Of Taxes and Real Entitlement
Posted: January 30, 2012
By: Carl Ginsbeurg, Protest In The USA Blog
Robin Hood rides to France. French President Nicolas Sarkozy has followed through on his promise to put before parliament a financial transaction tax – calling it a “Robin Hood Tax” – of 0.1% on stock trades to commence in August, according to reports. Absent from the tax: bond sales. Sarkozy also proposed raising the basic consumption tax (VAT) by 1.6 percent, to 21.2 percent, and upping by 2 percentage points the taxes paid on financial profits. His proposed targets of new revenue: an increase in construction of low-income housing and creation of an “industry bank” to make cheaper loans to small and medium companies.
The Enduring Demise of the Austerity Doctrine. The National Institute of Economic and Social Research, a British think tank, reports that four years after the Great Recession began, Britain is nowhere close to regaining its lost ground in terms of growth. New York Times columnist Paul Krugman writes that that failure undercuts any argument that the austerity doctrine – prominent in elite circles in both Europe and the US for the last two years – will address economic demise and gross inequality it perpetuates.
Britain has been pushing “expansionary austerity.” But, asks Krugman, “How could the economy thrive when unemployment was already high, and government policies were directly reducing employment even further?” State and local governments in the US, have slashed spending and employment which, Krugman maintains, “has been a major drag on the overall economy. Without those spending cuts, we might already have been on the road to self-sustaining growth; as it is, recovery still hangs in the balance.”
Why not a “living wage”? In New York, key Democrats have introduced a bill to raise the state’s minimum wage to $8.50 an hour, a 17 percent increase. The Empire State now joins Delaware, reports the Times, which recently passed a minimum wage increase, and raises are in the mix in California, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Missouri and New Jersey.
New York City’s Mayor Michael Bloomberg supports the Dem’s proposal; however, Gotham’s chief executive – whose personal wealth is estimated at $20 billion — beat back a living wage proposal of $10 an hour after his re-election “It is impossible to live in this city on $15,000 a year,” Micah C. Lasher, Mr. Bloomberg’s director of state legislative affairs, told the New York Times. Working at $8.50 an hour full-time grosses a worker $17,680 a year.
Had the national minimum wage kept pace with inflation over the past 40 years, it would be at $10.39 now, according to the National Employment Law Project. Says Paul Sonn, the Law Project’s legal co-director, $8.50 an hour “really is not enough for New York’s cost of living and New York’s economy.” Not by a long shot.
Technology’s great tradition. Among those attending the World Economic Forum in Davos was Google’s Executive Chairman Eric Schmidt. He was talking up social media and related technologies. Schmidt first came to the Davos event 15 years ago. “At Davos the conversation is really about economic growth and the reality is that technological advancement benefits those who are educated but endangers jobs that are routine and automatable….This has been true for two hundred years with technologies,” said Schmidt. With estimated wealth of $7 billion, Schmidt is the 136th richest person in the world.
Attention: Wall Street parents! The cost of private school in New York City is breaking the $40,000 per year barrier, according to a recent report. That’s just tuition. Add-ons include spring training in Florida for sports. Over the past 10 years, the median price of first grade in the city has gone up by 48 percent. The New York Times reports that unlike public schools, which have faced severe cutbacks in the face of dwindling state and local revenues, private schools seem only to add courses, such as languages. “Offering Mandarin is a way to prepare students for the 21st-century world we live in,” said Trinity School’s headmaster. Trinity has three theaters, six art studios, two tennis courts, a pool and a diving pool.
The percentage of students receiving financial aid has not increased alongside tuition. At the schools for which financial data was available, 18.5 percent of students received financial aid, the same figure as a decade ago.
Oh where or where will Tim Geithner go? With the announcement that Treasury Secretary Timothy Geithner is to leave his post at the general election, speculation as to his destination is afoot. Wall Street would be a solid guess. Bill Moyers and Michael Winship reminded readers recently that Jack Lew, President Obama’s new chief of staff used to work for Citigroup, as did Clinton-era Treasury chief Robert Rubin. Bill Daley, who Lew replaced, labored at JPMorgan Chase, “where he was maestro of the bank’s global lobbying and chief liaison to the White House,” write Moyers and Winship. Daley replaced Obama’s first chief of staff, Rahm Emanuel, who once worked as a rainmaker for the investment bank now known as Wasserstein & Company, where in less than three years he was paid a reported $18.5 million.
Geithner will be playing catch up. Average income for the richest 400 families in the US in 2008 was an $270 million, according to David Morris. Had these tribes actually paid the statutory tax rate of 39 percent, Morris points out, an additional $500 billion in revenue would be raised over 10 years.
What they do pay, writes David Cay Johnston, is a whole lost less. “The federal tax burden on the richest 400 has been slashed,” he writes, “thanks to a variety of loopholes, allowable deductions and other tools. The actual share of their income paid in taxes, according to the IRS, is 16.6 percent. Adding payroll taxes barely nudges that number.”