Category Archives: Tax

Rich Getting Richer Via Tax Policies

“I’ve been rich and I’ve been poor. Believe me, rich is better.” This famous quote has always been true, but never as true as today. After decades of dominance by the right, here’s the 2019 version:

“I’ve been rich and I’ve been poor. Believe me, rich is insanely better.”

The insanity stems from tax policies. Marginal income tax rates plunged starting in the 1980s, hitting their modern-day lows under President George W. Bush. After rising modestly during the Obama Administration, they fell again under President Trump.

Rate cuts generate only part of the current bonanza. Tax breaks passed by various Congresses account for the rest, hugely increasing the billions that flow to the haves.

So, insanely, taxes really are making the rich richer. With inequality soaring, they’re widening the income gap instead of making it smaller.

All taxpayers get at least modest breaks, but the big money goes to those who need it the least: income is redistributed upward, with disproportionate shares going to the top percentiles.

The most blatant example literally “wills” capital gains (and capital gains taxes) away. With the stroke of a pen, when assets such as real estate and equities are passed along to heirs, all unrealized capital gains are wiped out. The assets are revalued and given a new basis price, their worth at the time of transfer.

It’s called a step-up in basis, and it can happen again and again. As a result, wealth can pass untaxed from one generation to the next.  (Retirement accounts get no such break, but non-retirement holdings do — and guess who has those.)

In another fiscal favor to the rich, income from wealth is taxed at a lower marginal rate than income from work. The federal rate on long-term capital gains and dividends is 20 percent, well under the 37 percent top rate on income from wages and salaries. The highest earners do pay an Obama-era surcharge of 3.8 percent on investment income; even so, they still save more than a third compared to the tax on income from labor.

This break in particular acts as rocket fuel for income inequality. With income from capital becoming an ever-greater share of total income, a lower rate drives up the fortunes of wealthy Americans and leaves middle America farther and farther behind.

Tax expert David Cay Johnston ran the Internal Revenue Service numbers.  From 1961 through 2013 (the latest year for which data is available), the 400 richest Americans saw their federal income taxes drop from 42.4 cents on the dollar to 22.9 cents. For 2013, adjusted for inflation, that gave the top 400 an average $195.4 million in extra after-tax income. The vast majority of Americans took home more dollars too: an average of $6,812.

It’s the ratio, Johnston wrote, “that may take your breath away.” After more than 50 years of deliberate tax policy choices, here it is:

For each dollar of increased after-tax income enjoyed by the vast majority in 2013, the top 400 enjoyed $28,684 more. That’s $28,684 to $1.

The ratio can always go higher and probably already has; it came before the Trump tax cut, which delivered its own special breaks to the rich.

One of those more than doubled the estate tax exemption, raising it from $5.5 million to $11.4 million for an unmarried person. A couple can shield twice that amount, or $22.8 million.

It was a major anti-estate tax victory, but only the latest in a streak going back to 2001: the exemption back then topped out at $675,000, or $1.35 million for a couple. Legislation passed in that year gradually raised the totals to $3.5 million/$7 million by 2009. Congress later upped those exemptions as well, and the 2017 law has raised them to new highs.

According to “death tax” propaganda, estate taxes amount to double taxation of a lifetime’s hard-earned income. According to the facts, “unrealized capital gains account for almost half of the fair market value of estates.” Under the stepped-up basis (see paragraphs 7 and 8), those gains will never be taxed, period.

Let’s end with an exclamation point. From 2014-2023, two tax breaks alone will put the haves up by an estimated $1.984 trillion. Just from lower taxes on capital gains and the stepped-up basis, those who need nothing will be up by nearly $2 trillion.

That $2 trillion should be going to the common good, not to the well-off. Congress can make it happen by ending tax breaks that do little more than make the rich richer.

• This piece first appeared at www.nydailynews.com

The Palestinian Authority is No Longer Crying Wolf Over its Imminent Collapse

We have been here many times before. However, on this occasion even the principal actors understand that the Palestinian Authority is not crying wolf as it warns of imminent collapse.

The crisis is entirely of Israel and Washington’s making. Keen to pander to hawkish public opinion in the run-up to last month’s election, Israel’s Prime Minister Benjamin Netanyahu struck a severe blow against Mahmoud Abbas and his government-in-permanent-waiting.

He announced that Israel would withhold a portion of the taxes it collects on behalf of the Palestinians, and which it is obligated under the Oslo accords to pass on to the PA, based in the West Bank.

The money deducted is the sum the PA transfers as stipends to the families of political prisoners and those killed and maimed by the Israeli army.

This is an incendiary issue, as Netanyahu well knows, given that Palestinians view these families as having made the ultimate sacrifice in the struggle to liberate their people from brutal Israeli occupation.

Abbas cannot be seen to back down, and so has refused to accept any of the monthly tax transfers until the full sum is reinstated, amounting to nearly two-thirds of the PA’s revenues.

Given how precarious Palestinian finances are, after decades of resource theft and restrictions on development imposed by Israel, the PA is already on the brink of bankruptcy.

The problem for Netanyahu and Washington is that the PA was established – under the 25-year-old Oslo accords – to take the pressure and costs off Israel of policing the Palestinian population under occupation.

If the PA collapses, so do the Palestinian security forces that have been keeping order in the West Bank as Israel has continued to plunder Palestinian land and resources.

Late last month the United Nations warned that the standoff had left the PA facing “unprecedented financial, security and political challenges”.

Which means that, despite his recent electoral triumph, Netanyahu is in a serious bind.

He cannot be seen by his even more right-wing coalition partners to be climbing down and restoring stipends to people Israelis view simply as “terrorists”.

Equally, he dares not risk a Palestinian uprising in the West Bank. That would be a real possibility if the Palestinian economy implodes and there are no Palestinian security forces to suppress the resulting wave of popular anger.

A preview of the difficulties in store was given at the weekend, when more than 600 rockets were fired out of Gaza, threatening the cancellation of the Eurovision song contest in Israel later this month.

By Sunday evening, four Israelis were reported dead, while 20 Palestinians had been killed by Israeli airstrikes. The Palestinian fatalities included two pregnant women and a toddler.

There is also the danger, from Israel’s point of view, that if Abbas’s PA collapses, the void in the West Bank will be filled by his Hamas rivals, who run Gaza. Israel has been delighted to keep the Palestinian territories divided under feuding Fatah and Hamas leaderships.

A way out – or a change of tack – is urgently required.

Israel has tried twice to quietly make partial tax transfers to the PA’s bank account, in the hope the money would be accepted. The PA returned it.

Then, the European Union stepped in. Ostensibly an “honest broker”, it appears to be occupying a role the Trump administration has formally abandoned. The EU proposed last week that the PA accept the transfers on a “provisional basis”, until the crisis can be resolved.

PA officials were dismissive. “Let the people take to the streets,” one said. “We have our backs to the wall.” The PA line is that in the current climate, if it backtracks, Israel will simply intensify unilateral measures harming the Palestinian cause.

So now, more in desperation than any realistic prospect of achieving peace, attention is turning to Donald Trump’s long-promised “deal of the century”.

After endless delays, the US administration now seems to be preparing for its release next month, soon after the holy month of Ramadan finishes.

The plan’s main architects, Trump’s son-in-law Jared Kushner and his Middle East envoy Jason Greenblatt, have issued a spate of statements hinting at the contents.

Greenblatt has sought to reassure neighbouring Egypt and Jordan that they will not shoulder the burden. He discounted rumours either that Gaza’s Palestinians would be encouraged to move to the Sinai, in a land swap that would allow Israel to annex parts of the West Bank, or that Jordan would find itself recast as an alternative Palestinian homeland.

Kushner, meanwhile, has strongly suggested that the goal of a two-state solution, implied by the Oslo process, will finally be jettisoned. “New and different ways to reach peace must be tried,” he has said.

He has also stated that the plan will stress “economic benefits” for the Palestinians and “security” for Israel.

David Friedman, Trump’s ambassador to Israel and a stalwart ally of Israel’s most extreme settlers, has recently added that Israel will maintain security control of the West Bank.

According to analysts, these statements suggest the White House is preparing the ground for an offer to the Palestinians of “limited autonomy” – an outcome Arab officials confirmed to The Washington Post.

Sensing the danger, 40 former senior European officials have signed a letter opposing any plan that creates a Palestinian “entity devoid of sovereignty, territorial contiguity and economic viability”.

“Limited autonomy” would be a reformulation of Israel’s long-running ambition to thwart permanently Palestinian hopes of statehood – a policy the late Israeli academic Baruch Kimmerling once termed “politicide”.

Since the late 1970s, the Israeli right has advocated hemming Palestinians into enclaves where they are denied sovereignty.

The model of disparate cantons, effectively operating as glorified municipalities and surrounded by a sea of Israeli settlers, is little different from that of “black homelands”, or Bantustans, established in apartheid-era South Africa.

Now, it seems, the Trump administration is ready to support this racist idea as a way to promote regional peace.

The Americans hope that, with a few sweeteners, the Palestinians can be made to swallow this bitter pill. It is an idea Netanyahu has advanced for some time, with his talk of “economic peace” – or what might be better termed “economic pacification”.

But the current impasse on taxes shows that buying off the Palestinians with bribes, in return for the abandonment of core national goals, may not prove so easy.

With the PA close to collapse, it is hard to see how Trump’s deal of the century can do anything other than speed up the authority’s demise.

• A version of this article was first published in The National

Paul Manafort and the Crime of Not Provoking Russia

Paul Manafort has been convicted and sentenced to four years in prison for what the judge calls “white collar crimes” unrelated to “Russian collusion.” The mainstream press is in a state of shock. Surely, the morning cable anchors protest, he should have gotten 20 years!

He was friends with (“pro-Russian”) Ukrainian businessmen and politicians! He took fees for political consulting work with foreigners—that he never reported to the IRS! He committed bank fraud and tax fraud! And he may have had a role in the decision of the Republican National Committee at the Republican convention in July 2016, to modify a section of the program to remove reference to the provision of U.S. lethal military aid to Ukraine!

For two years that last accusation has been treated by the press as the truly damning one, the clear proof of a conspiracy to help Russia. There’s been a deliberate effort to generate outrage, where none really smolders in the masses’ breasts. How many people in this country feel strongly about the issue of Ukraine, could find the country on the map, have any knowledge in its history or any strong feelings about the matter of who should have sovereignty over Crimea?

The implicit argument is that not to give offensive weapons to the government in Ukraine at the time (then headed by Arseniy Yastenyuk, who had attained power through a U.S.-supported violent coup and the documented sponsorship of grotesque neocon beast Victoria Nuland) was anything other than the height of irresponsibility, if not treason. (“What more do we need than that?” demands the angry CNN “foreign policy analyst” or “national security analyst” while the hosts nod in agreement.), But this new regime in Kiev was riddled with fascists, was engaged in an effort to impose its armed authority over a rebellious ethnic Russian Donbas region, and might potentially be at war with Russia at any moment.

One could interpret the platform change as a rational retreat from an unnecessary provocation of Moscow. Why should that be so controversial or mysterious?

But to the talking heads of MSNBC and CNN, and maybe some on Fox, the minor move was sure, clear proof of Russian collusion. The party committee couldn’t have been applying mere common sense, and deference to a presidential nominee who’d expressed hope for normal relations with Russia. No, it had to have been hijacked by Russian agents.

In the real world, it’s just possible that Manafort (for whatever reasons) had educated Trump to some basic facts: Ukraine has long been ethnically divided between Ukrainians and (ethnic) Russians. The regime that seized power in February 2014 (toppling the democratically elected if highly corrupt one that Manafort had served) had completely alienated the Donbas region from the outset by its anti-Russian discriminatory measures, provoking the rebellion. As for the Crimean Peninsula, it had been Russian from 1785 to 1954, and the base of the Russian Black Sea Naval Fleet since the 1780s, so it wasn’t surprising that Moscow would want to re-assert sovereignty to prevent the very real prospect of losing its base to the relentlessly expanding NATO.

(It would have made sense for Bernie Sanders, had he won the Democratic nomination—that is, had we had a fair, not rigged, Democratic primary process—-to have stricken out any such language from a Democratic Party platform.)

I wrote a number of columns about Ukraine after the 2014 putsch opposing U.S. intervention in Ukraine and the U.S. effort, involving about $ 5 billion invested in what Victoria Nuland and Madeleine Albright both referred to publicly as “support for the Ukrainian people’s European aspirations.” (This was code for the drive of right-wing politicians in Ukraine to join EU after following the well-established pattern of former east bloc countries first joining NATO, then the European trade bloc.) Some of these were re-posted on Russian media. Am I thus guilty of collusion?

This matter of the non-support for military involvement in Ukraine, as a bad thing, is at the heart of the collusion case. The Manafort judge T.S. Ellis has been right to be skeptical, and to suspect that the prosecutors have been trying too hard to pin on Manafort a conspiracy charge implicating Trump and Russia. (Or a Trump staffer and a Russian businessman. Or a Trump aide and a Ukrainian businessman, or Russian-Ukrainian businessman, or Russian-American businessman.)

The fact of the matter is, as Graham Stack, a Fusion GPS researcher once hired to gather dirt on Manafort, pointed out last year: “Manafort was nothing like a pro-Kremlin influence on the former Ukrainian President Viktor Yanukovych… Instead, Manafort was one of the driving forces pushing Yanukovich towards signing the agreement with the EU. The Kremlin has every reason to hate him.”

That is, Manafort for his own business reasons wanted Ukraine to join the European Union, just like Victoria Nuland wanted to use the Ukrainian people’s (supposed) yearning to join the organization—that was then squeezing the life out of the Greeks and was subsequently rejected by the British—-as part and parcel of Ukraine’s planned entry into the anti-Russian military alliance. (This had been announced in 2008, the same year as NATO unveiled plans to welcome Georgia as well in the near term. That plan is on hold after the Russo-Georgia War of that year, just as plans to admit Ukraine are permanently on hold for fear—by the Germans, if not the U.S.—of provoking Russia.)

The motives of Nuland and Manafort were very different. She wanted a cause that would unite the opposition and facilitate regime change; he wanted a deal that would personally aggrandize him, given his investments in EU countries and in Ukraine. But  Russia was as of February 2014 opposed, for reasons Moscow stated clearly. (Basically, the cross-border economies are so deeply integrated, the cultures so similar and movement between the two countries so free that EU goods once in Ukraine would flow uncontrollably into Russia, damaging the Russian economy. Was the Russian stance unreasonable? Moscow offered Kiev a generous aid package, which Yanukovych accepted; meanwhile, Russia indicated it had no problem with Ukraine’s eventual EU membership once certain issues were resolved, and reiterated Putin’s aspiration for a Eurasia-wide free market to extend from Vladivostock to Lisbon. (Was this reasonable? Or does it “threaten our national interests” somehow?)

The Russians perhaps convinced Yanukovych that the austerity measures Ukraine would have to accept even for associate NATO membership would be destabilizing. So he withdrew from the provisional deal that had been pushed by Manafort.The  U.S.-backed  opposition declared Yanukovych a traitor loyal to Russia, and the government fell giving way to the current dysfunctional regime that lionizes fascists like Stephan Bandera.

One should definitely condemn Manafort for his past “consulting work”—with the likes of Ronald Reagan, George H. W. Bush, Bob Dole, Gerald Ford, Ferdinand Marcos, Mobutu Sese Seko, and Jonas Savimbi. (This list of clients includes at least five mass murderers.) But why single him out for assisting the former, democratically elected Ukrainian president in his negotiations with the EU? (Oh, because he didn’t report the income…the tax fraud thing…  Terrible indeed.)

The fact is, Manafort would not have been on trial had there not been an effort to seize on any kind of link between anyone around Trump and any one or thing Russian to substantiate the charge of “Russian interference” in the U.S. election. The thinly researched and argued January 2017 “Assessing Russian Activities”intelligence report on that “interference” was followed by a drive to investigate Trump campaign collusion with Russia, with a clear political mission to explain Hillary’s loss by attributing it to Trump’s (treasonous, secret) relationship with Putin.

It hasn’t led to anything yet but a meeting in a Manhattan cigar bar Aug. 2, 2016 between Manafort, his deputy Mike Gates and Konstantin Kilimnik, a Russian business partner of Manfort’s since 2005 (“thought to be linked to Russian intelligence”) that might have involved  the sharing of some polling data that by law should have been kept secret (or only shared with U.S. political operatives seeking to legitimately influence the outcome of the U.S. election).

Maybe some Russians used the information to influence targeted U.S. minds, using Facebook to throw the election result in Wisconsin. That would see horrible, would it not? An attack by other people on our democracy?! (While we never interfere, anywhere!)

The message is in any case clear. We should be outraged that “the Russians” “interfered” in “our election” tainting its result. We should view “our” elections as sacrosanct affairs, and be outraged that Trump staffers were willing to talk to Russian officials or private citizens, about the election or lots of other things, neglecting to report any contact with nationals of a country that (for some reason) we’re supposed to regard as an “adversary.”   Indeed, the overriding historical import of the movement to drive Trump from office is its re-enforcement of Russophobia in this country.

Trump is depicted as evil less due to his bigotry, misogyny, racism, Islamophobia, or corrupt business practices than due to his failure to do the right thing: take a hard line on Russia.

That means denouncing Putin, the way Hillary did. (Clinton as top U.S. diplomat called Putin a new Hitler, for re-annexing Crimea.) It means continuing to demand, as Obama did, that Russia withdraw from Crimea and cease whatever material support it provides to the separatists in the Donbas region or face continuing U.S. (and EU) sanctions. (These are hopeless demands, and are hurting Europe as well as Russia. Yet their maintenance is depicted as the only responsible route forward, and suggestions they be lifted portrayed as capitulation to evil.)

And it means howling in indignation when Paul Manafort, the closest thing to a “smoking gun” about collusion between Russia and Trump, only gets four years behind bars. It means disparaging Judge Ellis, noting his expressed concern about special prosecutors’ overreach and the possibility of the case becoming a “political weapon.”

News anchors visibly consternated by the sentence length seem troubled too by the likelihood that the Mueller probe will conclude with no real evidence. The dream of Trump being exposed as a Russian agent—promising sanctions relief after his victory in return for advance Russian notice about Wikileaks’ hacked emails publication schedule—-is fading.

In its place is the dream of replacing Trump in 2020 with an (appropriately) anti-Russian leader. This would mean one committed to NATO (which is still officially on track to include Georgia and Ukraine, to better encircle and provoke Russia); committed to the sanctions designed to hobble the Russian economy and prevent other countries from trading with it; committed to challenging Russia’s influence in the Middle East and depicting any such influence as “foreign interference” in a region that ought by rights be dominated by the U.S. as the world’s “exceptional” nation; and the insistence on the myth that the U.S. has “national interests” transcending class interests that need to be protected from Russia pursuing its own.

The appropriately anti-Russian leader the mainstream media seeks must of course be, preeminently, a proud capitalist. The restoration of normality must combine the new Russophobia (which has nothing to do immediately with anticommunism—since the Russian state is thoroughly capitalist and Putin’s party is both pro-market and pro-Orthodox religion—but draws on Cold War specifically anti-Russian tropes) with a clear repudiation of socialism.

*****

Saturday: Dave Gura on MSNBC expressing puzzlement that John Hinckenluper in a Joe Scarborough interview refused to call himself a capitalist (recognizing the negative connotations of that word among many young people).

Shame! the bipartisan panelists all agree; he should have proudly broadcast his capitalist status, and promoted the market as the key to creating jobs. If the Dems go with a “socialist” message, Trump will win! The very word socialism is Kryptonite!

These two phenomena—the mainstream ruling-class disappointment that the “Russian collusion” case is collapsing, and alarm at the soaring popularity of “socialism”—are related. To bring him down, one accuses the president of collusion with a country vilified throughout the Cold War; the USSR was targeted for its “socialism” but also attacked on the basis of ethnic stereotypes that remain useful to the anti-Russian propagandist. To make sure his successor is committed to the post-Cold War strategy of maintaining global hegemony and preventing the emergence of any rival, one must insure that someone who accepts capitalist imperialism takes office.

The morning TV news anchors, makers of public opinion, unite in agreement that it is unacceptable to question the motives of legislators who always vote in favor of Israel. (In this they in fact unite with Trump, who’s opportunistically charging the Democrats with antisemitism.) They also unite in agreeing it’s good the Hanoi summit between Kim and Trump failed, because it would be against U.S. interests to reduce sanctions until Pyongyang gets rid of it’s nukes (which it’s not going to do without sanctions relief, so the anti-Trump position is a virtual demand for war). These are some of the responsible positions of the anti-Trump mainstream.

My, what an awful, awful man! Such a Russian stooge! Jeopardizing our national security, serving Russian interests, by pulling out of Syria! (When did insistence on indefinite deployment of U.S. forced illegally in Syria become so mainstreamed?) And by talking about an Afghan pullout!

And his campaign chairman was meeting Russians! (Let us recall Manafort was chairman all of three months.) And Manafort was secretly meeting Russians, our adversaries!

Such outrage. Such unanimity. Such slavish devotion to capitalism, imperialism, “our heroes” in the U.S. military, sterile political correctness plus unquestioned devotion to Israel, and of course the systematic vilification of Russia. The trashing of both socialism and Russia, the latter having nothing to do with the former anymore, but what difference does it make?  We’re supposed to believe that both of them are Kryptonite, and that the choice before us is between the responsible capitalist and Russophobe (such as Joe Biden) and the capitalist and imagined Russophile traitor Donald Trump.

Wall Street Mini-Tax Could Raise Maxi Revenue

With great fanfare, politicians on the left are thinking big on tax reform: a 70 percent rate on incomes over $10 million, a wealth tax on the super-rich, estate taxes as high as 77 percent. With no fanfare at all, the nonpartisan Congressional Budget Office (CBO) has made the case for thinking small. According to the CBO, a mini-tax on sales of stocks, bonds and other holdings could boost revenues by scores of billions a year.

The estimate came in December 2018 when the CBO released its list of options for cutting the federal deficit. For the period 2019-2028, a Wall Street tax of 0.1 percent would bring an extra $777 billion into the Treasury. Market declines were predicted early on, along with lower capital gains and lower trading volumes. Even so, after factoring in all the headwinds, the tax still produced average annual revenue increases of almost $78 billion. The numbers rose as the years went by: the inflow totaled $534.5 billion in the closing half-decade, compared to $242.2 billion from 2019-2023.

The tax is called a financial transactions tax, “FTT” for short. The United States had one from 1914 until 1965; it could be coming around again as lawmakers try to cope with “the defining challenge of our time,” income inequality.

Such a levy would instantly become the single biggest non-income tax on wealth in America. Five days a week and after-hours, the financial markets execute millions of trades involving billions of shares. The huge majority belongs to taxpayers in the upper rungs. Given the volume and the value of the trades, even a tiny tax would generate giant revenues. The Institute for Policy Studies, in a Q&A on the tax, said the burden “would fall overwhelmingly on short-term speculators. For most pension funds and traditional stock-and-bond-holders, the cost would be negligible—in fact less than typical portfolio management fees.”

A detailed analysis of FTTs by the Tax Policy Center was published in 2016. The study looked at the arguments pro and con, and there were plenty of both. For opponents, the tax was “an answer in search of a question.” It would “curb productive trading…reduce market liquidity, raise the cost of capital, and discourage investment.” If you want more, “It could also cause prices to adjust less rapidly to new information.”

For proponents, the upsides included less “speculative short-term and high-frequency trading,” less volatility, and fewer bubbles. Payback was part of the argument too: It “could help recoup the costs of the [2009] financial-sector bailout as well as the costs the financial crisis imposed on the rest of the country.” From this sprang the nickname, the “Robin Hood Tax.”

The name fits—but Robin never took from the rich on a scale so small and yet so large. The study concluded that a tax of 0.34 percent “could raise a maximum of about 0.4 percent of GDP ($75 billion in 2017) in a highly progressive manner.” Note that the 0.34 percent rate more than triples the CBO’s 0.1 percent, but brings in no more revenue. The reason is tax evasion, which rises as the rate increases; the increases can ultimately lose more revenue through evasion than they gain. Nonetheless, the tax is clearly a fiscal policy bonanza.

If it again becomes law, said the Center, the bonus billions could be used “to benefit the poor, finance future financial bailouts, cut other taxes, or reduce public debt.” The last option, of course, is how the CBO was spending the money. There’s no lack of other possible uses, including sorely-needed infrastructure repairs or restoring free tuition to public colleges and universities.

Even the right gets something to love with a FTT. Here’s the Tax Foundation in February of 2018, praising sales taxes and their superiority to income taxes: “Retail sales taxes are one of the more transparent ways to collect tax revenue. While graduated income tax rates and brackets are complex and confusing to many taxpayers, sales taxes are easier to understand; consumers can see their tax burden printed directly on their receipts” (in this case, directly on their financial transactions receipts).

In the newest news, Sen. Brian Schatz (D-HI) and Rep. Peter DeFazio (D-NJ) have just submitted FTT legislation calling for an 0.1 percent tax to the current Congress. Earlier efforts over the last decade have gone nowhere, and any Democratic bill faces an uphill battle in the GOP-controlled Senate.

Timing is everything, though. And the nonpartisan CBO just gave out those big, beautiful numbers for precisely the tax that Schatz and DeFazio are proposing.

This article originally appeared at www.nydailynews.com

“We Don’t Do Propaganda”

Earlier this month, Dutch historian Rutger Bregman, author of Utopia For Realists, was interviewed by the high-profile Fox News presenter Tucker Carlson. During a panel discussion at the World Economic Forum in Davos in January, Bregman had bluntly told billionaires that they should stop avoiding taxes and pay their fair share:

“We gotta be talking about taxes. That’s it. Taxes, taxes, taxes. All the rest is bullshit, in my opinion.”

His comments went viral which, in turn, led to him being invited on to Carlson’s television show. It’s safe to say that the interview did not go as the right-wing host would have liked. In fact, Fox News decided not to air the segment. However, it was captured on mobile phone footage in the Amsterdam studio where Bregman was doing the interview and it was later distributed via Twitter. He told Carlson:

‘The vast majority of Americans, for years and years now, according to the polls – including Fox News viewers and including Republicans – are in favour of higher taxes on the rich. Higher inheritance taxes, higher top marginal tax rates, higher wealth taxes, it’s all really mainstream. But no one’s saying that at Davos, just as no one’s saying it on Fox News, right? And I think the explanation for that is quite simple, is that most of the people in Davos, but also here on this channel, have been bought by the billionaire class. You know? You’re not meant to say these things. So I just went there, and I thought, you know what, I’m just going to say it, just as I’m saying it right here on this channel.’

Carlson was happy enough at this point. Indeed, he praised Bregman for what he’d said in Davos: “That was one of the great moments – maybe the great moment in Davos history.”

Carlson added: “If I was wearing a hat, I’d take it off to you.”

The Dutch historian continued:

‘America is still pretty much the most powerful country in the world, right? So if it really would want to, it could easily crack down on tax paradises. But the thing is, you guys have brought into power a president who doesn’t even want to share his own tax returns. I mean, who knows how many billions he has hidden in the Cayman Islands or in Bermuda. So I think the issue really is one of corruption and of people being bribed, and of not being, not talking about the real issues. What the family—what the Murdochs [owners of Fox News] basically want you to do is to scapegoat immigrants instead of talking about tax avoidance.’

By this point, it was clear that Carlson was unhappy with how the interview was going:

‘And I’m taking orders from the Murdochs, that’s what you’re saying?’

Bregman responded reasonably:

‘No, I mean, it doesn’t work that directly. But I mean, you’ve been part of the [right-wing libertarian think tank] Cato Institute, right? You’ve been a senior fellow there for years.’

The Fox News presenter interjected aggressively, seemingly rattled: “Well how does it work?”

Bregman replied:

‘Well, it works by you taking their dirty money. They’re funded by Koch billionaires, you know? It’s as easy as that. I mean, you are a millionaire, funded by billionaires, that’s what you are. And I’m glad you now finally jumped the bandwagon of people like Bernie Sanders and AOC [Alexandria Ocasio-Cortez, a newly elected Democrat politician in New York], but you’re not part of the solution, Mr. Carlson. You’re part of the problem, actually. … All the anchors, all the anchors of Fox—’

By this point, Carlson had lost it: “You would have to be a moron, you would have to be—”

Bregman carried on speaking:

‘They’re all millionaires. How is this possible? Well it’s very easy, you’re just not talking about certain things.

‘You are a millionaire funded by billionaires, that’s what you are… You’re part of the problem.’

Bregman then correctly predicted: ‘you’re probably not going to air this on your show.’

He added:

‘But I went to Davos to speak truth to power and I’m doing exactly the same thing right now. You might not like it, but you’re a millionaire funded by billionaires and that’s the reason you’re not talking about these issues.’

Carlson: “But I am talking about these issues.”

‘Yeah, only now. Come on, you jumped the bandwagon. You’re all like, oh, I’m against the globalist elite, blah blah blah. It’s not very convincing to be honest.’

That was too much for Carlson who exploded:

‘I wanna say to you why don’t you go fuck yourself ― you tiny brain. And I hope this gets picked up because you’re a moron. I tried to give you a hearing, but you were too fucking annoying…’

Unflustered, Bregman interjected with a smile: “You can’t handle the criticism, can you?”

Afterwards, Bregman shared the clip on his Twitter feed:

‘Here’s the interview that @TuckerCarlson and Fox News didn’t want you to see. I chose to release it, because I think we should keep talking about the corrupting influence of money in politics. It also shows how angry elites can get if you do that.’

As predicted, Fox News did not air the segment. No doubt prompted by Bregman releasing the exchange into the public domain, Carlson addressed it on his show:

‘Things went fine for the first few minutes and then Bregman launched into an attack on Fox News. It’s not clear that Bregman has ever seen Fox. But he wanted to make his point. Fine.

‘But then he claimed that [adopts a fierce voice] my corporate masters tell me what to say on the show, and that was too much.’

Carlson continued:

‘Whatever my faults or those of this channel, nobody in management has ever told us what positions to take on the air – never – not one time. We have total freedom here and we are grateful for that. I have hosted shows on both the other cable channels so I know first-hand how rare that freedom is. On this show, thanks to Fox, we get to say exactly what we think is true, for better or worse.

‘But there was no convincing Bregman of that, he knew what he knew. So I did what I try hard never to do on this show, and I was rude. I called him a moron and then I modified that word with a vulgar Anglo-Saxon term that is also intelligible in Dutch.

‘In my defence, I would say that was entirely accurate. But you’re not allowed to use that word on television. So, once I’d said it out loud, there was no airing the segment.’

Carlson then pointed out that Bregman had released the exchange and that you could find it online:

‘There is some profanity, and I apologize for that. On the other hand, it was genuinely heartfelt and I meant it with total sincerity.’

It was a far from convincing explanation for why Fox News had not aired the segment. After all, a simple bleep could have overridden any profanity: a standard procedure used in television.

Note that we are not claiming that everything Carlson says can be dismissed as kow-towing to his ‘corporate masters’. Last year, for example, he admirably challenged the establishment consensus on Syria. That expression of dissent may well have boosted his ratings: always a welcome factor for a media outlet. Our point is that there is no freedom to ‘say exactly what we think’ on a corporate outlet. As Herman and Chomsky explained in Manufacturing Consent, there are structural limits in the ‘mainstream’ media:

‘the “societal purpose” of the media is to inculcate and defend the economic, social and political agenda of privileged groups that dominate the domestic society and the state. The media serve this purpose in many ways: through selection of topics, distribution of concerns, framing of issues, filtering of information, emphasis and tone, and by keeping debate within the bounds of acceptable premises.’1

That phrase, ‘keeping debate within the bounds of acceptable premises’, is crucial. Thus, for instance, a Fox News presenter who looked critically at the ownership and advertising behind that network would not last long; indeed, would likely never have been promoted into that trusted position in the first place.

‘You Say What You Like, Because They Like What You Say’

What was perhaps most interesting in Carlson’s riposte to Bregman was his defence of Fox News:

‘nobody in management has ever told us what positions to take on the air – never – not one time. We have total freedom here and we are grateful for that. I have hosted shows on both the other cable channels so I know first-hand how rare that freedom is. On this show, thanks to Fox, we get to say exactly what we think is true, for better or worse.’

Even former Guardian editor Alan Rusbridger understood the absurdity of this response. In 2000, he told one of us in an interview:

‘If you ask anybody who works in newspapers, they will quite rightly say, “Rupert Murdoch”, or whoever, “never tells me what to write”, which is beside the point: they don’t have to be told what to write… It’s understood.’

In fact, Bregman had already noted when he released the exchange:

‘I stand behind what I said, but there’s one thing I should have done better. When Carlson asked me how he’s being influenced by Big Business and tax-avoiding billionaires, I should have quoted Noam Chomsky.’

He expanded:

‘Years ago, when he was asked a similar question, Chomsky replied: “I’m sure you believe everything you’re saying. But what I’m saying is that if you believe something different, you wouldn’t be sitting where you’re sitting.”‘

Long-time readers of Media Lens will recall this example very well. It came up in a BBC2 programme in 1995 called The Big Idea when Andrew Marr – then of the Independent and now with BBC News – interviewed Chomsky about the propaganda model of the media. The quote in question comes when Marr is struggling to grasp the propaganda system that filters for obedient, power-serving journalists who are able to carve out a successful career in the ‘mainstream’.

Marr: ‘I’m just interested in this because I was brought up like a lot of people, probably post-Watergate film and so on, to believe that journalism was a crusading craft and there were a lot of disputatious, stroppy, difficult people in journalism. And I have to say, I think I know some of them.’

Chomsky: ‘Well, I know some of the best, and best-known, investigative reporters in the United States – I won’t mention names – whose attitude towards the media is much more cynical than mine. In fact, they regard the media as a sham. And they know, and they consciously talk about how they try to play it like a violin. If they see a little opening, they’ll try to squeeze something in that ordinarily wouldn’t make it through. And it’s perfectly true that the majority – I’m sure you’re speaking for the majority of journalists who are trained – have it driven into their heads, that this is a crusading profession, adversarial, we stand up against power. A very self-serving view. On the other hand, in my opinion, I hate to make a value judgement but, the better journalists and, in fact, the ones who are often regarded as the best journalists have quite a different picture. And I think a very realistic one.’

Marr: “How can you know that I’m self-censoring? How can you know that journalists are…’

Chomsky: “I’m not saying your self-censoring. I’m sure you believe everything you’re saying. But what I’m saying is that if you believe something different, you wouldn’t be sitting where you’re sitting.’

Chomsky’s phrase, ‘if you believe something different, you wouldn’t be sitting where you’re sitting’ sums up the propaganda system of the corporate media. What Tucker Carlson appears not to understand is that he has ‘total freedom’ to say what he likes on Fox News because he has shown that he can be trusted to remain within acceptable limits. He has obviously never heard Noam Chomsky explain how it works. Nor does he seem to be familiar with US critic Michael Parenti whose riposte to the proud boast by many a corporate journalist that ‘nobody tells me what to say or write’ was:

‘You say what you like, because they like what you say.’

Parenti expanded on the theme during a talk titled ‘Inventing Reality’ in 1993:

‘And, you know, the minute you move too far – and you have no sensation of a restraint on your freedom. I mean, you don’t know you’re wearing a leash if you sit by the peg all day. It’s only if you then begin to wander to a prohibited perimeter that you feel the tug, you see. So you’re free because your ideological perspective is congruent with that of your boss. So, you have no sensation of being at odds with your boss.’

Perhaps the Pulitzer Prize-winning US author Upton Sinclair put it most succinctly when he wrote:

‘It is difficult to get a man to understand something, when his salary depends upon his not understanding it.’

Obviously, the same applies to a woman. Indeed, Deborah Haynes, then defence editor at The Times and now foreign affairs editor at Sky News, tweeted proudly last year: “No one tells me what to think.”

Orla Guerin, a veteran BBC News journalist currently reporting from Venezuela, believes herself to be scrupulously impartial and neutral:

‘Thank you for watching, but we don’t do propaganda. We call it they [sic] way we see it, even if that does not suit the pre-conceived idea/ ideals that some have.’

Jeremy Bowen, the BBC News Middle East editor, opined:

‘We are the best source of decent, impartial reportage anywhere in the world.’

At first glance, the claims made by Guerin and Bowen sound plausible. After all, the BBC is widely admired and lauded around the world. In reality, the BBC is structurally and institutionally incapable of reporting fully and honestly the crimes of the West and its allies. It has never told even a fraction of the truth about US-UK crimes in Serbia, Afghanistan, Iraq, Iran, Libya, Palestine, Syria, Yemen and elsewhere. It has never properly reported these crimes or placed them in an accurate historical conquest, showing how the West has consistently attacked independent national movements abroad to ensure that local tyrants, armed and supported by ‘us’, suppress local people to the benefit of Western corporate interests. This framework of understanding is considered completely beyond the pale in ‘polite’ BBC discourse; it is not even thinkable for them. Moreover, the BBC exactly reverses this apologetic stance in its endless channelling and hyping of condemnatory Western government claims, often fabricated, against Official Enemies such as Iraq, Libya, Syria; thus preparing the way for Western sanctions and other forms of ‘intervention’, including full-scale invasion.

BBC reporting on Venezuela is a current ugly example. Because the US, UK and its allies are the world’s leading human rights violators, and because senior BBC News journalists and editors cannot even conceive of this possibility, BBC output must be considered propaganda on every issue relating to international – and, indeed, often domestic – affairs. Our media alerts and books are chock-full of examples and analysis that show this in great detail.

To take just one recent example: if Bowen’s absurd claim about the BBC were true, it would have reported extensively on former FBI Director Andrew McCabe quoting Donald Trump:

‘I don’t understand why we’re not looking at Venezuela. Why we’re not a war with Venezuela? They have all the oil and they’re in our back door’.

But you will never see this become the lead item on BBC News at Ten. Why not? Because that would sink the story we’re supposed to believe: that the US is acting out of humanitarian concern for Venezuelans. In a sane media, McCabe’s account of a meeting with Trump would have been central to countless news stories and discussion about Venezuela. BBC News, ITV News and Channel 4 News would all be leading with this on their news bulletins. The newspapers would have it on their front pages. In fact, our database searches show that not a single ‘mainstream’ UK newspaper has reported the remarks. The left-wing Morning Star is the only national newspaper to have covered the story.

Likewise, ‘mainstream’ news media seem supremely disinterested in similar remarks from the notorious US neocon hawk, John Bolton, resurrected from the war crimes of the Iraq invasion, and now anointed as the US National Security Advisor. He made crystal-clear the realpolitik considerations driving US policy towards Venezuela:

‘It’ll make a big difference to the United States if we could have American oil companies invest in and produce the oil capabilities in Venezuela’.

Imagine if Putin had made similar remarks threatening war on Venezuela, and been entirely open that the objective was the vast oil reserves there. There would be no end to the headlines devoted to his monstrous intentions and the perfidy of Russian imperial ambitions.

We challenged Paul Royall, the editor of BBC News at Six and News at Ten, about not reporting the former FBI director citing Trump’s desire for war on Venezuela:

‘Hello @paulroyall. You are the editor of @BBCNews at Six and Ten. Why is *this* not front and centre in your news reports on #Venezuela? Why have you instead *buried* a crucial factor that helps to explain US policy towards #Venezuela?’

As ever, Royall – who follows us on Twitter – remained silent. Similar challenges to Orla Guerin and Andrew Roy, BBC News foreign editor, also blew past like the proverbial desert tumbleweed. Likewise, an earlier tweet of ours was ignored:

‘Your news reports present a highly partial, US-friendly view of #Venezuela. By omitting crucial facts, you are misleading your audiences’

As the veteran journalist John Pilger has long pointed out, this phenomenon is called ‘lying by omission’. It is a major factor in enabling senior journalists at major ‘mainstream’ news organisations to claim wrongly, as Orla Guerin did, that, ‘We don’t do propaganda’. This is a deadly myth. Deadly, because it masks the fact that corporate media, especially BBC News, are responsible for propaganda that pushes more Western ‘intervention’, more war, more stolen natural resources, more mass deaths of innocent civilians, more refugees, more corporate profits, more fossil-fuel burning, more species loss and, ultimately, more planetary destruction; perhaps even human extinction in an era of climate chaos.

  1. Edward Herman and Noam Chomsky, Manufacturing Consent, Vintage, 1998/2004, p. 298.

The Denial of Taxes to the PA is an Ominous Sign of Netanyahu’s Grand Plan

Israel’s decision to withhold part of the taxes it collects on behalf of the Palestinian Authority and plunge it deeper into crisis starkly illustrates the hypocrisies and deceptions at the core of the two governments’ relationship.

Under the terms of what are now the quarter century-old Oslo accords, Israel is responsible for collecting about $200 million each month in taxes, which it is supposed to pass on to the PA, the Palestinian government-in-waiting in the West Bank.

The money belongs to the Palestinians but Israel has temporarily withheld it on several occasions in the past as a stick with which to beat the Palestinian leadership into line.

On this occasion, however, the stakes are far higher.

Last week Israeli Prime Minister Benjamin Netanyahu belatedly implemented a law passed last summer that requires his officials to retain part of the taxes owed to the Palestinians – those that the PA transfers to political prisoners’ families as a monthly stipend.

It echoes the Taylor Force Act, a law passed by the US Congress in 2016, that denies American economic aid to the PA until it stops sending those same stipends to 35,000 families of prisoners and those killed and maimed by the Israeli army.

The PA has tried to avert that threat by channelling the payments through a separate body, the Palestine Liberation Organisation.

Israel and Washington regard the prisoners simply as terrorists. But most Palestinians view them as heroes, those who have paid the highest price in the struggle for national liberation.

The Palestinian public no more believes the families should be abandoned for their sacrifices than Irish republicans turned their backs on those who fought British rule or black South Africans forsook those who battled apartheid.

Palestinian president Mahmoud Abbas called Israel’s actions “robbery” and said he would rather cut funding for health and education than for the prisoners and their families. “They are the most respected and appreciated part of the Palestinian people,” he declared.

Then he played his ace card. He said he would refuse all tax money from Israel until the full sum was reinstated.

That risks plunging the PA into financial meltdown and – most importantly for Israel – might ultimately lead to the disbanding of the Palestinian security services. Their job has long been to act as a security contractor, keeping order on Israel’s behalf in the West Bank.

The security forces hoovered up a massive 20 per cent of the PA’s $5.8 billion state budget last year.

The PA is already reeling from a series of hammer blows to the Palestinian economy. They include Donald Trump’s decision to cut all funding to UNRWA, the refugee agency for Palestinians, and to hospitals in Israeli-occupied East Jerusalem.

In addition, Mr Abbas reportedly declined $60m in annual US aid for his security services last month for fear of exposing the PA to legal action. A new congressional measure makes aid recipients like the PA subject to American anti-terrorism laws.

But the current stand-off between Mr Netanyahu and Mr Abbas lays bare the duplicity of the situation for all to see.

The PA leader may say the prisoners are the most cherished Palestinian constituency but he also describes his security services’ co-ordination with Israel as “sacred”.

The security services’ role is to assist the Israeli army in foiling Palestinian attacks and in arresting the very Palestinians he extols. Mr Abbas cannot realistically hold true to both positions at the same time.

Mr Netanyahu, on the other hand, has nothing to gain from harming the Palestinian security services, which the Israeli army relies on.

The decision to withhold taxes was taken chiefly to boost his popularity as rival right-wing parties compete for who appears the most hawkish before April’s general election.

Paradoxically, in withholding the PA’s tax money, Mr Netanyahu is punishing Mr Abbas, his supposed peace partner, while showing a preference for Hamas, Mr Abbas’s arch rival in Gaza.

Although Israel categorises Hamas as a terror organisation, Mr Netanyahu has been allowing extra funds into Gaza from Qatar to alleviate the enclave’s dire conditions.

Further, there is something richly ironic about Mr Netanyahu rebuking the PA for rewarding Palestinian “terrorists” in the same week he negotiated a deal to assist bringing Otzma Yehudit, or Jewish Power party, into the Israeli parliament.

The party is Israel’s version of the Ku Klux Klan, disciples of the late rabbi Meir Kahane, whose virulently anti-Arab Kach party was outlawed 25 years ago as a terror organisation.

So appalling is the prospect of this unholy alliance that even pro-Israel lobbies like the American Israel Public Affairs Committee (AIPAC) and the American Jewish Committee felt compelled to issue statements condemning Jewish Power as “racist and reprehensible”.

Mr Netanyahu believes the extra votes Jewish Power will attract to the right in the election will ensure he has the support necessary to build a coalition that can keep him in power.

But there is another glaring flaw in Mr Netanyahu’s tax grab.

If Mr Abbas’s coffers run low, he will simply send even less money to Gaza, which is already being choked by Israel’s lengthy blockade.

That would intensify the unrest in Gaza, which could lead to rocket attacks into Israel and even larger mass protests by Palestinians at the perimeter fence encaging them.

At the same time, if things remain unresolved, an already fragile PA will move closer to collapse and Hamas might then be poised to fill the void left in the West Bank.

Loss of power for Mr Abbas, combined with loss of a security contractor for Mr Netanyahu, appear to make this confrontation mutually self-destructive – unless Mr Netanyahu and the right have another card up their sleeve.

Hani Al Masri, a Palestinian policy analyst, has wondered whether Mr Netanyahu is setting the stage for US President Donald Trump to introduce his long-awaited “peace deal” after the election.

Much of Mr Netanyahu’s coalition is keen to annex Palestinian areas outside the main West Bank cities, destroying any hope of a Palestinian state ever emerging. Mr Trump might be amenable.

In this scenario, argues Mr Al Masri, Israel would aim to “end what remains of the PA’s political role, preserving only its administrative and security role”. It would be reduced to bin collections and law enforcement.

Should the PA reject the process of being hollowed out, Israel and the US would then look for an alternative, such as rule by local warlords in each Palestinian city and expanded powers for Israeli military rulers in the West Bank.

The denial of taxes to the PA may not yet presage its demise. But it points to a future in which Palestinian self-rule is likely to become an ever-more distant prospect.

• First published at The National, Abu Dhabi

America’s Rigged Tax Collection System

Charges of rigging fill the air in today’s America. Elections, the economy, college admissions, the list seems endless. Whatever the truth in other cases, our tax collection system is undeniably rigged. It’s been so from the beginning, rigged against the vast majority of workers.

In 1943, under pressure to pay for World War II, Congress passed a law requiring employers to withhold taxes and report the incomes of their employees. The same law implicitly allows self-reporting by huge numbers of largely high-income taxpayers: landlords, self-employed professionals, small businesses, et al.

Tax compliance figures for the two groups differ starkly. The latest estimate from the Internal Revenue Service shows 99% compliance by wage and salary earners. Self-reporters, by contrast, are evading scores of billions in taxes year after year.

Here’s the bottom line from the IRS:

Findings from earlier tax gap analyses that compliance is higher when amounts are subject to information reporting and even higher when also subject to withholding, continue to hold….Misreporting of income amounts subject to substantial information reporting and withholding is 1 percent; of income amounts subject to substantial information reporting but not withholding, it is 7 percent; and of income amounts subject to little or no information reporting, such as nonfarm proprietor income, it is 63 percent.

Self-reporters take several forms, for example, partnerships, S corporations and limited liability companies (LLCs). They self-report via numerous avenues: business income, corporate income, self-employment taxes, credits, and more. If self-reporters have taken any capital gains in the stock market, brokerage firms are now required to report that income to the IRS. It’s the only significant instance of their income getting the same reporting treatment as wages and salaries.

The most recent IRS figures cover the period 2008-2010. Adding up all the under-reported categories, the agency estimated Treasury losses at $387 billion a year. Stunningly, self-reporters paid little more than a third of what they should have. (Really, you say? Go back to that IRS quote, and do the math for yourself.)

Here’s the agency’s summation of what it all means:

A high level of voluntary tax compliance remains critical to help ensure taxpayer faith and fairness in the tax system. Those who don’t pay what they owe ultimately shift the tax burden to those who properly meet their tax obligations. The new tax gap estimate updates long-standing research findings that information reporting and withholding are strongly associated with higher levels of voluntary compliance.

The words may be measured, the volume low—but it’s actually a primal scream with an unmistakable message. The IRS is telling Congress that self-reporting dooms the federal government to losses of about $400 billion a year. It’s also saying that America’s wage and salary workers deserve an unrigged tax collection system—everybody’s income should be reported, not just theirs.

Employers do the reporting for their employees; brokerage firms do it for stock market capital gains; let’s turn to banks to do the job for current self-reporters. Income and expenses are the major information components. Some way, somehow, those components have to be identified, separated, and added up. At year’s end, the totals should be reported to the IRS and to the income recipient. It would be nothing more (and nothing less) than a W-2 for self-reporters: the same as most American workers have been getting for decades.

If current technology isn’t up to the job, then invent technology that is. There’s nothing digital magic can’t do. If you don’t believe it, ask Siri (or better yet, Zora).

The bigger obstacle by far is political. The investment community fought relentlessly against basis reporting of capital gains. Entire other communities will do likewise to resist, demonize and delay any self-reporting reform. Listen to Bruce Bartlett in a 2012 op-ed examining, yes, the tax gap: “People don’t like the intrusion into their privacy — and the diminution of their opportunities for tax evasion — and businesses don’t like the cost or the alienation of their customers.” To which the obvious answer is: what does “liking” have to do with it?

Let’s finish with a billion-dollar idea.

The Treasury could attack that $387 billion-a-year revenue loss by inviting all techies to compete for a $1 billion prize. The goal: develop easy-to-use, non-intrusive software that eliminates the self-reporting shortfall.

The nation could wind up with the bargain of the century. The loss from under-reporting of income amounts to $1.06 billion a day. Prize-winning software could recover that amount by the first coffee break of Day Two.

And in the process, end 75 years of tax unfairness.

•  This article first appeared at www.nydailynews.com.

Tax Reform: Down with the “Stepped-Up Basis”

The term “stepped-up basis” is shorthand for a tax loophole that lines the pockets of the haves while it picks the pockets of the Treasury. According to the Congressional Budget Office, the cost over ten years could reach $644 billion.

Let’s see how the well-off get handed hundreds of billions that should be going toward the good of all Americans.

The basis of an asset (stocks, real estate, fine art, etc.) is its price or fair market value when it’s acquired. Any increase over the basis becomes a capital gain. When holders dispose of assets, they’re taxed on those gains—except when the stepped-up basis steps in, and erases both the gains and the taxes.

It’s automatic: when assets are passed along to an heir, the value at the time of the transfer becomes the heir’s basis. Magically, all the accumulated gains vanish. With no gains, all the taxes vanish too.

The basis loophole is actually one tax inequity on top of another. First, capital gains are taxed at a far lower rate than wages. When this preferential rate isn’t preferential enough, the affluent simply hold on for the zero rate.  (“This is the thrill that pulses through the veins of the well-to-do when they discover there is no longer any limit on their power to accumulate.” The words are Thomas Frank’s, taken from his latest book Rendezvous with Oblivion.

The loophole doesn’t apply to commonly-held retirement accounts such as regular IRAs and 401(k)s. Putting it another way, those hundreds of billions go lopsidedly to the wealthy—people with hugely appreciated assets, separate and apart from retirement savings.

Full disclosure: The stepped-up basis is available to just about everybody. For tax years 2018 through 2025, it’s open to individuals with a net worth up to $11.2 million or couples with a net worth up to $22.4 million.

Anybody who calls for ending a law has to counter the thinking that led to it in the first place. Proponents of the stepped-up basis claim that it’s often not possible to accurately determine the original basis, especially for assets that could date back several decades.  Our digital age has made this rationale more and more tenuous. In the large it simply doesn’t wash anymore.

In addition, Congress could always tailor a repeal to deal with holdings acquired long ago. Lawmakers faced a comparable situation in 2008, when they passed a bill requiring basis reporting for stock market capital gains. In that case they worked out various post-2008 schedules for different types of holdings. While Wall Street investors were always required to report gains honestly, the Internal Revenue Service now gets basis figures that provide a double-check. Over the long term, accurate reporting of capital gains by brokerage firms should approach the 99% level already achieved by employer reporting of workers’ wages and salaries.

Basis prices of other major assets should also be routinely reported. Realtors, for example, should be required to report to the IRS any home or property sale exceeding a specific amount; the same for major art galleries, antiques dealers and jewelers. Exceptions would be allowed; e.g., family heirlooms (provided they stay in the family and aren’t resold for tax-free gains).

The two capital gains tax inequities (the stepped-up basis and lower rates) effectively increase income inequality and perpetuate wealth over generations. For this the Treasury pays dearly: according to the Congressional Budget Office (CBO), these tax breaks are expected to cost a combined $1.984 trillion from 2014 to 2023.

The same CBO report estimated the federal deficit for that decade at $1.932 trillion (excluding interest on the national debt). So if those two tax breaks were ended—just those two—the Treasury could gain enough revenue to pay for all federal programs over that period without running a deficit. (Of course behaviors could also change, lowering the Treasury’s pick-up. Even so, the prospect should warm the hearts of all fiscal conservatives and deficit hawks.)

Eliminating both breaks likely goes a break too far. In that case, Congress should start with the most egregious. It should shut down the stepped-up basis.

Author’s Note: (Hyperlinks (where significant searching required):

1st graph, 2nd hyperlink: Table 1 p. 6/Exclusions from Taxable Income/Capital gains on assets transferred at death

5th graph: Table 2 p. 15/Tax Expenditure/Exclusions from Capital Income/Capital gains on assets transferred at death

7th graph: Scroll down to subhead Inherited IRAs and Retirement Accounts. 1st graph of that subhead

11th graph: Table 1 p. 6/Exclusions from Taxable Income/Capital gains on assets transferred at death ($644 billion) + Preferential Tax Rates on Capital Gains and Dividends ($1,340 billion, or $1.34 trillion)

Last hyperlink: Scroll well down to subhead Fiscal impact of subsidizing wealth inequality.

The Breakdown of the American Two-Party System

Trump’s hyper-nationalist propaganda strikes a cultural chord steeped in the myth that capitalism is the economic bulwark of freedom. Yet reality is not as malleable as myth. In fact, capitalism has led to unsustainable economic and social inequalities as well as the degradation of ecosystems and global warming. Faced with these crises, the U.S. two-party system is politically bankrupt, its instability marked by raw political nerves, belligerence and elected office-holding obsession by Washington’s power brokers.

The Republican Party is in a corner. The party is pleased that Trump has reduced corporate taxes and taxes on wealthy Americans as well as deregulated corporate behavior and weakened environmental protections. While many Republican Party leaders and Wall Street executives may be concerned with Trump’s hyper-nationalist rhetoric and obsession with trade wars, they seem very satisfied with the gains the president has handed to them.

And, now, Republican leaders want to cut social programs to balance the budget that the party’s tax policies helped worsen. But the future of Republicans is bleak. Trump has effectively hijacked the Republican Party and many Republicans are concerned that the Faustian bargain they have struck with the president may ultimately weaken their party. They can only hope that multiple Democratic candidates and raucous Democratic in-fighting will divide them and allow Republicans to keep control of the House and Senate and win the presidency in 2020.

Indeed, the Democratic Party is splitting. As the corporate class and the wealthiest dig in under Trump, the Democrats seem alternately flummoxed and impotent. Since the late 1980s the party has moved rightward and been effectively relegated to a “loyal opposition” role by emerging populist politics. The party’s weakness is obvious: it offers no clear alternative political vision. Democratic leaders speak only in generalities about important issues including health care, minimum wage, regressive taxes, military expenditures and others. Mainstream news reporters and analysts often wonder where the Democratic leadership is in these politically tumultuous times.

The Democratic national platform may specify goals but the party leaders are not willing to speak out about specific political alternatives. They fear alienating independent and fringe voters. They are particularly sensitive to being seen as “tax-and-spend liberals,” as purveyors of “creeping socialism,” as “soft on violent crime,” or as “welcoming immigrants.” As the Democrats did in the 2016 presidential campaign, the Democratic Party hides and waits for Trump to shoot himself in the foot. Its “progressive” leaders, moreover, struggle to get footing in superficial personality politics of Washington.

The time is ripe for a progressive third party to build a following. As the Democratic Party falters in finding its bearings and the Republican Party threatens to weaken social programs, young people are ready to pursue leftist alternatives. They do not fear socialism as many older voters do. The “anti-establishment” 2016 primary vote is a clear indication that the nation is ready for progressive politics. Trump, Cruz and Sanders (generally anti-establishment advocates) won approximately 27,000,000 primary votes while Clinton, Bush, Rubio, and Kasich (generally establishment advocates) won about 22,000,000 primary votes. This statistical comparison is even more compelling because both parties at the national level preferred establishment candidates over populist ones. That is, until Trump outmaneuvered the Republicans. Still, the Democratic Party was so harnessed to Clinton that it defeated its own populist candidate.

Savvy political strategists know that the history of capitalism is peppered with anti-democratic actions. Global capitalism has allowed an international corporate class to acquire tremendous political power across nations. Wealth has been concentrated to unprecedented levels. It is, furthermore, the principal marker indicating who controls the reins of government in any nation.  In the U.S., according to the New York Times, the richest 1 percent now controls more wealth than the bottom 90 percent of Americans.

Yet it is the bottom 90 percent that holds over 70 percent of the private debt and is the most vulnerable to global economic volatility and to the massive storms, tide surges and wildfires accompanying climate change. Public regulation of wealth distribution and the health of ecosystems is the only way to manage these crises. Progressive Americans must get behind a third party with a strong left politic in order to appeal to those who have been most hurt by global capitalism. Only then, can the nation chart a more promising political course.

Crimes of a Monster: Your Tax Dollars at Work

Is ours a government of the people, by the people, for the people, or a kakistocracy rather, for the benefit of knaves at the cost of fools?

— James Russell Lowell, 19th century American poet/critic/editor/diplomat, in a 1876 letter to Joel Benton.

Let us not mince words.

We are living in an age of war profiteers.

We are living in an age of scoundrels, liars, brutes and thugs. Many of them work for the U.S. government.

We are living in an age of monsters.

Ask Donald Trump. He knows all about monsters.

Any government that leaves “mothers and fathers, infants and children, thrashing in pain and gasping for air” is evil and despicable, said President Trump, justifying his blatantly unconstitutional decision (in the absence of congressional approval or a declaration of war) to launch airstrikes against Syria based on dubious allegations that it had carried out chemical weapons attacks on its own people. “They are crimes of a monster.”

If the Syrian government is a monster for killing innocent civilians, including women and children, the U.S. government must be a monster, too.

In Afghanistan, ten civilians were killed—including three children, one an infant in his mother’s arms—when U.S. warplanes targeted a truck in broad daylight on an open road with women and children riding in the exposed truck bed. They had been fleeing airstrikes on their village.

In Syria, at least 80 civilians, including 30 children, were killed when U.S.-led air strikes bombed a school and a packed marketplace.

In Yemen, a U.S. drone bombed a caravan of vehicles on their way to or from a wedding, leaving “scorched vehicles and body parts … scattered on the road.” As investigative journalist Tom Engelhart documents, that 2013 bombing was actually the eighth wedding party (almost 300 civilians dead) wiped out by the U.S. military, totally or in part, since the Afghan War began in 2001. “Keep in mind that, in these years, weddings haven’t been the only rites hit,” notes Engelhart. “US air power has struck gatherings ranging from funerals to a baby-naming ceremony.”

Then there was a Doctors without Borders hospital in Kunduz that had 12 of its medical staff and 10 of its patients, including three children, killed when a U.S. AC-130 gunship fired on it repeatedly. Some of the patients were burned alive in their hospital beds.

Yes, on this point, President Trump is exactly right: these are, indeed, the crimes of a monster.

Unfortunately, this monster—this hundred-headed gorgon that is the U.S. government and its long line of political puppets (Donald Trump and before him Obama, Bush, Clinton, etc.), who dance to the tune of the military industrial complex—is being funded by you and me.

The blood of innocent civilians is on our hands whether we choose to recognize it or not.

It is our tax dollars at work here, after all.

Unfortunately, we have no real say in how the government runs, or how our taxpayer funds are used.

We have no real say, but we’re being forced to pay through the nose, anyhow, for endless wars that do more to fund the military industrial complex than protect us, pork barrel projects that produce little to nothing, and a police state that serves only to imprison us within its walls.

The only alternative to paying one’s taxes is jail, and there are few people willing to go to jail for a principle anymore.

Still, while we may not have much choice in the matter of how our taxes are used, we still have a voice and a vote, and it’s time the American people made their voices—and their votes—heard about the way our taxes are used and misused by this government of wolves and thieves and liars.

Consider: we get taxed on how much we earn, taxed on what we eat, taxed on what we buy, taxed on where we go, taxed on what we drive, and taxed on how much is left of our assets when we die.

Indeed, if there is an absolute maxim by which the federal government seems to operate, it is that the American taxpayer always gets ripped off.

This is true whether you’re talking about taxpayers being forced to fund high-priced weaponry that will be used against us, endless wars that do little for our safety or our freedoms, or bloated government agencies such as the National Security Agency with its secret budgets, covert agendas and clandestine activities. Rubbing salt in the wound, even monetary awards in lawsuits against government officials who are found guilty of wrongdoing are paid by the taxpayer.

Not only are American taxpayers forced to “spend more on state, municipal, and federal taxes than the annual financial burdens of food, clothing, and housing combined,” but we’re also being played as easy marks by hustlers bearing the imprimatur of the government.

With every new tax, fine, fee and law adopted by our so-called representatives, the yoke around the neck of the average American seems to tighten just a little bit more.

Everywhere you go, everything you do, and every which way you look, we’re getting swindled, cheated, conned, robbed, raided, pick-pocketed, mugged, deceived, defrauded, double-crossed and fleeced by governmental and corporate shareholders of the American police state out to make a profit at taxpayer expense.

Yet as Ron Paul observed, “The Founding Fathers never intended a nation where citizens would pay nearly half of everything they earn to the government.”

The overt and costly signs of the despotism exercised by the increasingly authoritarian regime that passes itself off as the United States government are all around us: warrantless surveillance of Americans’ private phone and email conversations by the NSA; SWAT team raids of Americans’ homes; shootings of unarmed citizens by police; harsh punishments meted out to schoolchildren in the name of zero tolerance; drones taking to the skies domestically; endless wars; out-of-control spending; militarized police; roadside strip searches; roving TSA sweeps; privatized prisons with a profit incentive for jailing Americans; fusion centers that collect and disseminate data on Americans’ private transactions; and militarized agencies with stockpiles of ammunition, to name some of the most appalling.

Meanwhile, the three branches of government (Executive, Legislative and Judicial) and the agencies under their command—Defense, Commerce, Education, Homeland Security, Justice, Treasury, etc.—have switched their allegiance to the Corporate State with its unassailable pursuit of profit at all costs and by any means possible.

As a result, we are now ruled by a government consumed with squeezing every last penny out of the population and seemingly unconcerned if essential freedoms are trampled in the process.

As with most things, if you want to know the real motives behind any government program, follow the money trail. When you dig down far enough, you quickly find that those who profit from Americans being surveilled, fined, scanned, searched, probed, tasered, arrested and imprisoned are none other than the police who arrest them, the courts which try them, the prisons which incarcerate them, and the corporations, which manufacture the weapons, equipment and prisons used by the American police state.

It gets worse.

Because the government’s voracious appetite for money, power and control has grown out of control, its agents have devised other means of funding its excesses and adding to its largesse through taxes disguised as fines, taxes disguised as fees, and taxes disguised as tolls, tickets and penalties.

The government’s schemes to swindle, cheat, scam, and generally defraud Americans have run the gamut from wasteful pork barrel legislation, cronyism and graft to asset forfeiture schemes, the modern-day equivalent of highway robbery, astronomical health care “reform,” and costly stimulus packages.

Americans have also been made to pay through the nose for the government’s endless wars, subsidization of foreign nations, military empire, welfare state, roads to nowhere, bloated workforce, secret agencies, fusion centers, private prisons, biometric databases, invasive technologies, arsenal of weapons, and every other budgetary line item that is contributing to the fast-growing wealth of the corporate elite at the expense of those who are barely making ends meet—that is, we the taxpayers.

Those football stadiums that charge exorbitant sums for nosebleed seats? Our taxpayer dollars subsidize them.

Those blockbuster war films? Yep, we were the silent investors on those, too.

Same goes for the military equipment being peddled to local police agencies and the surveillance cameras being “donated” to local governments.

In other words, in the eyes of the government, “we the people, the voters, the consumers, and the taxpayers” are little more than indentured servants.

We’re slaves.

If you have no choice, no voice, and no real options when it comes to the government’s claims on your property and your money, you’re not free.

You’re not free if the government can seize your home and your car (which you’ve bought and paid for) over nonpayment of taxes.

You’re not free if government agents can freeze and seize your bank accounts and other valuables if they merely “suspect” wrongdoing.

And you’re certainly not free if the IRS gets the first cut of your salary to pay for government programs over which you have no say.

It wasn’t always this way, of course.

Early Americans went to war over the inalienable rights described by philosopher John Locke as the natural rights of life, liberty and property.

It didn’t take long, however—a hundred years, in fact—before the American government was laying claim to the citizenry’s property by levying taxes to pay for the Civil War. As the New York Times reports, “Widespread resistance led to its repeal in 1872.”

Determined to claim some of the citizenry’s wealth for its own uses, the government reinstituted the income tax in 1894. Charles Pollock challenged the tax as unconstitutional, and the U.S. Supreme Court ruled in his favor. Pollock’s victory was relatively short-lived. Members of Congress—united in their determination to tax the American people’s income—worked together to adopt a constitutional amendment to overrule the Pollock decision.

On the eve of World War I, in 1913, Congress instituted a permanent income tax by way of the 16th Amendment to the Constitution and the Revenue Act of 1913. Under the Revenue Act, individuals with income exceeding $3,000 could be taxed starting at 1% up to 7% for incomes exceeding $500,000.

It’s all gone downhill from there.

Unsurprisingly, the government has used its tax powers to advance its own imperialistic agendas and the courts have repeatedly upheld the government’s power to penalize or jail those who refused to pay their taxes.

All the while the government continues to do whatever it likes—levy taxes, rack up debt, spend outrageously and irresponsibly, wage endless wars that make no one safer but fatten the bank accounts of the defense contractors—with little thought for the plight of its citizens.

Somewhere over the course of the past 240-plus years, democracy has given way to kleptocracy (a government ruled by thieves), and representative government has been rejected in favor of a kakistocracy (a government run by the most unprincipled citizens that panders to the worst vices in our nature: greed, violence, hatred, prejudice and war) ruled by career politicians, corporations and thieves—individuals and entities with little regard for the rights of American citizens.

The American kleptocracy continues to suck the American people down a rabbit hole into a parallel universe in which the Constitution is meaningless, the government is all-powerful, and the citizenry is powerless to defend itself against government agents who steal, spy, lie, plunder, kill, abuse and generally inflict mayhem and sow madness on everyone and everything in their sphere.

This dissolution of that sacred covenant between the citizenry and the government—establishing “we the people” as the masters and the government as the servant—didn’t happen overnight.

It didn’t happen because of one particular incident or one particular president.

It has been a process, one that began long ago and continues in the present day, aided and abetted by politicians who have mastered the polarizing art of how to “divide and conquer.”

By playing on our prejudices about those who differ from us, capitalizing on our fears for our safety, and deepening our distrust of those fellow citizens whose opinions run counter to our own, the powers-that-be have effectively divided us into polarized, warring camps incapable of finding consensus on the one true menace that is an immediate threat to all of our freedoms: the U.S. government.

We are now the subjects of a militarized, corporate empire in which the vast majority of the citizenry work their hands to the bone for the benefit of a privileged few.

Adding injury to the ongoing insult of having our tax dollars misused and our so-called representatives bought and paid for by the moneyed elite, the government then turns around and uses the money we earn with our blood, sweat and tears to target, imprison and entrap us, in the form of militarized police, surveillance cameras, private prisons, license plate readers, drones, and cell phone tracking technology.

All of those nefarious government deeds that you read about in the paper every day: those are your tax dollars at work. It’s your money that allows for government agents to spy on your emails, your phone calls, your text messages, and your movements. It’s your money that allows out-of-control police officers to burst into innocent people’s homes, or probe and strip search motorists on the side of the road, or shoot an unarmed person. And it’s your money that leads to innocent Americans across the country being prosecuted for innocuous activities such as raising chickens at home, growing vegetable gardens, and trying to live off the grid.

Just remember the next time you see a news story that makes your blood boil, whether it’s a child being kicked out of school for shooting an imaginary arrow, or a homeowner being threatened with fines for building a pond in his backyard, remember that it is your tax dollars that are paying for these injustices.

So what are you going to do about it?

There was a time in our history when our forebears said “enough is enough” and stopped paying their taxes to what they considered an illegitimate government. They stood their ground and refused to support a system that was slowly choking out any attempts at self-governance, and which refused to be held accountable for its crimes against the people. Their resistance sowed the seeds for the revolution that would follow.

Unfortunately, as I make clear in my book Battlefield America: The War on the American People, in the 200-plus years since we established our own government, we’ve let bankers, turncoats and number-crunching bureaucrats muddy the waters and pilfer the accounts to such an extent that we’re back where we started.

Once again, we’ve got a despotic regime with an imperial ruler doing as they please.

Once again, we’ve got a judicial system insisting we have no rights under a government which demands that the people march in lockstep with its dictates.

And once again, we’ve got to decide whether we’ll keep marching or break stride and make a turn toward freedom.

But what if we didn’t just pull out our pocketbooks and pony up to the federal government’s outrageous demands for more money?

What if we didn’t just dutifully line up to drop our hard-earned dollars into the collection bucket, no questions asked about how it will be spent?

What if, instead of quietly sending in our checks, hoping vainly for some meager return, we did a little calculating of our own and started deducting from our taxes those programs that we refuse to support?

If we don’t have the right to decide what happens to our hard-earned cash, then we don’t have very many rights at all.

If the government can just take from you what they want, when they want, and then use it however they want, you can’t claim to be anything more than a serf in a land they think of as theirs.

This was the case in the colonial era, and it’s the case once again.