigwigs don’t create jobs–job creation is a function of demand. (No one is going to be hired to produce more widgets if few people have the resources to buy those widgets.)
What I always wonder, however, is whether these “captains of industry” treat their country clubs and other membership organizations the way they treat their countries. How would the Orange Menace react if members of Mar-A-Lago declined to pay their dues?
Those golf courses need tending. The clubhouse roofs and mechanical systems require maintenance. The properly servile “help” won’t be there to bring you your Scotch and soda if they aren’t being paid. Etc. Why don’t the same people who presumably understand the need to pay dues adequate to keep these organizations functioning acknowledge that–as members of the polity–they have similar obligations to the country?
Because they do know better.The loss of those billions of dollars isn’t accidental.
“A global tax system that loses over $427 billion a year is not a broken system, it’s a system programmed to fail,” said Alex Cobham, chief executive of the Tax Justice Network.
The ability to evade paying one’s membership dues–the chutzpah required to be a “free rider” on the contributions of others– doesn’t mean that a businessperson is “smart.” To the contrary, it demonstrates just who the real “takers” are.
35 thoughts on “Pay Your Dues!”
What is particularly offensive, is that the wealthy “game” the system, while the poor “cheat.” Is there no religion or ethical system that can convince people they are the same thing from a different perspective?
Rather than copy and paste Elizabeth Warren’s quoted smackdown above; I will merely ask that you read it again and apply it to hundreds of thousands of tax exempt churches. Religious laws protecting some have been enacted and religion is becoming deeply embedded in governments at all levels while the government is, as stated in the 1st Amendment, not establishing religion but is allowing laws “…prohibiting the free exercise thereof…” of many religions to be enacted at state levels. What would their tax dollars add up to?
On a personal level; my taxable income too low to pay income taxes. I struggle to maintain my savings account at or near $5,000 in case of emergencies for myself and my family; that account accrues .09, that is NINE CENTS, per month in interest which is reported to the federal government as income.
“Economists are quick to point out that economic growth–and the ability of wealthy Americans to prosper in an economy heavily dependent on consumption–requires that those at the bottom of the income distribution have disposable income sufficient to spend in the marketplace.”
This 2020 Holiday Season, I will not be spending what “disposable income” I have in the marketplace. I will not be Christmas shopping due to the Covid-19 Pandemic; I have asked my family, in lieu of gifts I do not need, to please donate to local food banks as I am doing this year. I live off of my “paid membership dues” in the form of Social Security and PERF which is barely above poverty level; the millions forced into joblessness and lack of income to pay for basics such as housing, food and medical care, need my help more than any business in the marketplace keeping Wall Street afloat.
Do any of you here in Indianapolis know where I can get a list of smaller food banks to donate to in addition to the known groups I have donated to?
Over the last few decades, the Republican administrations have decimated the COLLECTION Service of the IRS. That mean there are fewer and fewer people employed by the government to LOOK at those who are cheating. Our government put blinders over the eyes of those who make sure companies and individuals abide by OUR rules. I assume that KNOWING they are unlikely to get caught has emboldened them further. Step one could be rebuilding the enforcement/collection division of the IRS. That should not require Mitch and the Republicans to sign on. JUST ENFORCE THE LAWS.
The tax “reform” bill ballooned the deficit. Republicans never worry about the deficit when it comes to tax cuts for the rich. They only worry about it when democrats want to create social safety networks that help those in need.
Compassionate conservatism is an oxymoron.
We will have the pleasure of continuing to watch Katie Porter school the CEOs for at least another two years.
It is the wealthiest among us who, in the words of Charles Koch, are “saving capitalism from democracy”.
I would have to agree with JoAnn, churches and religious organizations should be taxed! Because, they are effectively over the wall, or demolished the wall between church and state. They put their nose in politics, and, since the beginning, religious organizations have endeavored, and successfully managed their policies and dogmas into civil society! So, as a matter of civil society they must take up the burden of taxation afforded to all in civil society. Just the taxation of religious organizations would put a huge dent in the national debt/deficit. Rolling back the ridiculous tax cuts to corporations and the wealthy would also put a huge dent into that very same deficit.
Increasing the tax base by new deal programs getting people back to work, will also decrease the deficit because economic activity and more taxpayers will increase contributions to the public coffers. Also, many of the red states who are taker states need to be nudged towards self-sufficiency. In those red states, there are a lot of religious organizations that can contribute to that through taxation! But also, politicians that roil against feeding at the public trough, definitely realize that without the maker states, they would be in a whole world of hurt! The maker states allow the taker states to keep their taxes low while extorting taxpayers in the maker states (mostly blue states) to support their illusionary and hypocritical (red state) realities.
With the government protecting its citizenry overseas, American corporations and the American wealthy need to pony up. We all pay for those governmental protections afforded to the wealthy and corporations! Higher tax rates never affected the growth of the economy. If you look at the federal corporate tax rates from around 1900 to 2012, corporations are almost paying nothing now. But at times were paying 50% or more. And, that was in the 40s and 50s when our industrial explosion was full steam ahead. Production and growth was not slowed one iota because of higher corporate taxes. Neither was it slowed by higher taxes on the wealthy! These welfare programs for the wealthy and corporate entities need to be eliminated immediately!
So, you’re right, a lot of things could be done to share the burden which is expected in an equal and fair society. Will it happen? The resistance is going to be almost unpalatable and quite deafening. And it’s going to take harsh leadership to bring things back to equilibrium!
Yes, there is cheating by the wealthy. Why don’t we encourage and fund the government to have the smartest lawyers and accountants and incentivize the biggest “takedowns”?
On the other hand, the amount of money lost to legal “tax avoidance” designed to benefit primarily the wealthy is also massive. We need to make law changes like:
-Lower estate tax exemption limit and fix “stepped up” loophole
-End “carried interest” and real estate 101 exchange loopholes
-Only allow large deductions for charitable donations when the money is spent
-Tax more capital gains as ordinary income
-Implement a financial transactions tax
-Increase maximum earnings for paying FICA
– No mortgage interest deduction for more than 2 homes
Do not allow U.S. corporations to “defer” their U.S. taxes on offshore profits
It isn’t just the federal coffers that could use the tax money raised if churches were taxed. Our local property tax base would be increased as well, thus helping out our police and fire departments as well as street maintenance. And as long as tax reform is undertaken there are plenty of other tax exempt organizations besides churches that raise money only to pay their leader and staff while delivering little to nothing toward their “mission”. Those phony scams needs to come to a halt.
They pay their country club dues without complaint because they know they (and not any of “those” people) benefit.
On Sunday AM I heard an interesting discussion with 3 of our current generation of great historians.
The most interesting historical reflection and comparison to our present time was from Doris Kearns Goodwin.
She said that the times of Teddy Roosevelt and his Presidency are most analogous to the present in terms of wealth inequality and political division. That was the era of the “Gilded Age” with unfettered accumulation of obscene and ostentatious wealth while the working class struggled on meagre wages and no means of redress.
I may have to find some books to read on that era and how the Roosevelt administration addressed the problems of that era. The only thing I’m aware of is that the 1st income tax program was passed.
It is a very peculiar system requiring massive amounts of propaganda spreading to ensure the peasants don’t peak above a certain level.
For those suggesting that we begin taxing churches, the only way to make that happen is to eliminate the section of the US Tax Code 501(c)(x) – tax exempt organizations (includes all churches) and tax-free charitable contributions (including donations to churches) . The reason is that if it’s not done then every church in America will become “not a church” and morph into some other kind of charitable organization that enjoys tax exemption. The fact is that while non-profits do a whole lot of good in this country and elsewhere, it also serves as a regressive provision of the tax code as it’s only the rich who benefit from it.
Nonprofits should not pay taxes because they, in fact, do not generate profits, not because the tax code exempts them from it, providing that the code allows for some margin to replenish reserves to be used for future charitable use. The most egregious example of abuse of the tax-exempt charitable organization is not churches. It’s the University of Alabama football program. Hospital/health providers aren’t far behind.
If Congress and POTUS don’t have the stomach to do this then it’s not worth further discussion – because SCOTUS, and especially our current version of it, would rightly slap down any law that discriminated against religious organizations over secular tax-exempt organizations.
Another ox waiting to be gored is the time-honored religious dictum all across the political spectrum that capital MUST be given favorable tax treatment over labor. The top 1% derive that majority of their income from capital gains, taxed at 15% and dividends (taxed at 22% above a certain income level) but working stiffs are subject to higher marginal tax rates. I always admired Steve Forbes, son of the magazine scion and one-time presidential candidate, who campaigned on the idea of a flat tax. While I would never agree to a very pure implementation of it (too regressive) it could be adopted in a hybrid model where tax rates are marginally increased up to a maximum, say 25% (it’s now 37%). But here’s where the FLAT part comes into place. Capital gains, Interest, dividends, gifts (above a certain amount) and yes, ESTATES (above a certain value) would ALL be taxed exactly like ordinary (W-2) earned income.
And how would corporations and LLC’s and LLP’s, etc. be taxed? Drum-roll please….. They WOULDN’T be taxed! (Dems hate this idea as much as Republicans love it). As long as a corporation retains profits for purposes of reinvestment in the business they are not taxed because otherwise the income would be taxed twice (once for the corp and once for the shareholder on dividends paid by the corp). There would be limits as to how much capital any corp can retain as a % of it’s book value before it is REQUIRED to be paid out in dividends to shareholders, or be taxed, at exactly the same rate (25% in my example). I would name this provision after Jeff Bezos.
The only way such a scheme would actually work, however, and be revenue neutral or better, is to repeal the thousands of pages of the US Tax Code devoted to loopholes, mostly in the form of special provisions that have to do with how revenue and expenses are recognized and treated. Once all of those are GONE, the US Congress will have to find something else to do with their time, because today what they do is sell these tax loopholes to special interests and constituents in exchange for their contributions to pay for expensive political campaigns. The US Tax Code currently fills 2,600 pages and has tripled in size over the last 30-35 years, with another 65,000 pages of text that describe its hideous complexity.
Last, God Bless you Jo Ann Green for thinking of others less fortunate to whom you are willing to give part of your fixed income!
There was an opinion piece in the NY Times about raising minimum wage, but it made some good points about the theory of trickle down economics:
The conventional wisdom held that productivity growth was the only route to higher wages. Through that lens, efforts to negotiate or require higher wages were counterproductive. Minimum-wage laws would raise unemployment because there was only so much money in the wage pool, and if some people got more, others would get none. Collective bargaining similarly was derided as a scheme by some workers to take money from others.
It was in the context of this worldview that it became popular to argue that tax cuts would drive prosperity. Rich people would invest, productivity would increase, wages would rise.
In the real world, things are more complicated. Wages are influenced by a tug of war between employers and workers, and employers have been winning. One clear piece of evidence is the yawning divergence between productivity growth and wage growth since roughly 1970. Productivity has more than doubled; wages have lagged far behind.
The point is not that economists were completely wrong. Productivity obviously plays a role in determining wages. McDonald’s cannot pay workers more money than it collects from its customers. But economists were partly and consequentially wrong. Power mattered, too.
As incomes at the top level have risen, the taxes at the top level have been slashed, and it is remains the same at the middle and lower levels shifting burdens to people that can less and less afford it and now we have a whole new group of people shifting into the group where those tax breaks matter less and less because they are falling below the poverty line. Corporations are growing rich at the expense of the employees and at the same time avoiding taxes.
I also agree that “not for profits”, especially hospitals that have revenues in the billions need to to step up and pay taxes. The reason these guys have tax breaks is because they are supposed to provide charity, or social benefits, but many do so a minimal level, and that free ride should be reigned in. I have a hard time with something like our neighborhood not-for-profit, the Old Northside Foundation, that owns two public parks and several pieces of public art. We pay the storm water assessment fees, but we don’t pay property taxes, and it is obvious they are good for the community because they attract visitors and attention from all over the area.
I have no idea why the IRS is such a low funding priority. I can only guess it is part of the same strategy to make the rich get richer knowing any questionable practices will never get caught.
Also a huge chunk of downtown Indy is owned by the State and Federal government, removing that property from the city tax roles. I don’t know if the solution is to tax them, or create new access fees similar to storm water assessment fees.
Even the mortgage exemption tax deduction has unintended consequences. I think I had read that without it, housing prices would be 5% lower! I suspect that it contributes to global warming by encouraging people to continually trade up to bigger and bigger homes and lots in the suburbs.
So many problem with taxes and loop holes.
The Paradise Papers in 2017 and the Panama Papers in 2016 revealed the worldwide network of off shore tax havens. According to the BBC, the name “Paradise Papers” reflects “the idyllic profiles of many of the offshore jurisdictions whose workings are unveiled”, so-called tax havens, or “tax paradises”. The 1% and large corporations can take advantage of this.
The Trumpet as we learned paid little or no Federal Income Tax for years. I suspect he is not al;one among his 1% friends.
During the years Ike was president the the highest marginal personal income tax rates was 91%. As late as 1963 the highest marginal personal income tax rates was 91%. It is now 37%.
If you spent one dollar every second, it would take you roughly 11.5 days to spend all of it. If you spent one dollar every second it would take you 31 and 3/4 years to spend it all.
If the Democrats win the two Georgia Senate seats in the special election at least on paper or theory they would have the ability to finally set-up a fair taxation system for all of us. Our example may lead to other countries following our lead.
The question is would Biden go big and bold if the Democrats can win in Georgia, or will it just be some musical chairs and feel good talk.
As long as our elected officials can be bribed with campaign contributions, tax favors will be granted to the contributors. We need a comprehensive public funding system to strip the Wealthy Few of their ability to cheat the rest of us. Congress can create such a system with a simple single Act. Elect those candidates who are for such reform and reject those who are against it.
It’s anomalous that law and order Republicans look at that as necessary on every street but Wall Street.
Warren was my primary choice for president and Professor Kennedy’s recitation of one of Warren’s observations, among others, is the reason why. I have also written here and elsewhere that we are in need of substantial reform of both the Internal Revenue Code and the Bankruptcy Acts. We often hear politicians say they could write the IRC on a few pages, but we already have – the rest are loopholes. The IRC came into being in 1913 with the promise that it would be progressive, i. e., the more you make the more you pay etc., but today it is anything but progressive (e.g. I paid more taxes last year than Boeing with its 11 billion in profits, or even Amazon’s Bezos, who is said to be headed to be the world’s first trillionaire, and while millions of our diseased and unemployed fellow citizens are dumped into poverty status with a looney at the helm. Progressive for whom?
For instance, American corporations who operate domestically and overseas can shield profits made overseas (see especially Apple/Ireland) since they are free from U.S. taxation until “repatriated.” This leaves billions untaxed and when such corporations wish to bring such profits back to this country their lawyers negotiate what the rate will be with the IRS. The next time you send in your 1040, append a note telling the IRS that you will not be bound by the tax rate schedules but wish to negotiate and see how that sells. Equal Protection of the Laws?
Are pitchforks available for sale at Rural King?
Patrick, makes a lot of sense!
Corporations monies that they hold on to for future investments was taxed at one time, and, should be taxed again. Because we know that those corporations are setting on trillions upon trillions of dollars claiming that they’re waiting to invest it.
As far as taxing religious groups, the government actually gives money to Catholic charities to distribute in their charity work. So, if that’s the case, the religious organizations can be taxed, and the government would decide what monies would go back for their charity work and whatever else they would use it for!
this could effectively end with these televangelists and other ministers running around and private jets and living a luxurious lifestyle on charity money.
I claim to know somethings about science and engineering but accept that one price of that is that I know less about other things like law and finance. If I had enough wealth I would solve that problem by hiring lawyers and tax accountants and financiers to protect me from any avoidable expense. That’s how Trump didn’t loose all of the wealth his father gave him.
So it’s a cops and robbers thing. Tax law enforcement like street law enforcement has to stay ahead of the robbers and the robbers have to stay ahead of law enforcement. It’s a competition with winners and losers reminiscent of capitalism and sports.
Republicans offer to enforce street law and order with violence but tax law and order with robbers. Democrats need to enforce all law and order with professional law enforcers.
It’s axiomatic that that’s easier said than done but there are now no easy problems left to solve in an an incredibly complex world getting more so every single day.
IRS has admitted that due to its slipshod database it paid $30 to $40 million in stimulus money to people who had no right to receive it (like the shocked woman in Sweden who has no idea how her name came up). That’s a pittance, of course, compared to what DJT has bamboozled IRS out of over the years. How about Bezos ponying up a few dollars?
IRS specializes in outmoded ways of processing data. When I joined private industry, in 1968, IRS HQ was my first account. I helped a young lady become a hero by explaining to her how, using the discs the agency had just paid millions for, they could access a given record randomly and directly – no need to go through millions of other records sequentially to reach the desired taxpayer’s data. Years after that IRS continued to use primarily sequential tape searches in tax processing. Three years ago IRS wrote me to say that I had $16,000 coming and I would receive it by the end of the month. When I pursued the case, knowing IRS owed me nothing, they first tried double talk and when I refused to give drop the matter they stopped communicating. The money, of course, never appeared.
The fact that such a vital agency can be both inept and politically manipulated was proven, for all to see, by Trump. The amount of money it has misplaced, misspent and misdirected and frittered away will never be known. Was Jack Kennedy simply repaying an election debt when he located the main IRS processing center in West Virginia?
ya know i cant resist this subject..many here know how i stand on this subject,and wages to the working class..ive been one by choice. i like working with my hands,with others,without.i can be a leader when the shit hits,and help make the job easier,done right. everything we do, as the working class pads someones ass,somewhere.. the use of cheap words like socialism,entitlement etc,as i see, the very people here,have a very high standard to the law,language,rules. i enjoy this immensly. my understanding of a wide variety of people,thru experience,and self thought. i walk through a walmart,and see like people of my socio/economic needs. i dine at fine restaurants to enjoy what a working class person has become,in the kitchen. i park my semi tractor,in the back beside the dumpster. (and hope i dont get blocked in by a car) i read what my country,and the world is spewing about,and find the need to follow a few issues,overlooked by,but in contrast,look how they,are like us,or,why we shouldnt,and why. all this is rolled up into a person who never had a chargeable accident,nor a dui. a complete resume,and a vast amount of experience dealing with assholes who didnt like something. (ill get a laugh outta him later.) i defend the liberal,and working class first,all others come second. even when im surrounded on a job site by hostile trumpers,i didnt keep silent. try that in houston on a hot oil field supply yard,and walk away. what am i worth? im just the next joe like me who expects the same. money,shove it,,ill take my own worked hard secuirty i live with. but,its really all about who,i work for,and what they get in return. i didnt vote for anyone,unless they come to the table in a t shirt and worn jeans. (you?)its sure has been a long road,and im proud of myself,but be damn if i can be proud of what ive been handed from those who run for office to screw us out of what we work for,and hand it to an investor(.Ceo pay dont mean squat,try overall payouts of profits) there should be no discussion on the reason why,those who do the work, get paid a living wage..none…
the panama papers etc,our own land based corps that parked money offshore,visably,and laughed at us until we,gave in and allowed another loophole to repatriotate,that profit. billions,and they demand from our goverment? seems they need to relocate to china or the soviet,er russia.. seems everyone elected today in d.c. us merely a lobbist to them.correct?
i have 3,and able to donate to the cause,where do i send the pitchfork?
Jack I admire the life you’ve chosen to lead even though I chose different. I suspect that my life choices would not fit you and vice versa.
Ain’t diversity plus freedom grand? Everyone fits and everyone contributes to everyone’s success each in their own way.
Why is that concept so difficult for some to grasp?
ML at 12:10, your 4th paragraph left out any context to the rest of your post. Could you enlighten us further?
Terry, the more that data base technology develops the less tolerant we should of both government and businesses making clerical errors. Of course implementation of that technology requires some investment and confidence in a future.
It’s almost like either Republicans lack that confidence or are slaves to kick the can down the road to future opposite party administrations to fix.
Pete writes, “Everyone fits and everyone contributes to everyone’s success each in their own way.”
How many years of slavery did this country use to build up their capital success?
Kicking the can down the road and creating messes for Democrats to clean up are core Republican strategies. Hoover bequeathed the Depression to FDR. Vietnam would have ended sooner if Nixon had not cajoled the Communists to keep fighting in the belief that he would give them a better deal than the outgoing LBJ administration. Remember Bush 41’s recession? Remember Baby Bush’s Great Recession (always trying to outdo his dad)? Remember Trump’s all out effort to turn America into a shithole country? Republicans are so busy trying to make life better for the already well off that they have no time or inclination to take care of the fundamentals. They are so obsessed by their sophomoric, crackpot Ayn Rand philosophy that they forget to ask what works. They are so busy reciting the party’s line of the day they don’t look at the harm done by allowing non-thinkers to think for them.
All of which is understandable in a group of self-centered childlike grownups. But what I will never comprehend is how they allowed themselves to play Russian Roulette with democracy while ignoring the damage they were doing. How did they conclude they would be o.k. under an authoritarian? Did they not notice their cult leader’s handling of Jeff Sessions, Loyalist # 1? Or is associating with those in power a sufficient reward in itself to permit them to act so irrationally?
In my view, we were saved by Trump’s inability to form a coherent plan or strategy, not by any Constitutional safeguards. Trump proved that anything not specifically prohibited by the Constitution is allowed and there is no meaningful penalty for making up your own rules. Will we be lucky enough to get another chowderhead the next time the voting majority decides it wants a dictator? That’s pushing our luck.
its called greed..
For the person who asked about food banks, The Storehouse food pantry is one of several small food banks around town. They accept cash contributions as well as food donations. Additional information is available at http://storehousepantry.org/
Marilyn Shank; thank you so much, I will check it out immediately
They are “tax weasels.”
First, I apologize for misspelling my own name above.
Marilyn Shank; I clicked on that website and got the address; Googled Storehouse Food Pantry to check them out and it infected my computer and locked it up. Had to manually shut down the hard drive and go through my security procedures to get back on line.
Great post, Sheila – to the heart of the matter –
I will add one thought on tax cheating – to some (or maybe many) it goes hand in hand with their view of the tax structure – we are talking about rich bullies – they want to be able to do whatever they want – force workers to work without any safety considerations, dump toxic waste, steal land, anything – if there is no money, the “evil liberals” can pass all of the laws they want, but nobody will be there to enforce them (as was noted above – billions lost due to a shrunken IRS)
As for tax shelters, I always thought we should declare war on them. Cough up records and allow our IRS auditors, or complete naval and air blockade. But then again, I have been working on some fantasy novels, so take that with a grain of salt. 8)>
Comments are closed.