Super Rich Still Have Little To Fear From IRS
By Stephanie Mencimer on Wed. April 11, 2012 7:10 AM PDT
In 2009, IRS commissioner Doug Shulman said in a speech that the IRS had formed a new group of auditors who were going to be directing their attention at a special group of taxpayers: the super rich. Dubbing them “global high wealth individuals,” Shulman promised that his agency would be taking a hard look at people who had tens of millions of dollars worth of assets and income tied up in complicated financial dealings that often involved overseas banking and aggressive tax avoidance strategies. The IRS, he said, wanted to make sure that hard-working, tax-paying Americans could be sure that everyone is paying her own fair share. It’s certainly a ripe area for the government to turn up more revenue. In fiscal 2011, audits of people making more than $1 million identified $5 billion in underreported income tax, and that’s just for the roughly 15 percent of millionaires the IRS audited.
Two-and-a-half years later, though, the effort to target the super rich has proven underwhelming. According to a new study by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University, the IRS has completed a mere 36 audits from the over-$10 million set since launching the global high wealth group. TRAC researchers estimate that this means the IRS audited only between 12 and 18 people, because the audits were counted by annual returns, not by individuals, who may have had more than one year of returns examined. That’s not even one percent of the more than 8,000 annual returns that the IRS has said include gross income of $10 million or more. (By comparison, working poor people with children who claim the Earned Income Tax Credit get audited at twice the rate of any other taxpayer.)
As part of its global high wealth group effort, the IRS has also promised to focus more on “flow through” entities—the partnerships and S corporationsthat super rich people use to avoid paying taxes. The group didn’t have the most ambitious goals to begin with, according to TRAC. But it failed to even meet those. The IRS hoped to audit 122 of these sorts of corporate entities in fiscal 2011, but completed only 40.
The IRS hasn’t come up totally empty handed by looking at the portfolios and tax returns of the super rich. They found $47 million in additional taxes owed. But if you consider how much the IRS turns up just in simple audits of ordinary millionaires, that’s pretty small potatoes. TRAC can’t say whether the disappointing results from the IRS are due to a lack of resources for the agency or the fact that the super rich might just have incredibly complicated financial affairs that aren’t quickly and easily tackled by the average IRS auditor. Either way, more resources for the IRS ought to be a priority for anyone who really cares about the budget deficit. The government is clearly leaving money on the table that it could surely use right now.
Source: Mother Jones
Obama promotes ‘Buffett Rule’ among wealthy endorsers
President Obama plugged his plan to increase taxes on millionaires yet again Wednesday morning, but this time with a new twist – appearing alongside rich people who support the signature tenet.
The proposal would require that people earning $1 million a year or more pay at least the same tax rate as middle-class families. Obama calls it the “Buffett rule” after billionaire investor Warren Buffett, who has famously complained that he pays a lower rate than does his secretary.
To help make the point, the endorsers showed up with their assistants. Appearing on stage with Obama were Abigail Disney, president of the Daphne Foundation, and her assistant, Celine Justice. Whitney Tilson, managing partner of T2 Partners LLC, appeared with her assistant, Kelli Alires; Google retiree Frank Jernigan joined with his assistant, Teresa Gardiner; and Lawrence Benenson, of Benenson Capital, appeared with his assistant, Carmen Peterson.
None of those millionaires has told him they’re excited about paying more taxes, Obama said.
But “they agree with Warren,” he said. “This should be fixed.”
The measure is highly unlikely to pass the divided Congress this election year. But the message was live on network television this morning, same as Tuesday, giving the president’s “tax fairness” message the kind of exposure that money can’t buy.
Source: Los Angeles Times
November 2011 Report on Negative Tax Liability for Corporations
A comprehensive new study that profiles 280 of America’s most profitable companies finds that 78 of them paid no federal income tax in at least one of the last three years. Thirty companies enjoyed a negative income tax rate over the three year period, despite combined pre-tax profits of $160 billion. These are among the findings in “Corporate Taxpayers and Corporate Tax Dodgers, 2008-2010,” released by Citizens for Tax Justice and the Institute on Taxation and Economic Policy.
“These 280 corporations received a total of nearly $223 billion in tax subsidies,” said Robert McIntyre, Director at Citizens for Tax Justice and the report’s lead author. “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”
Corporations are lobbying for lower corporate rates and an exemption for profits they shift offshore. McIntyre, however, says “Our study provides proof that too many corporations are already being coddled by our tax system.”
Findings in the report include:
• The average effective tax rate for all 280 companies in the study over the three year period was 18.5 percent; for the period 2009-2010 it was 17.3 percent, less than half the statutory rate of 35 percent.
• 78 of the companies enjoyed at least one year in which their federal income tax was zero or less.
• 30 companies enjoyed a negative income tax rate over the entire three year period on their combined pre-tax profits of $160 billion.
• Total tax subsidies given to all 280 profitable corporations amounted to $222.7 billion from 2008-2010.
• Wells Fargo tops the list of 280 U.S. corporations receiving the most in tax subsidies, getting nearly $18 billion in tax breaks from the U.S. treasury in the last three ears.
• Pepco Holdings had the lowest effective tax rate of all the companies in the study, at negative 57.6 percent over the three year period. Some companies within sectors fare worse than others. For example, the report finds that FedEx paid a 0.9 percent tax rate over the three year period while its competitor, UPS, paid a 24.1 percent rate.
• While retailers and wholesalers in the study generally pay average effective tax rates of about 30 percent, Amazon.com paid a rate of only 7.9 percent on its $1.8 billion in profits from 2008-2010.
• Financial services received the largest share (16.8 percent) of all federal tax subsidies over the last three years. More than half of federal corporate tax subsidies for companies in the study went to four industries: financial services, utilities, telecommunications, and oil, gas & pipelines.
• The top ten defense contractors saw their combined tax rate decline from 19.3 percent in 2008 to a mere 10.6 percent rate in 2010.
• U.S. corporations with significant (ten percent or more of their total worldwide profits) foreign profits paid tax rates to foreign countries that were almost a third higher than they paid to the IRS on their domestic profits.
Source: ctj.org
Wall Street Firms Spy on Protestors in Tax-Funded Center
Wall Street’s audacity to corrupt knows no bounds and the cooptation of government by the 1 per cent knows no limits. How else to explain $150 million of taxpayer money going to equip a government facility in lower Manhattan where Wall Street firms, serially charged with corruption, get to sit alongside the New York Police Department and spy on law abiding citizens.
According to newly unearthed documents, the planning for this high tech facility on lower Broadway dates back six years. In correspondence from 2005 that rests quietly in the Securities and Exchange Commission’s archives, NYPD Commissioner Raymond Kelly promised Edward Forst, a Goldman Sachs’ Executive Vice President at the time, that the NYPD “is committed to the development and implementation of a comprehensive security plan for Lower Manhattan…One component of the plan will be a centralized coordination center that will provide space for full-time, on site representation from Goldman Sachs and other stakeholders.”
At the time, Goldman Sachs was in the process of extracting concessions from New York City just short of the Mayor’s first born in exchange for constructing its new headquarters building at 200 West Street, adjacent to the World Financial Center and in the general area of where the new World Trade Center complex would be built. According to the 2005 documents, Goldman’s deal included $1.65 billion in Liberty Bonds, up to $160 million in sales tax abatements for construction materials and tenant furnishings, and the deal-breaker requirement that a security plan that gave it a seat at the NYPD’s Coordination Center would be in place by no later than December 31, 2009.
The surveillance plan became known as the Lower Manhattan Security Initiative and the facility was eventually dubbed the Lower Manhattan Security Coordination Center. It operates round-the-clock. Under the imprimatur of the largest police department in the United States, 2,000 private spy cameras owned by Wall Street firms, together with approximately 1,000 more owned by the NYPD, are relaying live video feeds of people on the streets in lower Manhattan to the center. Once at the center, they can be integrated for analysis. At least 700 cameras scour the midtown area and also relay their live feeds into the downtown center where low-wage NYPD, MTA and Port Authority crime stoppers sit alongside high-wage personnel from Wall Street firms that are currently under at least 51 Federal and state corruption probes for mortgage securitization fraud and other matters.
In addition to video analytics which can, for example, track a person based on the color of their hat or jacket, insiders say the NYPD either has or is working on face recognition software which could track individuals based on facial features. The center is also equipped with live feeds from license plate readers.
According to one person who has toured the center, there are three rows of computer workstations, with approximately two-thirds operated by non-NYPD personnel. The Chief-Leader, the weekly civil service newspaper, identified some of the outside entities that share the space: Goldman Sachs, Citigroup, the Federal Reserve, the New York Stock Exchange. Others say most of the major Wall Street firms have an on-site representative. Two calls and an email to Paul Browne, NYPD Deputy Commissioner of Public Information, seeking the names of the other Wall Street firms at the center were not returned. An email seeking the same information to City Council Member, Peter Vallone, who chairs the Public Safety Committee, was not returned.
In a press release dated October 4, 2009 announcing the expansion of the surveillance territory, Mayor Michael Bloomberg and Police Commissioner Kelly had this to say:
“The Midtown Manhattan Security Initiative will add additional cameras and license plate readers installed at key locations between 30th and 60th Streets from river to river. It will also identify additional private organizations who will work alongside NYPD personnel in the Lower Manhattan Security Coordination Center, where corporate and other security representatives from Lower Manhattan have been co-located with police since June 2009. The Lower Manhattan Security Coordination Center is the central hub for both initiatives, where all the collected data are analyzed.” [Italic emphasis added.]
The project has been funded by New York City taxpayers as well as all U.S. taxpayers through grants from the Federal Department of Homeland Security. On March 26, 2009, the New York Civil Liberties Union (NYCLU) wrote a letter to Commissioner Kelly, noting that even though the system involves “massive expenditures of public money, there have been no public hearings about any aspect of the system…we reject the Department’s assertion of ‘plenary power’ over all matters touching on public safety…the Department is of course subject to the laws and Constitution of the United States and of the State of New York as well as to regulation by the New York City Council.”
The NYCLU also noted in its letter that it rejected the privacy guidelines for the surveillance operation that the NYPD had posted on its web site for public comment, since there had been no public hearings to formulate these guidelines. It noted further that “the guidelines do not limit police surveillance and databases to suspicious activity…there is no independent oversight or monitoring of compliance with the guidelines.”
According to Commissioner Kelly in public remarks, the privacy guidelines were written by Jessica Tisch, the Director of Counterterrorism Policy and Planning for the NYPD who has played a significant role in developing the Lower Manhattan Security Coordination Center. In 2006, Tisch was 25 years old and still working on her law degree and MBA at Harvard, according to a wedding announcement in the New York Times. Tisch is a friend to the Mayor’s daughter, Emma; her mother, Meryl, is a family friend to the Mayor.
Tisch is the granddaughter and one of the heirs to the now-deceased billionaire Laurence Tisch who built the Loews Corporation. Her father, James Tisch, is now the CEO of the Loews Corporation and was elected by Wall Street banks to sit on the Federal Reserve Bank of New York until 2013 representing the public’s interest. (Clearly, the 1 per cent think they know what’s best for the 99 per cent.)
The Federal Reserve Bank of New York is the entity which doled out the bulk of the $16 trillion in bailout loans to the U.S. and foreign financial community. Members of Tisch’s family work for Wall Street firms or hedge funds which have prime broker relationships with them. A division of Loews Corporation has a banking relationship with Citigroup.
The Tisch family stands to directly benefit from the surveillance program. In June of this year, Continental Casualty Company, the primary unit of the giant CNA Financial which is owned by Loew’s Corp., signed a 19-year lease for 81,296 square feet at 125 Broad Street – an area under surveillance by the downtown surveillance center.
Loews Corporation also owns the Loew’s Regency Hotel on Park Avenue in midtown, an area which is also now under round-the-clock surveillance on the taxpayer’s dime.
Wall Street is infamous for perverting everything it touches: from the Nasdaq stock market, to stock research issued to the public, to auction rate securities, mortgages sold to Fannie Mae and Freddie Mac, credit default swaps with AIG, and mortgage securitizations. Had a public hearing been held on this massive surveillance sweep of Manhattan by potential felons, hopefully someone might have pondered what was to prevent Wall Street from tracking its employee whistleblowers heading off to the FBI offices or meeting with a reporter.
One puzzle has at least been solved. Wall Street’s criminals have not been indicted or sent to jail because they have effectively become the police.
Occupy Wall Street's Message Gains Momentum In Congress
Occupy Wall Street is finding a louder voice in Congress as lawmakers invoked its rhetoric repeatedly Wednesday in attempts to crack down on speculation, punish dangerous mine operators and pass a jobs bill.
Joined by Rep. Bruce Braley (D-Iowa), the chairman of the Populist Caucus, Sen. Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-Ore.) introduced the Targeted Wall Street Trading Tax bill. It would levy a tax equivalent to three cents for every $100 on transactions like stock trades, credit swaps and derivatives that were largely blamed for the mortgage market meltdown and financial crisis of 2008 that plunged the economy into recession.
Harkin said the bill targets large-scale investors. “By setting the tax rate very low, the measure is not likely to impact the decision to engage in productive economic activity,” he said at a press conference. But he said the amounts would add up for the big players, serving as both a check on reckless speculation and a deficit-cutting measure that could bring in hundreds of billions to help rebuild the country.
House Republicans are adamantly opposed to all such tax measures, including on transactions, so the measure stands little chance of becoming law. But Harkin said that with Occupy Wall Street in the backdrop, “more and more people around the country are supporting what they’re seeing. …There’s been a great groundswell of support there and I think once they find out about this I think they’re going to be very supportive.”
Further, DeFazio argued that economic recovery requires tamping down the most excessive activities on Wall Street. “Part of the recovery effort would be aimed toward squeezing out the most speculative of traders, those that are trading either derivatives, contracts, futures, stocks, [a] thousand times a second,” he said at the presser. “We think it’s about equity, we think it’s about fairness, we think it’s about making Wall Street pay for the recovery on Main Street.”
People of the 1% who stand with the 99%
The “Occupy Wall Street” protesters — also known as the “99 percent” — have struck a chord with at least a few members of an unexpected audience: America’s rich and privileged.
United under the banner “We are the 1 percent: We stand with the 99 percent,” a band of entrepreneurs, trust fund babies, professionals and inheritors has taken to the web to share their abhorrence of corporate greed and support for tax code changes that would see them pay a higher share of their considerable wealth.
Among other things, they’re posting their stories on a Tumblr page created by Wealth for the Common Good and Resource Generation, two groups dedicated to working for “fair taxation and just wealth distribution.”
