taxes

With the resignation of the acting head of the Internal Revenue Service (IRS) over a series of audits of conservative organizations, the agency is under intense public scrutiny. Ai??But this furor ignores little-noticed numbers released last month — they show that the IRS’s audits of wealthy taxpayers revealed massive tax-dodging by the richest Americans.

In 2012, the IRS ramped up its audits of wealthy taxpayers, and shockingly found a massive rate of under-paying taxes. It audited one in eight tax filers with incomes over $1 million, concluding that about 75 percent of these millionaires failed to pay the taxes they owed. Altogether, the agency collected an additional $4.8 billion in taxes from these taxpayers after the audits were conducted.

As the press and politicians look at the IRS’s conduct with regards to auditing political nonprofits, it’s important to remember that these audits can be a powerful tool for making sure that wealthy taxpayers are paying what is legally required of them. If last year’s numbers are any indication, increasing audits of wealthy taxpayers will reveal under-payment and help us raise the money needed to fund the government.

Today is tax day, the deadline for filing your tax return. While millions of Americans are doing their patriotic duty and paying their taxes through the year, wealthy individuals and corporations have made an art out of dodging their tax responsibilities.

Here’s one example, taken from the new documentary filmAi??Tax Free Tour,Ai??which looks at corporate tax dodging. In 2012, the computer electronics maker Apple shifted many of its profits overseas, parking $36 billion globally. Yet at the same time, it only paid a 1.9 percent tax rate on these profits.

How did it accomplish this? As the clip below explains, it parked the money in Ireland, where the corporate tax rate is 12.5 percent. But that’s still six times what it ended up paying, so in order to get the lower rate, it dropped it profits in the Netherlands, where the corporate tax rate hovers at around one percent. It also placed some of its profits in the British Virgin Islands — where there are no taxes on corporate profits:

This egregious tax dodging has a negative impact on the average taxpayer in the U.S. A report released earlier this month estimated that the average taxpayer must pay $1,000 extra thanks to the taxes that Big Business fails to pay (which amounts to $90 billion a year).

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Corporations often park their profits overseas to avoid paying taxes on them. The U.S. Public Interest Research Group released a report yesterday detailing the costs that this has on the average U.S. taxpayer and on small businesses.

Here are some of the report’s key conclusions:

Based on the $150 billion in avoided taxes, the average U.S. tax filer filling out their 1040 form would need to pay $1,026 in additional taxes to make up for lost revenue from tax havens. Thatai??i??s enough money to feed a family of four for a month. […] To pick up the tab for the $90 billion multinational corporations avoid, the average small business in the United States would need to pay an average of $3,067 each in additional taxes. Large multinational corporations that use tax havens also gain an artificial competitive advantage over responsible small business owners.

ai???As this timely report shows,Ai??taxAi??haven abuse takes an immense toll on the vast majority of American taxpayers who donai??i??t employ armies of lawyers and accountants to avoid paying theAi??taxesAi??they owe,” said Sen. Carl Levin (D-MI) in a statement made in support of the U.S. PIRG report.

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Today, 30 large corporations and their trade associations sent a letter to the House Ways and Means Committee and the Senate Finance Committee concluding with the following request:

As business leaders, we consider comprehensive tax reform with a significant corporate tax rateAi??reduction to be a top priority for our companies and our country. Your efforts to date have made taxAi??reform in 2013 a possibility. We stand ready to support you in making it a reality.

Those who, like these corporations, support a cut in the corporate tax rate say that it is among the developed world’s highest. Indeed, on paper, the rate is 35 percent. But almost no corporations pay that rate, because they make use of deductions and loopholes to keep their taxes super low — or, in some cases, get more back from the Treasury than they give to it.

As an example, let’s look at the rates paid by some of the corporations who authored this letter:

Boeing: Boeing actually paid nothing in net federal taxes between 2002 and 2011, and even netted a negative 12.4 percent tax rate in 2011 because of a large tax benefit. between Its “share of income paid in taxes fell by 23.2 percentage points between 1969 and 2012.” This is all at the same time that it got billions of dollars of subsidies for both its defense and civilian wings.
FedEx: Memphis-based FedEx paid a negative 3.2 percent tax rate between 2008 and 2010.
Verizon: Telecom giant Verizon paid a negative 2.9 percent tax rate between 2008 and 2010.

These are just a few examples of these corporations already shirking their tax responsibilities — and actually getting a net benefit from the Treasury. It is unlikely that Americans will want to reduce their …

April 15th is the deadline for your federal tax return. As you mull over the taxes you paid to the federal government this year, check out this graphic from the National Priorities Project showing where your taxes went in 2012. As you can see, the military got the lion’s share of funding, getting 26 times as much as scientific research and seven times as much as education:

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You pay your taxes, so why don’t corporations?

The sequester continues to harm important investments in America, with the latest casualty being the National Park Service — which may have to shed employees and deny park visits which would mean losing 267,000 visitors.

But as average Americans feel the pain of $85 billion of annual cuts, corporations continue to rip off the Treasury.

Recall this July 2011 report from the Center for American Progress. Drawing on Internal Revenue Service data, it estimates that corporations underpay their taxes — either through evasion or noncompliance — by $400 to $500 billion every single year. So that means at the very least that corporations are dodging taxes that are equal to four times the amount that the sequester is cutting.

Some in Congress want to replace the sequester with a deal that cuts Social Security, Medicare or Medicaid benefits.Ai??Click here to sign on as a citizen sponsor of the Grayson-Takano letter against Social Security, Medicare, and Medicaid benefit cuts.

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Congressional Republicans are digging in their heels and claiming we don’t need to raise taxes rates on the rich any further after they went up to Clinton-era levels for families with incomes $450,000 and above.

But the fact is, income tax rates on the richest Americans are still lower than they were under Republican presidents Dwight Eisenhower, Richard Nixon, and even most of Ronald Reagan’s presidency. Here’s where rates were under them:

Dwight Eisenhower: During Ike’s presidency, the top rate was between 91 and 92 percent.

Richard Nixon: In 1969, when Nixon took office, the top rate was 77 percent. It dropped down to 71.75 in 1970 and finally to 70 percent for the rest of Nixon’s presidency.

Ronald Reagan: The top rate was Ai??69.125 percent when Reagan came into office, and he soon cut it to 50 percent, where it stayed through most of his presidency (it was cut again in 1987).

By every measure, taxes on the rich are still historically low, despite the partial restoration of the Clinton tax rates. Yet some right-wing lawmakers continue to demand sharp cuts to the benefits of programs like Social Security and Medicare in order for any kind of increased revenues.

Help us push for a balanced approach that cuts Pentagon waste, asks the rich to pay their fair share, and protects Social Security, Medicare, and Medicaid benefits from cuts.

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It is a frequent conservative mantra that government taxation and regulation prevent economic growth. EconomistsAi??Atif Mian and Amir Sufi looked at this claim for a new paper from the Federal Reserve Bank of San Francisco.

Using survey data from the National Federation of Independent Business, the two researchers found that when businesses complained most of lack of sales and demand, unemployment was highest. The research also showed that “there was almost no correlation between job growth in a state from 2008 to 2011 and the increase in the percentage of businesses citing regulation and taxes as their primary concern. In fact, if anything, the correlation is positive.”

This new research, which again relies on the complaints of businesses themselves, seems to undermine this conservative mantra.

Gov. John Kasich (R-OH)

Ohio’s Republican governor John Kasich (R-OH) has proposed a new tax plan that would radically restructure taxes in the state.

The plan would cut income taxes for most Ohioans, but increase extend sales taxes to additional goods — which tend to fall on poor and working people. The result is, as Policy Matters Ohio and the Institute on Taxation and Economic Policy found, that the rich would get a huge tax cut while the poorest Ohioans would actually face a tax increase. Here’s a table from their report demonstrating this:

As you can see, the poorest 20% would have their taxes raised by $63Ai??annually. Ai??The top one percent would get a more than $10,000 tax increase.

CPC co-chair Keith Ellison

Congress is locked in budget negotiations related to the upcoming sequester. This week, the Congressional Progressive Caucus (CPC) unveiled the “Balancing Act.” Noting that 2/3 of the deficit reduction that has taken place since 2011 has come from cuts, not revenues, the CPC plan adopts an approach that would have a truly balanced 50-50 cuts-revenue ratio.

Additionally, the plan invests in the economy with the goal of creating jobs — the best long-term path to deficit reduction.

Here’s some of the key elements of the CPC plan:

Raise $948 Billion In Revenues: This is done by closing various special interest loopholes — such as international tax loopholes that maintain offshore tax havens — and by ending subsidies for fossil fuel companies.
Cutting $278 Billion In Pentagon Waste: Unlike some lawmakers in Washington who want to spare the Defense Department altogether, the CPC cuts backs onAi??unnecessary weapons programs such as the V-22 Osprey. It also replaces the F-35 with the F-18 and reduces nuclear weapons expenditures, among other measures.
Cuts The Deficit By Investing $276 Billion In Jobs: The plan also invests money by extending the Make Work Pay tax credit for a year and by spending on teachers and school modernization as well as transportation infrastructure.

Here’s a chart showing how the Balancing Act would finally offer a balanced approach to deficit reduction after years of relying on cuts:

One area the Balancing Act does not cut is Medicare, Medicaid, and Social Security benefits.

Click hereAi??to pledge to hold any Democrat who agrees to a deal that cuts Social Security, Medicare, or Medicaid benefits accountable.

A new report finds that states are actually being denied billions of due to rich individuals and large corporations using offshore tax havens.

The report by the U.S. Public Interest Research Group concludes that tax havens cost state governments $39.8 billion in lost revenues in 2011. Corporations were responsible for $26 billion of this revenue loss.

Here are the states that faced the most revenue loss:

California: $7.14 billion in lost revenue
New York: $4.27 billion in lost revenue
New Jersey: $2.8 billion in lost revenue

Since the recession began, states haveAi??laid off over 130,000 teachersAi??because they lack the funds to keep them hired. Cracking down on these tax havens would be one way to re-hire those teachers and to spend money on badly-needed infrastructure.

Some on the right like to claim that the poor do not pay taxes. A new report from the Institute on Taxation and Economic Policy (ITEP) shows why this is a myth. ITEP looked all the taxes that people in states pay — income, property, sales, and other forms — and found that almost every state asks poor and middle income families to pay more of their income in taxes than the very rich.

Here’s a chart of the top 10 worst states. Note that in Washington State, the poor actually pay six times as much of their incomes in taxes as the top 1 percent :

Among the states studied, Oregon and Vermont were deemed to have the most progressive tax systems.

Bobby Jindal

Louisiana governor Bobby Jindal (R) has put forth a radical proposal to completely eliminate corporate and income taxes in his state. Here’s an excerpt of the statement he put out with his proposal:

The bottom line is that for too long, Louisiana’s workers and small businesses have suffered from having a state tax structure that is too complex and that holds back economic prosperity. It’s time to change that so people can keep more of their own money and foster an environment where businesses want to invest and create good-paying jobs.

The local press is reporting that, in order to keep his proposal revenue neutral, Jindal is considering hiking the state sales tax from 4 to 7 percent. That’s a 75 percent increase in a tax primarily paid for by the middle and working class. This would involve a huge shift in taxAi??responsibilitiesAi??from the rich — the state currently has three income tax brackets which require wealthier citizens to pay more — to the rest of Louisiana.

Adam Green talked about the work of his Progressive Change Campaign Committee, and the organization’s agenda for the 113th Congress.*He also outlined what progressives would like to see from President Obama in his second term.

The criticism from the left mirrors past complaints when Mr. Obama included tax cuts in his stimulus package, gave up on a government-run option in health care negotiations and temporarily extended Bush-era tax cuts for the wealthy two years ago. Liberals said Mr. Obama should have capitalized on his re-election victory and the expiration on New Year’s Day of all of the Bush tax cuts to force Republicans to accept his terms. “The president remains clueless about how to use leverage in a negotiation,” said Adam Green, a co-founder of the Progressive Change Campaign Committee, a liberal advocacy organization. “Republicans publicly admitted they lost the tax debate and would be forced to cave, yet the president just kept giving stuff away.”

The Progressive Change Campaign Committee sent an email to Democratic senior staffers in both the House and Senate at 3 p.m. ET Monday, after word trickled out that a deal in the works would only raise taxes for households making $450,000 and above (or $400,000 for individuals.) The email, obtained by TPM, argued that Democrats have no practical reason to cave on taxes and would actually have increased leverage if Congress blows through the midnight deadline to avoid the cliff. “Democrats hold the cards, and our leverage increases in less than 10 hours if we hold strong,” the email, signed by the group’s co-founders Adam Green and Stephanie Taylor, read.

(Photo credit: Flickr user Steve Rhodes)

Many Republicans and a few Democrats have suggested an idea corporate lobbyists love — raising the Medicare age and dumping millions of seniors into private insurance. This would cost seniors $11.4 billion annually.

Nobel laureate economist Paul Krugman decided to look at how much doing this would reduce the deficit versus President Obama’s tax proposal of ending the Bush tax cuts for the wealthiest Americans and returning the estate tax to 2009 levels (it was cut by President Bush as well). Here’s his conclusion:

So I thought Iai??i??d look at the dollars and cents ai??i?? and even I am somewhat shocked. Those tax hikes would raise $1.6 trillion over the next decade;Ai??according to the CBO, raising the Medicare age would save $113 billion in federal funds over the next decade.

So, the [tax] proposal would reduce the deficitAi??14 times as muchAi??as the [Medicare] proposal.

The choice seems clear. If you’re serious about tackling our long-term deficit, you should be for ending the Bush tax cuts for the richest Americans, not harming benefits for America’s seniors.

Sign up here to pledge to hold bad Democrats who agree to cuts in Medicare, Medicaid, or Social Security benefits accountable.

When Warren laid out the approach in a debate with departing Sen. Scott Brown during the campaign, it instantly entered the progressive canon… And the plan has widespread support beyond just liberals, progressives argue. Case in point, the PCCC polled voters in two swing states (Virginia and New Hampshire), and in Obama’s home state of Illinois, about Warren’s plan. The poll, conducted by PPP and shared with Salon before its release, didn’t mention Warren’s name, but asked about individual components. All had broad support.

(Photo credit: Flickr user Steve Rhodes)

In a radio interview with MSNBC’s Ed Schultz, Progressive Change Campaign Committee co-founder Adam Green argued that Democrats should go on offense and use smart leverage in fiscal talks. Schultz agreed, and then proposed that Democrats ask for higher than Clinton tax rates on the rich. He then tweeted out the idea:

On Schultz’s radio show, Green elaborated — saying such a plan to raise taxes on the super-wealthy exists in the House, and should be talked about more more in fiscal talks.Ai??Progressive Rep. Jan Schakowksy (D-IL) has proposed a “millionaire’s tax” that creates special tax brackets for millionaires and billionaires that range between 45 and 49 percent. According to economist Dean Baker, using numbers from Citizens for Tax Justice, this tax plan would raise as much as $1 trillion over a decade. Here’s a how much the plan would raise in billions of dollars each year (the presumed starting year when this study was performed was 2011):

The public supports a higher tax rate on the rich. We polled voters in Virginia, Illinois, Ohio, Missouri, Montana, and Minnesota on the question of whether they would support Schakowsky’s millionaire tax idea. Here are the results, which show that voters are overwhelmingly supportive of this idea:

QUESTION: Would you support or oppose a proposal that said personal income above $1,000,000 would be taxed at 45%, income above $20,000,000 dollars would be taxed at 47%, and income above $1,000,000,000 would be taxed at 49%?

Ohio
62% support
29% oppose

Missouri
56% support
30% oppose

Montana
56% support
33% oppose

Minnesota
61% support
29% oppose

Virginia
60% support
27% oppose

Illinois
67% support
23% oppose

As Schultz pointed out, yesterday the president said, “[We’ve got to] …

(Photo credit: Flickr user Serenitbee.)

Corporate lobbyists have a terrible idea they’re pushing during the budget debates. They want to lower the corporate tax rate while also cutting benefits for Social Security and Medicare beneficiaries. Most Republicans and an unfortunately significant number of Democrats have endorsed this bad idea.

But what if instead we asked corporations that are dodging taxes to actually simply pay the statutory rates asked of them?

In the spring of 2011,Ai??National Peopleai??i??s Action and the Public Accountability Initiative put out a report looking at tax dodging by the nation’s biggest banks. It found, shockingly, that if these big banks simply paid the rates that were asked of them — much as many Americans pay their tax rates withoutAi??exploitingAi??excessive deductions and loopholes — we could re-hire all 132,000 teachers laid off during the recession for another year of teaching — twice:

Six banks ai??i?? Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan StanleyAi??together paid income tax at an approximate rate of 11% of their pre-tax US earnings in 2009 and 2010.Ai??Had they paid at 35%, what they are legally mandated to pay, the federal government would have received an additional $13 billion in tax revenue.Ai??This would cover more than two years of salaries for the 132,000 teacher jobs lost since the economic crisis began in 2008.

Some of these very same banks who have dodged their tax responsibilities are now trying to attack social spending that Americans worked hard for. Remember that Goldman Sachs CEO Lloyd Blankfein recently advocated for cutting Social Security. This is a bank that received a $10 billion taxpayer bailout.

Seniors on Medicare and Social Security did not cause the Great Recession, Wall Street did. And Wall Street and the richest Americans should be asked to …

The truth is that on every prominent economic issue of our time, the public overwhelmingly agrees with the progressive position. If 74 percent of voters oppose cuts to Medicare benefits and only 17 percent support them (which is true in New Hampshire), progressives insisting on the 74 percent position is different than the Tea Party insisting on the 17 percent position. One is democracy. The other is fringe incalcitrance. Equating the two is either ignorant or dishonest, but in either case destructive. The Progressive Change Campaign Committee did our homework and hired the No. 1 most-accurate pollster of 2012, Public Policy Polling, to poll New Hampshire voters on these fiscal issues (with more states to come). As the Union Leader’s John DiStaso reported, huge majorities of voters in the “Live Free Or Die” state support taxing the rich, oppose cutting benefits, and support cutting corporate welfare. They also say that President Obama’s mandate is not to compromise for its own sake, but to “stand up for regular families – even if that means fighting.” That’s a mandate – a mandate for “the left.” The only question is whether Democrats will use it to fight for the will of the people.

Photo credit: Flickr user juggernautco

As cities across the country grapple with tough budget decisions thanks to the economic crisis caused by Wall Street, progressives continue to demand a balanced approach that does not rely solely on cuts.

But Chicago Mayor Rahm Emanuel is disregarding any sense of balance in grappling with the city’s $300 million budget deficit. “No new taxes, fines and fees,” he told the Chicago Tribune recently.

His comment shocked some budget analysts. ai???Absent some reform of the benefits that are paid out, a tax increase is just simple math — it has to occur,ai??? said Shawn Oai??i??Leary, who is a senior research analyst in Chicago at Nuveen Asset Management. ai???You canai??i??t cut your way to that kind of balance.ai???

If Rahm rules out tax increases, it’s likely that the only savings to be found would be through harsh cuts to the city budget, and perhaps rollbacks in pensions for public workers. That’s the cost of taking the Grover Norquist approach to budgeting, and it’s one that Chicago residents should demand that Emanuel back down from.

It turns out that higher taxes aren’t sending the rich fleeing. (Photo credit: Flickr user Molly DG)

Right-wing dogma preaches that hiking taxes on the wealthy will lead the rich to simply move away to find lower tax rates elsewhere. But a new analysis shows that this isn’t necessarily the case.

The San Jose Mercury News conducted an analysis of Internal Revenue Service (IRS) data and found that states with higher taxes actually have the highest number of rich individuals, and that lower-tax states don’t necessarily have as many wealthy people:

An analysis by this newspaper of IRS tax-return data shows that states that charge high income taxes — from California to New York to New Jersey — are home to the highest number of rich people per capita. And two-thirds of the states that don’t charge any income taxes actually have fewer numbers of millionaire residents per capita, the analysis shows.

Consider Florida and Texas, which are often cited as havens for rich movie stars, CEOs and athletes because they are income-tax free. California, on the other hand, has the nation’s second-highest income tax rate.

So in those three states, how many people earn at least $1 million a year for every 100,000 taxpayers?

Florida: 202. Texas: 217. California: 252.

The data seems to debunk the myth that lower tax rates will draw the presence of rich people and that higher tax rates will send them fleeing.

(Photo credit: Flickr user soukup)

Reuters/Ipsos just released a new poll that looks at the attitudes of southern white voters. The results were in some way unsurprising. 69 percent of working class and middle-class southern whites oppose the Affordable Care Act, for example.

But check this result out. Among poor and middle class southern whites, the group “agreed by more than 4 to 1 with the statement: ‘The wealthiest Americans should pay higher taxes.’”

America’s a progressive nation, sometimes it just doesn’t know it. (Hat tip to The Nation’s George Zornick for locating the poll.)

Democratic candidate for Governor Jay Inslee (D-WA)

By now, it’s common knowledge that Washington super lobbyist Grover Norquist has successfully intimidated Republicans into not backing any new taxes on the rich and corporations to pay to sustain the America we all love.

But why are Democrats suddenly jumping into Norquists’s camp?

During a recent gubernatorial debate in Washington, both the Republican and Democratic candidates refused to back any sort of tax increase:

But no lip-reading will be required for the Washington state gubernatorial campaign between Republican Rob McKenna and Democrat Jay Inslee.

The two candidates were very clear ai??i?? they forcefully said they would not propose new taxes if elected governor.

ai???I am not proposing and I will not propose tax-rate increases,ai??? McKenna said last week in a debate with Inslee in Vancouver.

Inslee responded by saying, ai???No, I am not going to propose taxes. I do not believe theyai??i??re right for the state of Washington.ai???

This is remarkable, in the light of the sort of budget troubles the state has been in. One-third of the state parks’ department’s full-time positions have been eliminatedAi??and funding for state universities has been cut 50 percent in the past four years, now at a level it hasn’t been since 1991. If anything, voters shouldn’t take any candidate seriously who doesn’t want to promote some sort of way to raise revenues, especially from those who can most afford it. A 2011 Tax Foundation report even finds that taxes across the state put Washington 29th nationally — meaning the state already pays less than most.

Both Inslee and McKenna are simply failing the state with this no new taxes pledge.