By Dr. M.Bali
From Progressive Agenda and Wish list
Source: progressivewishlist.wordpress.com
Fair Taxation Issues.
Conservatives are proposing an adjusted budget plan throughout the following 10 years and large tax breaks for the well off and corporations. To balance financial backing without raising new incomes, they will need to slice $4.5 trillion in federal spending, influencing essentially every service the government provides. To adequately counter these recommendations, progressives need to push for “tax fairness” instead and that the rich and huge enterprises ought to pay their fair share. Surveys demonstrate that the tax fairness is firmly upheld by people in general – not simply by Democrats, but also by a substantial segment of independents. Furthermore, contingent upon the inquiry, greater parts of Republicans, or majorities, support making the rich and companies pay their fair share.
Tax avoidance spares the wealthiest companies and persons an expected $3 trillion every year:That's how much the wealthiest Americans avoid through the arrangement of subsidies, accounting schemes and sweet deals that deny middle-class wage-earners of their earned benefits. That is three times more than the deficit. The outcome? Slices to public services, extra taxes today or extra obligation to be paid by the next generations.
It is about time to implement the following reforms that would ensure that corporations and the wealthy pay their fair share.
1. Buffett Rule
The Buffett Rule, suggested by extremely rich man Warren Buffett, would require tycoons to pay a base tax rate of 30%. Adopt Buffett Rule to ensure secretaries don’t pay more in taxes than the CEOs for whom they work. Buffett wrote in 2011 that he thought it was outlandish that he pays a lower tax rate than his secretary does. The guideline’s motivation is to raise government tax rates on America’s wealthiest individuals and businesses.
At a minimum, pass the Paying a Fair Share Act of 2012 (H.R.766 – 113th) proposed by Sen. Sheldon Whitehouse (D-RI). According to the bill, it would raise $72 billion more than 10 years.
2. Deducting “Performance pay” write-offs
Most American citizens would be stunned to discover that they subsidize CEO rewards. A tax loophole clause permits companies to deduct from their taxable pay any sum paid to CEOs and their officials, as long as the pay is called “performance-based.” This means, by simply checking on a box, it allows them that the more they pay their executives, the less they pay in government taxes. There is a growing chorus calling for closing the CEO Tax loophole that allows corporations to take advantage of “performance pay” write-offs.
In the Congress, Sen. Jack Reed (D-RI) and Sen. Richard Blumenthal (D-CT) presented the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (S. 1476) in the 113th Congress. Rep. Lloyd Doggett (D-TX) presented a companion bill Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (H.R. 3970) in the House. Supporters believe these bills would raise $50 billion.
3. Progressive Estate Tax
Different countries may call it the death tax, the estate tax or inheritance duty.But whatever the name, one thing is without a doubt: most nations have methods for taking a rate of a man's belongings and capital once they have handed down it in the wake of passing away. The present US income tax system doesn't levy taxes on wealth. Inheritors can get boundless inheritances without estate taxes.
Establish a Progressive Estate Tax. A portion of the ultra-rich have the capacity to take favorable position of loopholes so they pay nothing in inheritance taxes. Others exploit the way that the exclusion levels for the estate assessment are high – $5.3 million for each person ($10.6 million for every couple.) President Obama proposes to restore the exclusions to their 2009 levels – $3.5 million for an individual ($7 million for a few) burdened at a 45% top rate.This and other changes would raise $131 billion more than 10 years, according to Taxation.org.
Pass Responsible Estate Tax Act by Sen. Bernie Sanders. If adopted, Sanders’ bill would levy higher tax rates based on the size of the estate. For instance, for the value of estates above $ 50 million value would pay a 55 percent while a smaller estate whose value is above $3.5 million but less than $10 million would pay 40 percent.
4. long-term Capital Gains and Dividends – “investment income”
Tax Capital Gains and Dividends the same as regular income. In 2015, the top marginal income tax for working pay is 39.6%, but the top tax rate on corporate dividends and capital gains is only 23.9%. To lessen this disparity, the tax rates on capital gains and dividends should be raised so they coordinate with the tax rates on pay rates and wages. These loopholes lead to avoiding paying $1.3 trillion more in taxes in 10 years, according to Taxation.org. The preferential tax treatment of capital gains is perhaps the single largest driver of the creation of personal wealth.
5. Social Security tax cap
Eliminate the Cap on Taxable Income, which is $106,800, thereby imposing a flat tax of 12.4 percent on all earnings, that goes into the Social Security Trust Fund.
Social Security (SSA) taxes are imposed on earned income to a greatest level set every year. In 2015, this most extreme—or what is alluded to as the assesable income base—is $106,800. The assessable income base serves as both a top on employers’ commitments and a top on SSA obligations. As a commitment base, it builds up the greatest measure of every workers incomes that is liable to the payroll charge. As an advantage base, it sets up the greatest measure of incomes used to figure benefits.
According to one analysis, raising or taking out the top on wages that are liable to assessments could lessen the long-go shortfall in the Social Security Trust Funds. Case in point, if the most extreme assessable income sum had been brought up in 2005 from $90,000 to $150,000—generally the amounts expected to cover 90% of all income—it would have dispensed with approximately 40% of the long-extended deficiency in Social Security. On the off chance that all incomes were liable to the taxes, yet the base was held for advantage counts, the Social Security Trust Funds would stay intact for the following 75 years. On the other hand, having diverse bases for commitments and advantages would debilitate the conventional connection between the assessments workers pay into the system and the benefits that they would derive from it.
6. Tax shelters
Major companies like Apple, Nike, Citigroup and another 362 companies were reported to have set up 1,357 auxiliaries and 7,827 offshore shell companies to stash almost $2.1 trillion in spots like Cayman Island and Bermuda with a specific goal to avoid paying U.S. taxes, and would collectively owe an estimated $620 billion in U.S. taxes if they repatriated the funds, or costing the U.S. Treasury an expected $90 billion in lost income for each year, as per a study by the U.S. Public Interest Research Group. Fifty-seven of the companies disclosed that they would expect to pay a combined $184.4 billion in additional U.S. taxes if their profits were not held offshore. Their filings indicated they were paying about 6 percent in taxes overseas, compared to a 35 percent U.S. corporate tax rate, it said.
As a consequence, most huge companies — like Boeing, General Electric and Verizon — have paid NO government taxes in some recent years. For example, Walmart has built a secret network of 78 subsidiaries and branches in 15 overseas tax havens, now holding at least $76 billion, which are used to minimize foreign taxes where it has retail operations and to avoid U.S. tax on those earnings. The wealthiest Americans are evading to pay their share, as well, with numerous paying a lower effective rate than many middle-class families.
Repeal the Tax Loophole that businesses and the wealthy utilize in sheltering their profits, even entire incomes, in foreign countries, to avoid paying taxes.
Numerous U.S. corporations utilize offshore tax havens and other bookkeeping tricks to avoid paying as much as $90 billion a year in income taxes. A substantial loophole clause at the heart of U.S. tax law permits companies to avoid paying taxes on outside profits until they are brought home. Known as “deferral,” it gives a big incentive to keep profits offshore as far as might be feasible. Numerous companies are known to never bring their profits home and never pay U.S. taxes on them.
Deferral gives companies, through clicking on a box in a tax form, huge incentives to utilize bookkeeping tricks so to make it create the fantasy that profits earned here were produced in a tax haven. Profits are piped through auxiliaries, frequently shell organizations with couple of workers and minimal genuine business movement. Viably, firms wash U.S. profits to avoid paying U.S. taxes. The capacity to put on the back burner these assessments for quite a long time or forever drives their motivation to utilize book-keeping devices to make it show up as if revenues were earned in nations where they won’t be taxed — like Cayman Island, which is home to more than 85,000 companies – making it one of the few territories with more registered organizations than people.
Stop giving tax loopholes to companies that move profits and jobs offshore, beginning with taking out the Active Financing Exception and the CFC look-through rules, thus eliminating the “deferral,” as proposed by Sen. Bernie Sanders and Rep. Jan Schakowsky. Corporations would pay taxes on their incomes the year it is earned, as opposed to uncertainly avoiding paying applicable U.S. taxes. This would likewise eliminate incentives to move U.S. incomes to tax-free safe havens, and it would raise $600 billion more than 10 years.
Congress should additionally pass the Stop Tax Haven Abuse Act (S. 1533), presented in 2013 by Sen. Carl Levin (D-MI). The bill would close large portions of the loopholes that make it alluring for companies to conceal profits abroad. If the bill is passed into law it, would raise $220 billion more than 10 years.
Pfizer-Allergan Merger Tax Inversion
The current news covering the recent Pfizer and Allergan's $160 billion merger arrangement were around an inauspicious picture of a U.S. company seeking so as to evade taxes shelter on Irish shores. For Pfizer, which made over $9 billion in profit 2014, the comparison to move to another country bodes well financially.
Commenting on drug giant Pfizer merging with the Dublin-based Allergan not “because some wizard potion has been discovered in the hills of Connemara” but “to dodge tax,” on about $148 billion that it has offshore, Simon Jenkins of the Guardian of Nov 2015, wrote that the same is true of “Starbucks, Amazon, Google and countless other global companies,” and that "Tax havens should be illegal in international law. They are patently unfair. They protect money laundering and crime. They bear few of the costs of the modern nation state, while sucking those states dry of the revenue needed to sustain them". […] Companies should pay corporation tax on the basis not of their headquarters or research base or place of origin... They should pay on the proportionate spread of their sales. Likewise, individuals should pay tax to the country where they live or whose citizenship they enjoy – as is the case with most Americans. Tax havens that harbour companies or individuals who dodge tax should be subject to economic sanction, like many poorer states round the world that have upset western regimes. If you want to pay tax in the Caymans, live in the Caymans and don’t come to Britain".
7. Financial transaction tax
The lack of a financial trading tax constitutes tax shirking. Not a penny of sales tax is paid on Wall Street financial and commodities transactions, which have been evaluated at around three quadrillion dollars yearly, or three thousand times the deficit. No business tax is paid notwithstanding the high-chance nature of "flash trading" that can lose whole pension reserves in almost no time.
It’s time to implement financial transaction tax. Also called Robin Hood tax, it’s a straightforward small levy on Wall Street financial transactions, that would harmonize a crazy money machine, create millions of jobs, could generate estimated $350 billions of revenue, and potentially counteract another monetary crisis in the future. A .5% speculation fee will be charged on investment houses, hedge funds, and other stock trades. Additionally, a .1% fee will be charged on bonds, and a .005% fee will be charged on derivatives. Many economists like Joseph Stiglitz and Paul Krugman and extremely rich people like Microsoft’s Bill Gates, Berkshire Hathaway’s Warren Buffett, Oracle’s Larry Ellison, Mark Cuban, and George Soros support it. Surveys demonstrate the larger part of Americans support it as well.
A burgeoning, national movement has sprung up in support of Sen. Bernie Sander's legislation, the Inclusive Prosperity Act of 2015. The text of the bill concludes, that "The global financial crisis cost Americans $19 trillion in lost wealth." It says the proposed tax "could help create sufficient jobs in both the public and private sectors to replace the 8 million jobs lost in the Recession." The bill has not made it out of the Senate Finance Committee. It's about time to implement this FTT that could generate billions of dollars a year for, say, climate change mitigation or for tuition-free community college, while limiting Wall Street speculators.
8. Carried Interest Loophole
In a recent article, Mayor Bill de Blasio of New York wrote that in 2014, due to carried interest tax loophole, the leading 25 hedge fund managers earned more than 150,000 of kindergarten teachers in America combined.
Private-equity firms (which purchase, put resources into, help oversee and inevitably sell companies) and hedge funds are controlled by managers on behalf of outside speculators. At the point when benefits from a company’s ventures are dispensed, they are ordinarily dispersed by investors’s stake. What’s more, as a rule they get 20 percent of the revenues as an performance-based reward, “carried” for a considerable length of time at once. In the event that the partnership earns a capital gain, the administrator reports his share (commonly referred to as a “carried interest”) as long-term capital gain income. Ordinary pay is taxed at marginal rates up to 35 percent (39.6 percent after 2012) while income from capital gain is taxed at rates up to 15 percent (20 percent after 2012). President Obama and other critics of the provision say the entire carried interest is basically a management income instead of investment profits from a proprietorship stake, and ought to be taxed like regular salaries.
Under the president’s budget proposal, an partner’s share of gain from a equity partnership would be saddled with self-employment taxes. If a partner sells his share, the gain would be taxed as customary pay, not as a capital gain. The proposal estimates that the rule would raise $14.8 billion through 2021.
In the Congress, to address this issue, U.S. Representative Sander M. Levin (D-MI) introduced H.R. 2834 110th Congress (2007-2008) bill on June 22, 2007, which would eliminate the ability the hedge fund managers of partnerships to receive capital-gains tax treatment on their income. On April 2, 2009, Congressman Levin introduced another and substantially revised version of the carried interest legislation as H.R. 1935.
The present federal income tax system is unmistakably broken — unreasonable, excessively complex, and practically unimaginable for most Americans to get it. Currently, 17,500 registered tax lobbyists work overtime to pack the U.S. tax code with special interest benefits that ballooned the U.S. income tax code, which is now nearly 74,000 pages long. Thus, the current system makes a mockery of the universal idea of progressive taxation where the tax rate increments occur as the taxable sums increase. Numerous individuals additionally feel that corporations, rich people and families, and specific vested parties have out of line unfair access to a thicket of deductions, assessment credits, allowance for depreciation and tax inversions, different loopholes and regulations that cut the final tab that companies wind up paying to their national treasuries.
Sen. Bernie Sanders' fair tax assessment plan is the most extensive proposal to fix the corporate tax collection mess. He calls for closure of offshore shelters, ending subsidies to Big Business: The wealthiest companies shouldn't be sponsored by American citizens and to mobilize entrepreneurship and support small businesses: Instead of helping multinational companies , Sanders proposes to bolster small and medium American companies by furnishing them with the low-interest credits.
The entire tax evasion surpasses $3 trillion. The figures may be on the top of the line, and there may be some overlap, and wealthy Americans may contend that quite a bit of it is lawful. In any case, the arrangement of loopholes and credits and exclusions is an announcement by the rich that they don't need to pay for their unbalanced offer of advantages, and that middle-income Americans ought to surrender their own particular earned advantages to pay the nation's bills.Former Labor Secretary Robert Reich put it aptly when he said that lost tax revenue "has to be made up by you and me and every other taxpayer who can't afford high-flying attorneys and accountants to shift our income into places with low taxes."