A transnational kleptocratic class

Thanks to whistleblowers who released a trove of documents, a team of journalists led by the International Consortium of Investigative Journalists (ICIJ) has released the first reports of what it calls the Pandora Papers. (Readers may recall an earlier expose called the Panama Papers.)

It reveals how vast sums of money are spirited away by politicians and wealthy people all over the world into tax-havens. Over 330 politicians from 90 countries are named. The US has become one of the biggest locations for tax dodging because of its laws involving the use of trusts. (This may be why the Panama Papers revealed few US names as using off-shore tax havens. It is not that they are more scrupulous but that they don’t have to. All the tax dodges they need are within the US.) News reports are careful to point out that these transactions may not be illegal but that is not the point. The global oligarchy makes the laws and we should not be surprised that they then use those laws to benefit themselves. But key questions that can and should be raised is how they amassed such wealth in the first place and why governments are allowed to connive in these schemes.
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This debt ceiling charade has to stop

The US Congress routinely goes through an exercise that to me perfectly captures its lack of maturity. It is the periodic votes on raising the debt ceiling. Doing so enables the Treasury to borrow or print more money so that the government can meet the obligations it has already incurred by past appropriations. Failing to do so will mean that the government will shut down and go into default and not be able to pay, among other things, the interest on the Treasury bills that were issued in the past, and thus would trigger a slide in the country’s credit rating. A default would be so bad that it is expected that the ceiling will be raised, as it always has in the past.
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How the sharing economy became professionalized (and hence more expensive)

I have never actually used Vrbo, Airbnb, and similar businesses that offer accommodation. I had been vaguely under the impression that they offered cheap, short-term, accommodations because people were renting out spaces in their homes that were under-utilized, often because their children had left home. They provided basic things like a bed and bathroom access and enabled the renter to make a little extra money and for the budget-conscious traveler to avoid expensive hotels.

But recently I was planning a trip where there was no hotel near the place I wanted to be in. So I looked up Airbnb. I was surprised at how expensive the accommodations were, close to and even more than hotels. It seems like this so-called sharing economy has gone from providing cheap accommodation to being expensive ‘experiences’. I decided that I might as well stay a little distance away in a hotel where at least you have some idea of what you are getting.
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How billionaires use their sports teams to avoid taxes

The invaluable investigative site ProPublica has been mining its trove of confidential tax documents that were released to it to expose the many ways that the wealthy members of the oligarchy exploit the system to make even more money and avoid paying taxes. I posted recently about how they revealed how wealthy people in the US abuse the Roth IRA provision that was designed to help ordinary people save for their retirement. Their latest report shows what is going on with sports teams.

Wealthy individuals buy sports teams (or a share of them) and it is assumed that they do so at least partly because they like the glamor associated with hobnobbing with elite athletes and hosting dignitaries in their luxury boxes. But those are not the only perks. ProPublica shows that these teams are also a tax dodge that enable owners to pay taxes at a lower rate than even the highest paid athletes.
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How billionaires abuse Roth IRAs

The Individual Retirement Account is a financial device in the US that was supposedly meant to encourage ordinary people to save for their old age. You could put up to a certain amount each year into the account and that amount could be deducted from your income, thus reducing your taxes. The money in the account would then grow tax-free as long as you did not take it out until the age of 59 ½. The idea was that you would let it grow until you needed it in your retirement. When you withdrew it then as needed, you would likely be in a lower tax bracket since you were not earning income.

That was the basic idea of the IRA. But then another wrinkle was introduced in 1997 and that was the so-called Roth IRA that was like the regular IRA except that the initial deposit into the account was not tax-deductible. But the offsetting benefit was that the money in the account was not taxable when you withdrew it at age 59 ½. Because these plans were supposedly meant for ordinary people, there was a limit to how much you could put into the account each year, with the original cap being S2,000, though that limit increased with time. If you started contributing early in life, the tax free growth could provide you with a little nest egg. In 2018, the average amount in a Roth IRA was $39,000.
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If you pay people more, they will come

The latest jobs report showed healthy growth in hiring. But more importantly, it also showed a rise in wages.

In an encouraging burst of hiring, America’s employers added 850,000 jobs in June, well above the average of the previous three months and a sign that companies may be having an easier time finding enough workers to fill open jobs.

Friday’s report from the Labor Department was the latest evidence that the reopening of the economy is propelling a powerful rebound from the pandemic recession. Restaurant traffic across the country is nearly back to pre-pandemic levels, and more people are shopping, traveling and attending sports and entertainment events. The number of people flying each day has regained about 80% of its pre-COVID-19 levels. And Americans’ confidence in the economic outlook has nearly fully recovered.
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How the rich avoid taxes

The report by ProPublica about how the very rich pay almost no taxes shows the problem with the tax system that taxes income and not wealth. As a result, the wealthy use devices to massively increase their wealth with things like stock options and other assets that do not get taxed until they are sold and get converted into income. But we know that the wealthy live a lavish lifestyle. So where does that money come from? Don’t they have to sell assets to get money and thus be liable for taxes on that amount? Ha! Such things apply only to peons like us.
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Getting corporations to pay their share of taxes

I have written before about one method by which huge highly profitable corporations avoid taxes. The way it works is for a big company in the US (say) to buy a small company in a country that has favorable tax laws, Ireland being the current favored nation. They then ‘invert’ the relationship, claiming that the foreign company is the parent one while the US one is the subsidiary, even though nothing else has changed. This enables them to pay the lower taxes of the other nation while enjoying all the benefits of being in the US. This practice even has a name: ‘corporate perversion’.
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The ongoing war on the working class

Ronald Regan’s ‘welfare queen’ rhetoric propagated the myth that many Americans are lazy good-for-nothings who would take any opportunity to not work, a slander on working people that did not seem to hurt his popularity with the working class, perhaps because many people believes it to be true of other people, not themselves. The reason for pushing that myth was to justify cuts in benefits to the poor (“It is for their own good, so that they learn the value of work.”) in order to give tax cuts to the rich. Neoliberal Democrats like Bill Clinton also seized on it continue the cuts, in the name of ‘ending welfare as we know it’.
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An inside look at the awful working conditions in ‘fulfillment center’ warehouses

A recent episode of the radio show Radiolab had a story from seven years ago by an award winning writer and investigative reporter Gabriel Mac who managed to get hired at an internet retailer warehouse. The show is careful not to mention the name of the company where he was a ‘picker’ and worked in a giant warehouse that was the size of about 17 football fields, referring to it by the generic name of Amalgamated. He said that at the beginning of the day they are given these scanner devices that tell them where to locate an item on the shelves to put it in a plastic bag and place it on a conveyor belt. The items seem on the surface to be placed on the shelves at random with the same item scattered all over the warehouse and placed in bins with other unrelated items. But the seeming randomness is misleading. The computer knows where things are and they have been placed so as to make collecting the items ordered by customers quicker.
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