Home > Cande = Conjecture & Exaggeration, Fande = Fact & Evidence, The Economy > Nicholas Kristof, of The New York Times, bringing the Fande

Nicholas Kristof, of The New York Times, bringing the Fande

source: http://www.nytimes.com/2011/10/16/opinion/sunday/kristof-americas-primal-scream.html?hp
‎”¶In the Bush expansion from 2002 to 2007, 65 percent of economic gains went to the richest 1 percent….

But anyone who believes in markets should be outraged that banks rig the system so that they enjoy profits in good years and bailouts in bad years.

The banks have gotten away with privatizing profits and socializing risks, and that’s just another form of bank robbery….
According to the C.I.A.’s own ranking of countries by income inequality, the United States is more unequal a society than either Tunisia or Egypt….
¶The 400 wealthiest Americans have a greater combined net worth than the bottom 150 million Americans.

¶The top 1 percent of Americans possess more wealth than the entire bottom 90 percent.”

Read more: 
source: http://economix.blogs.nytimes.com/2011/10/11/bankers-salaries-vs-everyone-elses/
“Why are the Occupy Wall Streeters so angry at bankers? This chart might give you some idea:

Via New York State Comptroller report.
That chart is from a new report from the New York State Comptroller’s office on the securities industry in New York City.”

source: http://elsa.berkeley.edu/~saez/atkinson-piketty-saezJEL10.pdf
‎”The effects of the top 1 percent on growth can be seen even more dramatically in two contrasting recent periods of economic expansion, 1993–2000 (Clinton administration expansion) and 2002–07 (Bush administration expansion). Table 1 shows that, during both expansions, the real incomes of the top 1 percent grew extremely quickly at an annual rate over 10.1 and 10.3 percent respectively.

However, …while the bottom 99 percent of incomes grew at a solid pace of 2.7 percent per year from 1993 to 2000, these incomes grew only 1.3 percent per year from 2002 to 2007. Therefore, in the economic expansion of 2002–07, the top 1 percent captured over two-thirds (65 percent) of income growth.”

source: http://www.imf.org/external/pubs/ft/fandd/2011/09/berg.htm


‎”The fact that sustainable economic reform is possible only when its benefits are widely shared. In the face of the current global economic turmoil and the need for difficult economic adjustment and reform in many countries, it would be better if these lessons were remembered rather than relearned.”

source: http://www.politifact.com/wisconsin/statements/2011/mar/10/michael-moore/michael-moore-says-400-americans-have-more-wealth-/
‎”Michael Moore says 400 Americans have more wealth than half of all Americans combined….

We rate Moore’s statement True.”

source: http://economix.blogs.nytimes.com/2011/10/10/about-that-99-percent/

“The top 1 percent of American earners receive about a fifth of the country’s income, according to Thomas Piketty and Emmanuel Saez, two economists who study inequality.

But as we’ve noted before, economic inequality isn’t just about what you make each year. It’s about how much wealth you have already accumulated, too. And inequality is far, far greater when you include wealth.

According to an analysis of Federal Reserve data by the Economic Policy Institute, a liberal research organization, the top 1 percent of Americans by net worth hold about a third of American wealth.

The average net worth for the 99th percentile in net worth was $19,167,600 as of 2007, based on this research. The average net worth of the next 9 percent of Americans was $2,371,500.

That means, of course, that the bottom 99 percent of Americans includes an awful lot of millionaires.”
source: http://www.ips-dc.org/reports/executive_excess_2011_the_massive_ceo_rewards_for_tax_dodging

“In fact, corporate tax dodging has gone so out of control that 25 major U.S. corporations last year paid their chief executives more than they paid Uncle Sam in federal income taxes….
We researched the 100 U.S. corporations that shelled out the most last year in CEO compensation. At 25 of these corporate giants, we found, the bill for chief executive compensation actually ran higher than the company’s entire federal corporate income tax bill.

Corporate outlays for CEO compensation — despite the lingering Great Recession — are rising. Employment levels have barely rebounded from their recessionary lows. Top executive pay levels, by contrast, have rebounded nearly all the way back from their pre-recession levels.

This contrast shows up starkly in the 2010 ratio between average worker and average CEO compensation. In 2009, we calculate, major corporate CEOs took home 263 times the pay of America’s average workers. Last year, this gap leaped to 325-to-1….

What are America’s CEOs doing to deserve their latest bountiful rewards? We have no evidence that CEOs are fashioning, with their executive leadership, more effective and efficient enterprises. On the other hand, ample evidence suggests that CEOs and their corporations are expending considerably more energy on avoiding taxes than perhaps ever before — at a time when the federal government desperately needs more revenue to maintain basic services for the American people. This disinvestment also undermines the infrastructure and services that small and large businesses also depend upon.
Investigative journalists and tax research organizations have been documenting how U.S.-based global companies are aggressively shearing — and even totally eliminating — their federal income tax obligations. This past March, for instance, The New York Times traced the steps General Electric has taken to avoid U.S. corporate taxes for the last five years. Citizens for Tax Justice, as part of a forthcoming study on tax avoidance among the Fortune 500, has identified 12 corporations that have paid an effective rate of negative 1.5 percent on $171 billion in profits….

Tax havens are costing the federal treasury, by one estimate, $100 billion a year. These havens are speeding the transfer of wealth out of local communities and the global south into the bank accounts of the planet’s wealthiest and most powerful. Tax havens, or more accurately ‘secrecy jurisdictions,’ can also facilitate criminal activity, from drug money laundering to the financing of terrorist networks.

How do tax havens work? One common corporate accounting technique, ‘transfer pricing,’ helps corporations shift profits offshore. Technology and drug companies regularly open shell companies — in tax havens — that hold their intellectual property rights. They then charge their U.S.-based operations inflated amounts for the use of these rights. These inflated costs get deducted off U.S. taxes. The overseas tax haven profits go un- or lightly taxed. Adding insult to injury, a coalition of corporate tax dodgers is now asking Congress to reward their tax avoidance with a deeply discounted five percent tax rate if they bring these funds back home where many of them started.

This offshore tax gaming has spawned a massive global tax avoidance industry, with teams of lawyers and accountants who add nothing to market efficiency or product development. This “shadow” banking industry played a key role in the 2008 financial crisis. The “shadow” system’s reckless financial maneuvering operated through layers of opaque offshore tax havens.

The two biggest bank recipients of U.S. taxpayer bailouts — Citigroup and Bank of America — both just happen to be tax haven-happy. Citigroup operates 427 subsidiaries in tax havens, the Bank of America 115.

Accounting games like ‘transfer pricing’ have sent the corporate share of federal revenues plummeting. In 1945, U.S. corporate income taxes added up to 35 percent of all federal government revenue. This year, corporate income taxes will make up just 9 percent of federal receipts. In 1952, the year Republican President Dwight Eisenhower was elected, the effective income tax rate for corporations was 52.8 percent. Last year it was just 10.5 percent.

Proposals to rein in tax dodging and excessive pay

Tax-dodging corporations argue they are breaking no laws. They are just, the argument goes, operating ‘under the rules that Congress has established.’ They are indeed. But massive corporate outlays for lobbying and campaign contributions shape those rules. The 25 firms highlighted in this study spent a combined total of more than $150 million on lobbying and campaign contributions last year.

All the companies highlighted in this report benefit enormously from their institutional presence in the United States. They utilize our taxpayer-funded infrastructure for transportation. They tap into government-sponsored research and subsidies for technological innovation. They expect the U.S. law enforcement and judicial systems to protect their intellectual and physical property. And they rely on the U.S. military to defend their assets abroad.

U.S. corporations also benefit from the public education of their workforces. In fact, 16 of the 25 CEOs included in this study received at least a portion of their post-secondary education in taxpayer-supported public universities. Yet these same corporations remain content to let others pay the bills.

We have, in short, a corporate tax system today that works for top executives — and no one else.

In this year’s edition of our Executive Pay Reform Scorecard, we highlight the many efforts underway to change the rules that are contributing to executive pay excess. These include efforts to rigorously implement the executive pay provisions in the Dodd-Frank financial reform law, as well as more far-reaching proposals that would use tax and procurement policies to discourage runaway pay.”

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