You are browsing the archive for wealth tax.

Plutocrats Are the Same the World Over

8:32 am in Failed government by masaccio

It isn’t just the US plutocrats like David Koch and Sheldon Adelson and the plutocrat wannabes at Romney $50K per plate dinners who want to screw up the economy and make sure Americans remain in blissful ignorance of the real world. Here’s an article in a French magazine Basta describing the efforts of French plutocrats to influence the US Elections and support right-wing right-think tanks. (Link is to Google translate. If it doesn’t work, insert this link: http://www.bastamag.net/article2758.html into google translate. Or read it in the original French.)

The article begins by pointing out that there is no limit on campaign contributions in the US, and no transparency. French companies are the fourth largest contributors to Senate and House campaigns behind Swiss, British and German companies. The article relies on OpenSecrets.org in reporting that French companies have admitted to giving $728K through October 1. Buyers include Sanofi (pharmaceuticals), Gulf Suez (energy), Lafarge (cement and building products), Areva (nuclear) and Louis-Dreyfus (commodities trading). French energy magnates fund 16 Republican global warming deniers and six adamantly opposed to any form of regulation of greenhouse gases. Several French companies support Illinois Congressman John Shimkus, probably because

He made headlines in 2009 by declaring that no one should fear rising sea levels because God promised Noah that mankind would never be threatened by a flood.

Another favorite is Dan Lundgren, currently trailing newcomer Ami Bera in California. Climate deniers would lose a major supporter if the results hold up. Another favorite is “flat-earth” candidate Anna Marie Buerkle, currently trailing Dan Maffei by 14,601 votes but unwilling to concede until the 14,442 provisional and absentee ballots are counted. Flat-earth candidates don’t do maths so good. All in all, not that great for the French contributions to stupid, but probably better than Karl Rove; at least the dollars were smaller.

Then there are regular French politicians. In their last elections, the people elected a Socialist, Francois Hollande, and gave him a working majority in the legislature. So right off, he appointed a French version of the inane Jack Welch to provide him with a report on needed changes in the economy. Louis Galois, a seasoned bureaucrat from European Aerospace Defense and Space (EADS), is a true representative of the plutocracy. His prescriptions read like Mitt Romney’s wet dreams: crush workers and use the profits to sweeten the pots of the rich. Sorry, I meant create jobs. In France.

The report calls for a payroll tax reduction of €30 billion, or $38 billion, a sum equivalent to about 1.5 percent of the French gross domestic product. The reduction would be in the form of a €20 billion tax break for businesses and a €10 billion break for workers on the lower end of the wage scale.

The government would offset the effect of the tax reductions on the budget through higher sales and carbon taxes, as well as cuts in government spending.

That sounds like a specific program to dump the costs on the working class, which now, of course, includes the middle class. And the new item: fracking for shale gas. As usual, the important thing is the destruction of regulations and the improvement of the animal spirits of the investing class.

A spokesman for Medef, the French employers union, says this is a great plan. And the Germans chime in with Jorg Kramer, who says that the French must change and not slide into the muck with Italy, Spain and Greece. And the Socialists are buying:

Firms will be offered tax credits worth up to €10bn next year, rising to €20bn by 2015, to be financed by an increase in VAT and €10bn in public spending cuts, as yet unspecified. That was less than the €30bn-a-year cut in payroll taxes that Gallois demanded, but far more than many analysts expected. The rebates will be proportionate to the size of a company’s payroll, up to a maximum of two-and-a-half times the minimum wage, in an attempt to support jobs./

I’m sure you recognize that the VAT hike will impact workers a lot, not so much the plutocrats. And I bet the spending cuts will not impact the rich. It looks like elections don’t matter much in France either, though the Socialists are raising the top tax rate to 75%, something we can never do here.

And the Greeks are in for more of the same austerity in the aftermath of another vote for it from their sleazy politicians. Elections don’t chanage things there either. Both leading parties vote for austerity, and both parties flatly refuse to investigate their tax-evading rich. The only important thing is to get another loan from the EU to “shore up its banks and pay off loans” to the rich.

The problem is that nations and their citizens owe a lot of money to the hyper-rich bastards who try to steal elections and keep us stupid so we won’t notice the oceans crashing into our cities or ask how the financial crisis happened. They want control so they can force us to repay those loans.

Just once, I’d like to hear a politician point out that there is an easy way to pay those debts: we tax the hell out of the plutocrats and use that money to “shore up the banks and pay off loans”.

Read the rest of this entry →

Rich Lend to Government Instead of Paying Taxes

2:11 pm in Uncategorized by masaccio

Drop the Debt, photo by Paul Miller at Flickr


The Tax Justice Network says that the richest people around the world have hidden between $21 and $30 trillion in tax havens, safe from the demands of their fellow citizens that they participate in funding the operations of governments by paying taxes. What do the rich do with that money? We know they play speculative games with the money, trying to profit from other rich people or pension plans, and money people are trying to save for retirement or for college expenses for their kids. But the main thing they do with money is lend it out. One of their favorite borrowers is the US government. It won’t default, and that interest check shows up when it’s due.

That’s our deal with the rich: they don’t have to pay taxes to fund the government, we just borrow from them, and pay them interest forever.

The figures for government debt growth are astounding. Thirty years ago, the world embarked on a massive tax-cutting program, led by the US. In that time, according to the Bank for International Settlements, governmental debt in 16 OECD economies (deflated by consumer prices) quadrupled. We are all paying interest on that to the people who own those sovereign obligations. If governments had raised that money by taxation, we wouldn’t be paying for the privilege of operating a government. Other non-financial sector debt has grown at similar rates.

As a side note, when trying to explain why this massive increase in debt loads, the Bank for International Settlements didn’t mention the massive tax-cutting regime in the developed nations.

The implications of this tax and borrow deal are infuriating. For one thing, billionaires like Peter Peterson can scold the government about its massive debt, while sucking out guaranteed interest payments, directly, and indirectly through their foundations and corporations. They can use their fellow travelers, like Bloomberg columnist Caroline Baum to persuade the gullible that we don’t have any money to fund Social Security and Medicare, because we have to pay the interest on that debt, and we can’t raise taxes because that would be useless, and reflective of an unattractive urge to hurt the rich for no good reason.

Since the Great Crash of 2008 we’ve been trying to muddle through and get back to some golden age of normal, like the 2000s, so the financial sector can continue its pillage. That isn’t going to work, and the ever alert Zero Hedge is, as usual, ahead of the curve. Last September, they posted a discussion of a study by Boston Consulting Group on the enormous fiscal problems facing the world. BCG isn’t impressed with the kick the can down the road approach that politicians in every nation have adopted. They think we need to restructure debt; hence the title of their paper, Back to Mesopotamia, a reference to a Debt Jubilee idea of that ancient ancestral society. An easy way to finance that restructuring is to tax existing assets. I didn’t realize polite people would say things like this in public:

Many politicians would see taxing financial assets as the fairest way of resolving the problem. Taxing existing financial assets would acknowledge one fact: these investments are not as valuable as their owners think, as the debtors (governments, households, and corporations will be unable to meet their commitments.”

This tax isn’t some piddling thing, either. The US would need a one-time tax of 25% of wealth. The Boston Consulting Group admits the evident unfairness of this in the context of recommendations for solving the housing crisis in the US:

Such a course of action would pose a significant issue of moral hazard, benefiting those who were reckless and imposing a share of the burden on those who were careful [or lucky]. But the government could conclude that the total economic and social costs of a prolonged period of low growth and deleveraging are so huge that unconventional measures are justified. After all, inflation would have even worse side effects.

(Me in brackets). As they say, we can’t keep on with this pretend solution regime forever. Maybe we’ll inflate away the savings of millions of Americans until we have social disruption, or maybe we’ll try austerity until we have social disruption. The debt won’t get paid. The only realistic way out is to inflict that loss on the people who can bear it best, the richest among us. Thus spake Boston Consulting Group.