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This Tax Day, ‘Farms’ Owned by the Rich Provide Massive Tax Shelter
Yasha Levine, The Nation
… thanks to misuse of agricultural tax breaks, many [wealthy individuals] will not end up paying their fair share of property taxes either.
Take Michael Dell, founder of Dell Computers and the second-richest Texan, who qualified for an agricultural property tax break on his sprawling 1,757-acre residential ranch in suburban Austin and saved over $1 million simply because his family and friends sometimes use the land as a private hunting preserve to shoot deer. Or take billionaire publisher Steve Forbes, who got more than a 90 percent property tax reduction on hundreds of acres of his multimillion-dollar estate in upscale Bedminister, New Jersey, just by putting a couple of cows out to pasture. They are not alone. All across the country, a huge number of America’s wealthiest are tapping into agricultural tax breaks—and none of them have to do any real farming to qualify.
Not only are agricultural tax breaks allowing wealthy landowners to shift their tax burden onto other less-affluent taxpayers but they are also helping bankrupt public schools, which derive the bulk of their funding from local property taxes.
Agricultural tax breaks got their start in the ’50s and ’60s, as a response to the explosive growth of suburban development, which was encroaching on farmland and raising agricultural property values to the point where farmers were having paying their tax bills.
(14 April 2011)
Offshore Banking and Tax Havens Have Become Heart of Global Economy
Amy Goodman and Juan Gonzales, Democracy Now (video, audio, text)
As millions of Americans prepare to file their income taxes ahead of Monday’s deadline, we look at how corporations and the wealthy use offshore banks and tax havens to avoid paying taxes and other governmental regulations. “Tax havens have grown so fast in the era of globalization, since the 1970s, that they are now right at the heart of the global economy and are absolutely huge,” says our guest, British journalist Nicholas Shaxson. “There are anywhere between $10 and $20 trillion sitting offshore at the moment. Half of world trade is processed in one way or another through tax havens.” Shaxson is the author of the new book, Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens.
… NICHOLAS SHAXSON: … We should not underestimate also the lobbying power of the accounting firms. They are—that’s something that people don’t really consider. Of course the banks are huge. The accounting firms, the legal firms that are involved in this are absolutely enormous.
I think one of the things that could be done is to look at ways of having much more severe penalties on people who assist particularly criminal tax evasion and other aspects of it. But we also mustn’t lose sight of the financial regulation aspect of this. And when countries like the United Kingdom, but other tax havens like Luxembourg, Ireland, the Netherlands, which are not traditionally regarded as tax havens, but they’re huge, huge players in this business, we must increasingly recognize them as engaging in what is nothing short of economic warfare against the United States and other countries. We really need to start recognizing that this is—you know, this is conflict. This is economic conflict. When one country tries to suck tax revenue or illicit flows or whatever out of another country, that is an aggressive act. And we need to start taking much more robust action to defend all of our countries against what’s going on in the offshore system.
… On the grassroots side, this is incredibly heartening, what’s been happening. There has been until, I would say, a year ago almost complete radio silence on this issue. Very few people were taking an interest in it. We saw—we have seen the Uncut movement is something that emerges, spontaneous protests against corporate tax avoidance. In my country, in the U.K., where there’s big spending cuts happening, people turning around, saying, “How come we’re giving these effective subsidies to corporations, these tax subsidies to corporations, and now we’re having to cut schools and hospitals?” And people are coming out onto the streets. And this is absolutely new, and this is thrilling to see. And it’s happening in the United States. And stories such as General Electric’s ability to get away with paying no tax in the United States is, you know, a catalyst for something. So something very new is happening now, and it’s tremendously refreshing. And this is, you know, the beginning, I believe, of something much bigger that will, as austerity and deficits continue to bite, will get more people into the streets.
(15 April 2011)
The Real Housewives of Wall Street
Matt Taibbi, Rolling Stone
Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?
America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we’re broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year’s retirees from the IRS, the SEC and the Department of Energy.
Most Americans know about that budget. What they don’t know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the “official” budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.
Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record.
(16 April 2011)