Large gifts given to others are taxable. There are some loopholes. For example, a parent can give up to $10,000 per year to a child without incurring gift taxes. But if you have income that can be classified as ‘carried interest’, then you can give huge gifts to your children without incurring any tax whatsoever.
Romney’s tax returns reveal that he gave $100 million to his children using this loophole, that is available only to the wealthy whose income is from investments.
Thanks to reader Henry, I learned about this article by James Surowiecki in the New Yorker that explains how private equity firms like Bain Capital (where Romney made his fortune) make their money. It is not pretty.
Private equity firms use a small amount of their own money and [Read more…]
One reason that politicians and other officials can avoid addressing hard questions at press conferences is because each journalist is usually given the chance to ask just one question. The politician can answer evasively or dismissively and [Read more…]
Mitt Romney is not a good public speaker. I find it painful to listen to him. Even a short clip of his speeches reveals someone who seems uncomfortable in that role because he lacks the ability to make his points clearly. What has got him so far is money and preparation plus the backing of the party establishment, the media, and the oligarchy, coupled with his willingness to say anything to pander to his audience. This is what makes so puzzling his repeated stumbles on the question of his own taxes, a topic that he must surely have known was coming. His performance on this issue is weirdly awkward for someone who prides himself on his careful preparation.
There seems to be increasing intrusiveness in the political process resulting in the current expectation that candidates for major office [Read more…]
Tyler Durden has posted a quiz in which he lists the major contributors to the main contenders for the presidency in recent years and asks you to try and identify the candidate.
It is not easy, but the exercise reveals how the oligarchy covers its bets to make sure that whoever wins the presidency, that person is safely in their pockets.
Jon Stewart of The Daily Show looks at the working conditions at Foxconn, the Chinese mega-factory which manufactures so many of the electronic products that we use. The working conditions are so appalling that the company has to take suicide-prevention measures, all so that we can save about 25% on the prices of these gadgets.
There is no doubt that the US oligarchy would love to see American workers in the same situation, as can be seen by their union-busting efforts. Some of us may ridicule Newt Gingrich’s suggestion that we should replace each union janitorial job with 30 child laborers, but bear in mind that this is how the oligarchy thinks, that their goal is to maximize profits and their ideal of ‘efficiency’ is to drive wages down as low as they can go.
In an earlier post, I discussed all the ways that wealthy people can reduce the rate at which they pay taxes, using measures that are not available to ordinary people, and which results of them paying at much lower rates than middle class people do.
Mitt Romney had for a long time refused to release his tax returns and suspicions were that this was because he was in fact paying at a lower rate than most people because of those above methods. Under pressure he has (sort of) agreed to release his returns around (maybe) April, and conceded that he does pay only about 15%, the same rate as the marginal rate on people whose income is in the range $8,375 to $34,000, which is even below the media income.
But the additional tidbit that was tucked away in his statement about his income was when he said, “And then I get speakers’ fees from time to time, but not very much.” It turns out that his total income from speaking fees for 2010 was $374,327.62, for an average of $41,592 per speech.
When your fees per speech is close to the median household income, and your total income from speeches alone put you in the top 2% of income earners, and you consider it ‘not very much’, then you really are living in a different world.
I got this from The Progressive Review but since the site did not cite a source, I cannot vouch for the accuracy of the data used to generate it.
Update: See the comment by savannahbarnett below that suggests that the data is unreliable and out of date, although the link to better supported data shows that the ratio in the US is still very high, in the 185 to 325 range.
Many big corporations avoid paying US taxes by creating offshore subsidiaries and putting their profits into those companies. That money is often stored in banks in the US but are technically considered outside of the country. Of course, these companies and their executives would like to be able to use the money (which is currently running at more than $1.375 trillion) in the US to pay for their bonuses and the like but if they ‘bring it back’ (i.e., put it in their US books) they would have to pay the 35% tax that they avoided by using their foreign subsidiaries. So now an army of 160 lobbyists is pushing to allow a ‘temporary’ tax holiday under which the money can be repatriated to the US at a rate of only 5.25%, which would be a massive windfall to these companies and impoverish the government. This was also done back in 2004, creating a windfall then.
[Read more…]
It looks like Europe is following the lead of the US, with its equivalent of the Federal Reserve giving money to big banks at low interest rates and allowing them to buy government bonds at higher interest rates. So the European central bank is essentially borrowing back its own money, just like the Fed did here, the banks essentially risk-free easy profits.
If one wanted even more evidence of the power of the global financial oligarchy over governments, look at how they managed to oust the elected leaders of the government in Greece and Italy and replace them with unelected ‘technocrats’, i.e., people who would implement harsh austerity policies that squeeze the general public in order to pay back to the banks the risky loans that they gave out. Even Silvio Berlusconi, one of the most tenacious of politicians whose ability to cling on to the prime ministership was legendary, had to bow down to this superior power and resign.