This Is Why We Can’t Have Nice Things….

Economists like to talk about “opportunity costs”–if you do X, you’ve lost the opportunity to do Y. I’ve been thinking about what we could do with the taxes we don’t get on the funds rich people hide from the IRS in those tempting tax havens, as disclosed by the Paradise Papers.

A column in the New York Times explained

A treasure trove of documents given the name of the Paradise Papers was unveiled last week, giving us a clearer idea of how rich people and powerful companies keep their money from the prying eyes of the Internal Revenue Service.

It seems that–if you are rich enough to afford the right law firm and tax haven–you can navigate the Internal Revenue Code in such a way as to legally evade lots and lots of taxes. It turns out that sixty-three percent of foreign profits made by American multi-national corporations are squirreled away in those hideouts, out of the sight of those pesky IRS agents.

That disclosure was annoying enough, but what really pissed me off were a couple of estimates of what those evaded taxes might have paid for.

We worry a lot about the cost of social programs in this country, saying we simply can’t afford many things that we know could bring big rewards. But that missing $70 billion from corporate offshore tax avoidance would go a long way. A mere $140 million could replace the lead water pipes poisoning children in Flint, Mich. It would cost just an estimated $22.5 billion to end homelessness by providing all needy families with rental assistance. President Barack Obama asked Congress for $75 billion for his initial universal preschool plan; universal preschool for all 3- and 4-year-olds would cost $98.4 billion over 10 years.

Senator Bernie Sanders’s College for All Act doesn’t even require the federal government to cover the entire $70 billion cost of public college tuition, but it could if this money were available to the government. Divvying up $70 billion a year to each parent in the country would be a huge step toward ending childhood poverty. And the available pot of money, were offshore tax avoidance not an option, would be even larger if rich individuals were taxed at the rates we all face here at home.

According to The Hill, if those writing our tax laws didn’t prefer letting their donors off the hook for their fair share, we could afford pretty much anything. Here are just a few of the things The Hill says we could pay for if we weren’t rushing a $1.5-trillion debt-financed gift to billionaires through the legislative process:

What makes this effort to take from the poor to give to the rich especially galling is the hypocrisy of the GOP “deficit hawks.”

 After spending eight years railing against the evils of deficits, after blocking numerous important investments because we “couldn’t afford it” and after swearing time and again that debt was our No. 1 enemy, most Republican representatives have tossed their anti-deficit positions aside in the blink of an eye. That is galling, yes.

But perhaps even more galling is that, having thrown their fiscal caution to the wind and having decided that now, with a Republican in the White House, debt is no longer a concern, their best idea for spending hundreds of billions of dollars is to give it all to the rich. For that, they should be truly ashamed of themselves.

When you wonder why Americans can’t have universal health care, or great trains that run every 20 minutes on tracks that are smooth and well-maintained, or other public services and amenities that citizens of other developed countries enjoy, just remember: we give  money to our billionaires instead.

 

 

21 thoughts on “This Is Why We Can’t Have Nice Things….

  1. robertriech.org, is a place with facts,and humor,and some stone cold truth about this issue, and the goverment gets all,thenblame. time we see wall street as its presented here, thanks for the facts….ive seen this for decades…

  2. This blog explains why Trump continues to applaud himself each time he is in front of a camera; maintaining protection of their $70 billion in hidden income.

  3. Their plan for increasing the debt is to then be able to truly claim that we just can’t afford Social Security, Medicare, Medicaid and all of the other social safety net programs.

    With lower tax revenues that can no longer support the social safety nets they will finally have real ammunition to demand cuts to or elimination of these programs.

  4. We need to throw this at every Senator and Congressman until the tax reform dies or is passed. The “representatives of the people” need to understand that voters know what they’re doing. I just wrote Senator Young last night with my thoughts on the Republican efforts to transfer wealth from the working poor and middle class to the very wealthy. I explained it my own terms, i.e I have been contemplating retirement, but I am concerned that with the Republican budget and the “tax reform”, I won’t the health care I expected under Medicare and I am no longer sure what my Social Security payout will be or how long it will last. I mentioned that voters will remember who harmed them and why. They all need to hear this again and again. And they need to be punished at the polls.

  5. Applause, applause!

    Don’t forget, the Donor Class for both political parties hide their cash and politicians from both parties help them.

    Both donor-controlled political parties are obstructionists.

    In other countries with laws, bribing public officials is a crime. In the USA, it’s called fundraising.

  6. This blog should be on the editorial page of the Indianapolis Star instead of the nonsensical writings of Gary Varvel, Reuben Navarette, etc.

  7. I agree with everything in the blog today, but keep in mind something Noam Chomsky said once. The laws governing corporations require that they maximize profits that can be sent to shareholders as dividends. Are we blaming them for following the law? If the Republicans were serious about tax “revision,” those provisions would be removed, and it would not be legal to squirrel away revenues that would be taxable.

  8. Wayne: it used to be on the editorial age until, the Star realized SSK was the counterpoint to Swarens and Varvel. They don’t like diversity of opinion or competition.

  9. Just a little note from this morning’s paper. After uears of declining deficits under Obama, the deficit for October was 37.9% hisgher than for October of 2016. I wonder how much of that extra spending was for Secret Service protection for the royal family.

    We have known since the Bush tax cuts that Republicans only care about the debt when Democrats hold office.

  10. The Paradise Papers don’t tell us everything. There are still all sorts of positive results flowing from ending these tax avoidance (and sometime evasion) techniques employed by the superrich and corporate taxpayers. Consider, for instance, what a return of these billions of dollars if redeployed into programs Sheila has noted would do for aggregate demand. Such troves are now useless to our economy; they are sitting somewhere else, perhaps guarded by layers of trustees. If they were redeployed here they could not only be used for the social good per Sheila’s outline but their utilization would spark aggregate demand which would in turn have positive effects on employment and, one would hope, an end to wage inequality, our biggest domestic issue.

    We also have tons of money sitting overseas in the form of admitted corporate profits which, by law, are not taxable until repatriated, and there is no statutory time limit on their return. That provision of the act cries out for repeal. These multinationals enjoy all the rights and privileges of being an American corporation (patents, trade agreements etc.) but with little responsibility to pay their fair share of the costs to our government and economy in return (another indirect form of corporate welfare). Imagine what the return of hundreds of billions in taxes from their now protected profits would do to aggregate demand in our economy (and our ability to fund important federal initiatives)!

    So do we need to raise taxes in order to raise more revenues? Not necessarily. Perhaps ending our strictures on collection and ending other loopholes in the tax code would suffice, but i doubt it. I think it will be necessary to end such impediments while raising taxes on the rich and corporate class who have been on the gravy train long enough because of the sorry state of our infrastructure and failure to support programs in education, medical care etc. We have a lot of catching up to do in an era of bullet trains in China and chuckholes here, and we have ample resources with which to catch up. The only missing ingredient to our progress is political will, and our task, it seems to me, is to agitate for policies that flesh out that will for the benefit of all.

  11. The meager breaks that the wealth redistribution bill gives to the wealth creators of the country, those who work for a living, is hush money. Don’t complain while we give away your children’s future.

    Will we take the money and comply or will we use democracy instead to replace this dysfunctional Congress and administration with traditional politicians?

  12. I’ll vote for democratic socialism, if the outcome is everything you covered here.
    And if the Republicans fail with this disaster of a tax reform bill, and the big money in DC makes good on the promise of pulling all funding… maybe then we can do away with Citizens United and get busy cleaning up this mess.

  13. Gerald is right. That $70 billion in taxes not being collected is only for ONE YEAR. The accumulated, untaxed money in foreign banks is over $2 TRILLION. Some analysts claim that if one digs a little deeper, one can find upwards of $20 TRILLION in accumulated cash not taxed.

    Think of the things that could be paid for from that windfall of taxes not paid. Hell, we might even be able to pay off our debt altogether.

  14. Three Richest Americans Now Own More Wealth Than Bottom Half of US Combined:
    The wealthiest 25 individuals in the United States today own $1 trillion in combined assets,” the report notes. “These 25, a group equivalent to the active roster of a major league baseball team, hold more wealth than the bottom 56 percent of the U.S. population combined, 178 million people.” https://www.commondreams.org/news/2017/11/08/three-richest-americans-now-own-more-wealth-bottom-half-us-combined-report

    The so called News Networks: CNN, MSNBC, and FOX have avoided giving any publicity to the implications to the Paradise Papers. Why would these News Networks bite the hands that feed them.??? The Guardian has been an excellent source for news on the Paradise Papers.

    It is all connected. The recession beginning in Bush the Youngers was world wide. Main street and the Proles suffered from bankruptcies: Wall Street was bailed out. The scandals were nearly endless, Libor was one example of a rigged system.

    The Occupy Movement brought this out. The Corporate Establishment Democrats ran away from this is wealth inequality as pointed by Occupy. Eric Holder gave us Too Big to Fail, Too Big to Jail as his guiding light.

    The laws that allow this money laundering can be changed of course. Sadly this will not happen. The Corporate Democratic Leadership of Pelosi and Schumer have been silent as you would expect. The Republicans want to further enshrine this inequality with more tax cuts.

  15. the Dow is over 23000 and that has no where to go but down, so look for that coming to a bank account near you. I’m really worried being in my late 50s that my 401k will drop again like it did in 2008. It finally recovered but at what cost? I’m running out of time to feed that monster so that I am not on welfare (if it’s still around) when I hit 65. If my spouse and I have no money to retire, then why live? That’s another reason why we can’t have nice things. These crooks will steal it from us.

  16. Aging Girl – I agree with you except for your observation that the Dow has no place to go but down. With continuing public largesse (tax cuts, less or no regulation), there is still room for the Dow to go up. The Dow tells us little about the real economy these days since it does not reflect the classical tests of greater corporate efficiency in the production of goods and services, cost controls and the like, but rather in how much the rich and corporate class can wheedle out of a bought Congress wed to trickledown economic theory. Our central economic problem in that respect is that you and I are chained to austerity economics while the rich and corporate class is enjoying trickledown economics at our and our descendants’ expense, payoffs to plutocrats today which, in my opinion, become a moral as well as a political and economic issue. I think of the Ayn Randers and others who support such a current Republican tax bill as fiscal Moores pretending to be pious defenders of free market economics when the bill has nothing to do with free market economics. It is a gift from the rest of us to the already rich, pure and simple.

  17. Great post Professor Kennedy, I’d like to add one more economic factor not discussed in this alnalysis . That factor is Keynesian Pump Priming, no this was not invented by Don the Con. Every investment in services and infrastructure multiplies through society many times. Put money in the hands of the working poor and middle class and they are likely to spend it on pent up demand for wants and needs. Putting it into the hands of the wealthy does none of this. Trickle down is a Reagan era fantasy that the right has been clinging to for far too long.

  18. Right you are, James. How many Rolls Royces can the rich get in the front yards of their estates and how many yachts at their piers? Aggregate demand means just that, total demand. The lack of wherewithal due to wage inequality is, in my opinion, the number one domestic issue of our day, since without a fairer sharing of the fruits of our economy we are destined to tepid demand in the market and near recession in our economy as we continue to reward capital over labor in lopsided fashion.

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