What is looked upon with horror in some circles in the US is viewed as perfectly reasonable in France.
The French government is to impose an extra tax of 3% on annual income above 500,000 euros (£440,000; $721,000).
It is part of a package of measures to try to cut the country’s deficit by 12bn euros over two years.
The tax increase came after some of France’s wealthiest people had called on the government to tackle its deficit by raising taxes on the rich.
See, that wasn’t so hard was it?
Harvey Golub, former CEO of American Express, takes to the opinion pages of the August 22, 2011 issue of the Wall Street Journal to whine about how unfair the current tax system is to rich people like him and that it would be an outrage if his taxes are raised. But he has solutions to the budget deficit! He feels that eliminating the departments of education and energy is better than him paying more taxes.
There is one statement that is flat-out incredible, where he says: “Of my current income this year, I expect to pay 80%-90% in federal income taxes, state income taxes, Social Security and Medicare taxes, and federal and state estate taxes.”
80-90% of his current income goes in taxes? To the calculators, Batman!
I have no idea what Golub’s income is this year is but let’s say it is one million dollars. Let’s be most generous in our calculations in his favor and assume that it is all from salary and that he is a single person and claims no deductions at all.
First off, federal and state estate taxes are not based on income at all, so it is deceitful for him to include that in the list of taxes that are set off against income. Furthermore, aren’t those taxes a one-time thing imposed at death? Does he die at the end of every year, pay the tax, and come back to life the following year? If so, he should really write about that, rather than this bilge.
As for the rest, he would pay federal income tax $327,643, social security tax $11,106 (assuming that he generously pays the employer’s contribution as well), Medicare $29,000 (again picking up the employer’s tab), and state income tax (if he lived in Ohio) $56,464, for a grand total of $424,213, or 42% of his income.
In reality, people like him claim a lot of deductions, have tax shelters, and get a lot of their income from investments that are taxed at a lower rate. I would be surprised if he pays even half that amount.
Back in May, I wrote about the hopeful sign that the New York Attorney General Eric Schneiderman was investigating the role of the big banks in the housing bubble, but cautioned that “The oligarchy is going to close ranks and pull out all the stops to defend itself and preserve its privileges and get away with a plea deal that involves just a slap on the wrist and fine.”
Well, the oligarchy seems to be doing just that. And who are their friends who are going to bat on their behalf to get the New York AG to accept a plea deal that is highly favorable to them? Why, the Obama administration. What a surprise!
Yves Smith explains what is going on in great detail and says:
It is high time to describe the Obama Administration by its proper name: corrupt… Team Obama bears all the hallmarks of being so close to banks and big corporations that it has lost all contact with and understanding of mainstream America… As far as the Administration is concerned, its goal is to give banks a talking point and prove to them that Team Obama is protecting their backs in a way that the chump public hopefully won’t notice.
Matt Taibbi has a new article in the latest issue of Rolling Stone whose title Is the SEC Covering Up Wall Street Crimes? pretty much says it all.
It recounts the story of Darcy Flynn, a staff attorney at the SEC (the Securities and Exchange Commission that is supposed to regulate Wall Street) who blew the whistle about how the SEC has been systematically destroying documents about matters that it had investigated, thus destroying the chances of seeing patterns of criminal behavior.
Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.
That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back.
The article also relates how the SEC is particularly prone to the revolving door, where SEC regulators get lucrative jobs at the very firms that they are supposed to be regulating, and then come back and lobby their colleagues to drop investigations.
Cenk Uygur talks with Matt Taibbi about the revolving door following an earlier article by Taibbi.
How bad is the economic warfare being waged by the oligarchy on the rest of us? Bad enough that David DeGraw calls it World War III. He has published a book The Road Through 2012: Revolution or World War III (to be released on September 28, 2011).
Here is the abstract of a long paper based on the book that lays out the gruesome details.
Despite increasing personal financial hardship, most Americans remain unaware of the economic world war currently unfolding. An all-pervasive corporate and government propaganda campaign has effectively obscured this blatant reality. After extensive analysis, it is evident that World War III is a war between the richest one-tenth of one percentof the global population and 99.9 percent of humanity. Or, as I have called it, The Economic Elite Vs. The People. This war has been a one-sided attack thus far. However, as we have seen throughout the world in recent months, the people are beginning to fight back.
You can read a condensed version here.
One of the enduring mysteries is why so many struggling poor people in the US are opposed to government programs that would assist people just like them. The Economist reports on recent studies that shed new light on this odd phenomenon. (via Boing Boing)
Economists have usually explained poor peoples counter-intuitive disdain for something that might make them better off by invoking income mobility. Joe the Plumber might not be making enough to be affected by proposed hikes in tax rates on those making more than $250,000 a year, they argue, but he hopes some day to be one of them. This theory explains some cross-country differences, but it would also predict increased support for redistribution as income inequality widens. Yet the opposite has happened in America, Britain and other rich countries where inequality has risen over the past 30 years.
Instead of opposing redistribution because people expect to make it to the top of the economic ladder, the authors of the new paper argue that people don’t like to be at the bottom. One paradoxical consequence of this “last-place aversion” is that some poor people may be vociferously opposed to the kinds of policies that would actually raise their own income a bit but that might also push those who are poorer than them into comparable or higher positions. The authors ran a series of experiments where students were randomly allotted sums of money, separated by $1, and informed about the “income distribution” that resulted. They were then given another $2, which they could give either to the person directly above or below them in the distribution.
In keeping with the notion of “last-place aversion”, the people who were a spot away from the bottom were the most likely to give the money to the person above them: rewarding the “rich” but ensuring that someone remained poorer than themselves. Those not at risk of becoming the poorest did not seem to mind falling a notch in the distribution of income nearly as much. This idea is backed up by survey data from America collected by Pew, a polling company: those who earned just a bit more than the minimum wage were the most resistant to increasing it.
Poverty may be miserable. But being able to feel a bit better-off than someone else makes it a bit more bearable.
A nice summary of the current state of affairs.
(Via reader Richard)
The actual law that was passed in the wake of the debt ceiling deal is a very detailed and complicated 28-page document. Given that the deal was supposedly agreed upon on Sunday, July 31 and was passed by both chambers and signed into law just two days later, I am amazed at how such a complex legal document could have been prepared in such a short time, even allowing for the massive resources the government has at its disposal. Now that the dust seems to have settled on the debt ceiling deal, let’s see what it says and what is likely to happen. As I said, it is quite complicated and I am not certain that I have all the details right. [Read more…]
I have been on a crash course to try and understand the arcane details of what options are available if the current debt ceiling is reached with no action taken to raise it and the balance in the government’s account actually becomes zero. I thought I would share what I have learned so far.
We tend to think of the US government as having a checking account, just like many of us, and of the debt ceiling like a loan given to us by a bank. This is mostly true, except in one significant way that I will get to below. This informative article by John Carney says that the government does have something that looks like a checking account in which all the money it receives continuously (tax receipts, air transport security fees, the postal service, Medicare premiums, etc.) is deposited and from which all its payments (federal employee salaries, income tax refunds, NASA, interest on our debt, unemployment insurance benefits and paying defense contracts) goes out. To get an idea of the scale of transactions in that account, at the beginning of last Friday, the account had $83 billion and during the day it received $7 billion in deposits and paid out $13 billion in withdrawals, leaving it at the end of the day with $77 billion. When the debt ceiling is raised, the balance of money available for use in that account is effectively increased by that amount.
[Read more…]
