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Economy

IMF Director Pillories Tax Evaders While Paying No Taxes Herself

In an interview with the Guardian last week, International Monetary Fund Managing Director Christine Lagardge scolded Greeks for not paying their taxes, essentially arguing that they deserved the pain that is coming with the austerity package they are being forced to swallow:

Lagarde, predicting that the debt crisis has yet to run its course, adds: “Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.” She says she thinks “equally” about Greeks deprived of public services and Greek citizens not paying their tax.

“I think they should also help themselves collectively.” Asked how, she replies: “By all paying their tax.”

Asked if she is essentially saying to the Greeks and others in Europe that they have had a nice time and it is now payback time, she responds: “That’s right.”

But as it turns out, Lagarde was throwing stones from inside a glass house, since she doesn’t pay any taxes of her own due to working for the IMF, which is part of the United Nations system. Most UN employees pay no taxes on their income.

Of course, when it comes to Greece and revenue, Lagarde did have a bit of a point. Greece’s revenue is on the low end for a European nation, due in part to its large underground economy:

In 2009, Greece collected just 36.9 percent of GDP in total government revenues. That was far below the overall EU total of 43.9 percent. Greece’s anemic tax collections ranked them seventh from the bottom among EU countries…This has been a longstanding problem in Greece. From 2001 to 2007, Greece consistently collected far less in revenue than a typical EU country. [...]

The current crisis has cast a light on Greece’s shadow economy and massive illicit financial flows. There are varying estimates of the size and impact of the country’s underground economy. Some suggest that a quarter of Greece’s GDP comes from its underground economy and estimates are that Greece lost an estimated $160 billion in unrecorded transfers through its balance of payments over the last decade ending 2009.

Perhaps next time, though, Lagarde should find a messenger that doesn’t earn a tax-free income that is larger than that made by the President of the United States.

NEWS FLASH

One In 189 High Income Americans Pays No Federal Income Taxes | Republicans love to rail against those Americans who don’t pay any federal income tax due to the fact that they make too little money to even qualify for the lowest tax bracket. However, according to the latest data from the Internal Revenue Service, many Americans at the top of the income scale are also avoiding having any federal income tax bill. In fact, one in 189 Americans with an annual income of more than $200,000 had no federal income tax liability in 2009, the most recent year for which data is available.

NEWS FLASH

Dozens Of GOP Congressional Candidates Refuse To Sign Anti-Tax Pledge | At least 27 Republican candidates promoted by the National Republican Congressional Committee have refused to sign the anti-tax pledge circulated by Americans for Tax Reform and its President, Grover Norquist, according to the Washington Post. 25 of those candidates are promoted by the NRCC as “‘Young Guns’ and ‘Contenders’ — the top rungs of a program highlighting promising candidates challenging Democrats or running in open seats.” The pledge asks Republican candidates to promise never to raise taxes for any reason, but Congressional Republicans have been wavering on it in increasing numbers over the last several months.

Economy

Kansas Gov. Approves Massive Tax Cut For Rich That Even Some Republicans Opposed

Kansas Gov. Sam Brownback (R) in January proposed a tax cut he said would give the state a “fairer, flatter, simpler” tax code, even though it raised taxes on the poor to help pay for a massive tax cut for the top one percent of state residents. Tuesday, Brownback signed an even bigger package into law, even as the state Senate’s top Republican and a host of other conservative lawmakers urged him not to.

The new package, largely backed by Tea Party-affiliated state legislators, abandoned some of Brownback’s proposals that would have hit the poor the hardest, though some still remain. But it will force lawmakers to make even deeper cuts to education and other programs to make up a growing budget gap, the Wall Street Journal reports:

The tax plan, which was the subject of weeks of intense debate and political maneuvering in the legislature, will reduce the top individual state income-tax rate to 4.9% from 6.45% in 2013. It also will eliminate income taxes on non-wage income for about 191,000 small businesses.

The plan likely would require additional cuts in spending on education and social services to cover a reduction in annual tax revenue projected by the Kansas Legislative Research Department to exceed $800 million by 2014, or 12.8% of projected state revenues.

“It is not good public policy,” state Sen. Steve Morris (R), the president of the state Senate, said of the legislation. Other Republicans agreed, including a group of 50 former Kansas Republican lawmakers who attempted to persuade Brownback to veto the bill. “I think Kansas taxpayers need to be asking where the governor would make these cuts,” said Rochelle Chronister, who formerly served as a state representative and as the president of the state GOP, said earlier this month.

Kansas’ tax code is already regressive, as the poorest 20 percent of Kansans paying more than 9 percent of their income in taxes, while the richest 1 percent pay less than 6 percent of theirs. Now, it is even more regressive, and on top of that, poor and middle class Kansans will have to deal with spending cuts that hit social programs on which they depend.

Economy

EXCLUSIVE: Tea Party Icon Allen West Says He’s Willing ‘To Talk About Raising Taxes’ To Lower Debt And Deficit

POMPANO BEACH, Florida — Perhaps the most beloved member of the freshman Republican class, Rep. Allen West (R-FL) made a startling announcement on Tuesday: he’s willing to discuss raising taxes in order to address the nation’s budget shortfall.

The Tea Party congressman’s concession came at a small town hall meeting in Pompano Beach. West stipulated that before he would consider increasing taxes, he would have to be satisfied that Congress had first “eliminated a lot of that waste, fraud, and abuse.” Once that threshold was met, West said it’d be time “to talk about raising taxes as a means to make sure we keep our debt and our deficit at a manageable level”:

QUESTIONER: How can we balance the budget without raising taxes?

WEST: [...] There are many things we can do in Washington DC. Last year, as a wet-behind-the-ears freshman, by April I found three wasteful programs in the Department of Defense. It saved the American taxpayer $357 million over 10 years. But, the question is this. If every single member in the House of Representatives, every single member in the Senate, went in on the committee of jurisdiction and oversight and they did the same thing, find $350 million in wasteful programs over the next 10 years, get it and eliminate it, think what happens for our budget. We get ourselves on the road to being able to balance this thing . Now, once we get to a point where we have waxed out the federal government, we have eliminated a lot of that waste, fraud, and abuse, then it certainly comes to the American people to talk about raising taxes as a means to make sure we keep our debt and our deficit at a manageable level.

Watch it:

The fact that West’s announcement is so surprising speaks to just how intransigent congressional Republicans have become when addressing tax and budget issues.

One of the primary reasons for their obstinance is because of a single anti-tax crusader in Washington DC, Grover Norquist. Nearly every Republican in Congress has signed Norquist’s pledge to “oppose and vote against tax increases.” Just seven House GOPers and seven in the Senate have refused.

Still, cracks are beginning to appear. Other House Republicans have shown similar angst about Norquist’s pledge recently, despite being signatories. They include Reps. Steve King (R-IA), Timothy Johnson (R-IL), Jeff Fortenberry (R-NE), Charles Boustany (R-LA), Mike Simpson (R-ID), and Frank Wolf (R-VA).

Economy

After Slashing Funds For Health And Education, Ohio Prepares To Cut Taxes For Banks

During the Great Recession, Ohio has cut its budget to ribbons, reducing funds for health services, higher education, and K-12 education. The budget cuts are so severe that some towns might officially cease to exist (due to disincorporation).

However, it seems that Gov. John Kasich (R-OH) and the Republican legislature feel that the state has money to burn on tax cuts for the financial industry:

An Ohio Legislative Service Commission analysis said the bill “may decrease GRF (general revenue fund) revenue by an uncertain amount, though the revenue loss may be up to $30 million per year, when compared to the introduced version of the bill.”

The potential of a $23 million to $30 million tax cut for financial institutions drew fire from Democrats at a time when schools and local governments are suffering from significant budget cuts.

Kasich’s original plan was meant to be revenue neutral, but the legislature cut it up until it turned into a gift to the banks worth millions of dollars. As Policy Matters Ohio noted, the justification for cutting banks’ taxes — that they will use the money to increase lending — is fundamentally flawed:

The idea that cutting bank tax rates will fuel more lending and a stronger economy is misplaced. Since many Ohio banks already are “flush with cash,” as a representative of the industry puts it, cutting their taxes is unlikely to lead to new lending. Ohio banks are doing well, as a Feb. 28 press release from the Ohio Bankers League entitled “Bumper Quarter for Ohio Banks” attests, and are in no need of a tax cut.

“We’re basically giving the banks … a $25 million gift every year,” said state Rep. Mike Foley (D). “But we’re also doing that in the context of an economy and state budget in Ohio that has been wracked and harmed and hurt and mangled by the financial industry that we’re giving benefits to today.”

Economy

Grover Norquist: Trying To Stop Billionaires From Dodging Taxes Makes You A Nazi

Americans for Tax Reform President Grover Norquist

After Facebook co-founder Eduardo Saverin avoided some $67 million in taxes by renouncing his American citizenship shortly before the company made its initial public offering, Sens. Chuck Schumer (D-NY) and Bob Casey (D-PA) introduced the “Ex-Patriot” Act. The bill would make former citizens subject to the capital gains tax on U.S. investments and bar those who renounce citizenship for tax purposes from reentering the country.

To American for Tax Reform President Grover Norquist, Schumer and Casey’s effort is akin to Nazism or South African apartheid, as The Hill reports:

“I think Schumer can probably find the legislation to do this. It existed in Germany in the 1930s and Rhodesia in the ’70s and in South Africa as well,” said Norquist. “He probably just plagiarized it and translated it from the original German.”

The Nazis infamously implemented a departure tax on Jews who tried to flee Germany before World War II. Schumer is Jewish.

“There’s already a law in the books George, but this is outrageous,” said Speaker of the House John Boehner (R-OH), referencing Saverin’s tax avoidance. “If it’s necessary, sure I would support [the Ex-Patriot Act].” In the last few months, several House Republicans have broken with Norquist and the Americans for Tax Reform anti-tax pledge, which says that signers will never agree to any tax increase, for any reason.

NEWS FLASH

Senators Introduce ‘Ex-Patriot Act’ In Response To Facebook Founder’s Tax Avoidance | Facebook co-founder Eduardo Saverin renounced his American citizenship ahead of Facebook’s initial public offering, a move that will save him about $67 million in taxes. Today, Sens. Chuck Schumer (D-NY) and Bob Casey (D-PA) introduced the “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” Act — or Ex-Patriot Act — to prevent this sort of tax avoidance. Under the bill, former citizens “will be subject to 30% capital gains tax on future U.S. investments no matter where they live.” Of course, Saverin could have bigger problems, as he may not be able to reenter the U.S. on account of his decision. And Saverin is certainly not the only person connected to Facebook who is planning on avoiding taxes.

Economy

Former GOP Governor Hits Romney’s Tax Plan: ‘You Can’t Do Just Tax Cuts’

Former Gov. Christine Todd Whitman (R-NJ)

Presumptive 2012 GOP presidential nominee Mitt Romney has released an economic plan that would spend trillions of dollars on tax cuts for the wealthiest Americans and corporations. These tax cuts would dwarf the Bush tax cuts, and Romney has in no way indicated how he will prevent the cuts from blowing a huge hole in the federal budget.

On CNBC today, former GOP Governor Christine Todd Whitman (NJ) criticized Romney’s tax plan, “you can’t do just tax cuts”:

I believe in cutting taxes. I cut taxes as a governor over and over again. But you can’t do just tax cuts. There are going to be times when you are going to have to close loopholes or raise some taxes. And unfortunately, as a candidate, and this is the problem with our primary system, it forces candidates to the right and to the left, Mitt Romney signed the no-new-taxes pledge.

Watch it:

While Romney has indeed pledged fealty to Grover Norquist and the Americans for Tax Reform anti-tax pledge, more and more Republicans have been breaking from that pledge, acknowledging that revenue needs to be a part of the nation’s budget solution. Rep. Timothy Johnson (R-IL) even blasted the pledge as “disingenuous and irresponsible.”

Economy

Indiana GOP Senate Candidate Says His Concern About Poor Not Paying Taxes Akin To Lincoln’s Fears About Slavery

The Republican Party’s nominee for Indiana’s U.S. Senate seat recently compared the fight over tax rates and reform to former president Abraham Lincoln’s concern over slavery, alluding to Lincoln’s famous “House Divided” speech ahead of the Civil War.

State treasurer Richard Mourdock (R) rehashed a favorite GOP talking point — that 47 percent of Americans don’t pay income taxes — at the town hall in Columbus City, Indiana, comparing those 47 percent to the Confederate states that seceded from the Union in an attempt to protect and expand slavery. Referencing Lincoln’s speech, Mourdock said that as long as nearly half of Americans don’t pay taxes, “we are a house divided” that is presumably on the point to another fight, this time between the rich and the poor:

MOURDOCK: What he meant by that was that slavery was either going to be totally eliminated from the United States or it was no longer just going to be restricted to the Southern states, it was going to go everywhere. I am here to suggest to you that we are in a house divided. You know this past April, when our federal taxes were paid, 47 percent — 47 percent — of all American households paid no income tax. In fact, half of that 47 percent almost, actually got tax money back from the government that they never paid -– because a few years ago we revised the welfare program to make it part of the tax code. When 47 percent are paying no income taxes — they do pay Social Security — but they are not paying income taxes, and 53 percent are carrying the load, we are a house divided.

Watch it:

Mourdock’s ridiculous allusion to a speech referencing the spread of slavery aside, the facts he presented to town hall attendees aren’t telling the whole story. It’s true that half of Americans don’t pay federal income taxes, but they do pay state income taxes, payroll taxes (which Mourdock referenced), and a host of other taxes. Many of those 47 percent don’t pay income taxes because they don’t have income on which to pay taxes — they are students or seniors without taxable income, or they don’t make enough money to qualify for the bottom tax bracket.

Republicans have opposed tax increases of various kinds to help pay down the deficit, largely because so many are beholden to a radical no-taxes pledge authored by Americans for Tax Reform President Grover Norquist. Mourdock, who has signed the pledge, seems no different than many Republicans in Congress — he’s willing to ignore the pledge, as long as the only tax increases that pass are on the poorest Americans.

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