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Former Tax Lobbyists Are Writing the Rules on Tax Dodging

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Congress too often shrugs off its responsibilities to the public in favor of getting money from wealthy donors and corporations. So it is with tax policy, as reported by Lee Fang in The Intercept:

The secret tax-dodging strategies of the global elite in China, Russia, Brazil, the U.K., and beyond were exposed in speculator fashion by the recent Panama Papers investigation, fueling a worldwide demand for a crackdown on tax avoidance.

But there is little appetite in Congress for taking on powerful tax dodgers in the U.S., where the practice has become commonplace.

A request for comment about the Panama Papers to the two congressional committees charged with tax policy — House Ways & Means and the Senate Finance Committee — was ignored.

The reluctance by congressional leaders to tackle tax dodging is nothing new, especially given that some of the largest companies paying little to no federal taxes are among the biggest campaign contributors in the country. But there’s another reason to remain skeptical that Congress will move aggressively on tax avoidance: Former tax lobbyists now run the tax-writing committees.

We researched the backgrounds of the people who manage the day to day operations of both committees and found that a number of lobbyists who represented world-class tax avoiders now occupy top positions as committee staff. Many have stints in and out of government and the lobbying profession, a phenomenon known as the “reverse revolving door.” In other words, the lobbyists that help special interest groups and wealthy individuals minimize their tax bills are not only everywhere on K Street, they’re literally managing the bodies that create tax law: . . .

Continue reading.

The way that Congress now serves the wealthy and not the public is another sign of the decline of the US, IMO.

Written by LeisureGuy

27 April 2016 at 8:59 am

Elizabeth Warren’s big win: The new, much-needed rule that could rein in Wall Street

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Andrew Burstein and Nancy Isenberg report in Salon:

Are you in the market for some good news? While everyone is being told to follow the excitement of the 2016 campaign to the exclusion of all else, out of the spotlight but not far away, the Obama administration is calmly trying to enact lasting progressive change. In the Labor Department earlier this month, consumer advocates won a big battle, as the vast middle class was “gifted” with a new requirement being placed on the financial services industry. As Massachusetts Sen. Elizabeth Warren explained, a glaring conflict of interest has been resolved in the favor of people saving for retirement. No longer can investment advisers recommend funds to their clients that reward them or their firms; instead, they must, without exception, direct customers into the best financial products, with lower or, sometimes, zero fees.

In her inimitable style, Warren crowed: “No more pushing products that generate financial benefits for advisers, while draining the customer’s savings.” It’s a very simple principle: “No more free vacations, cars, bonuses, fees, and other kickbacks.” Her mantra, as we know, is fairness. Her legislative agenda is to introduce new legal protections for consumers. She is quick to point out that most financial advisers are ethical, and work hard to help their clients. But these individuals have, for many years, been forced to compete with “slick-talking” advisers whose recommendations reflect personal incentives and produce “terrible results” for middle-class savers, amounting, the Labor Department says, to many billions of dollars.

Firms must now make a full disclosure. Facing the music, the largest independent company that manages retirement savings, with $450 billion in retirement assets, right away cut account fees for investors by “up to 30 percent.” Retirees win. The system can adapt. As Warren stated: “Americans are tired of a Washington that works great for the big guys and doesn’t work for anyone else.”

You know who she sounds like? Frances Perkins, Franklin D. Roosevelt’s secretary of labor for the entirety of his presidency, and the first female cabinet member in U.S. history. She should never be forgotten. Having personally witnessed the Shirtwaist Triangle fire of 1911, a tragedy in New York’s Greenwich Village that took the lives of 146 garment workers, a young and inspired Fannie Perkins resolved to devote herself to the cause of the American worker. As the accomplished business journalist Kirstin Downey lays out in her 2009 biography, Perkins pushed constantly for child labor laws, for safety regulations and a host of other fair labor practices. To prevent workers from descending into poverty, she urged compensation for workplace injury; she saw to the imposition of a minimum wage for the first time–which in the mid-1930s was around 45 cents an hour–and she pioneered unemployment insurance as we know it.

As compellingly up-front, if perhaps less pleasantly in-your-face than Warren is, Perkins told FDR when he was president-elect to think twice about naming her to the cabinet: “If you don’t want these things done…, I’d be an embarrassment to you.” She fed public demand. Fortunately for Roosevelt’s own historical reputation, he was not afraid of a strong woman. It is arguable that, were it not for Secretary Perkins, Social Security would never have happened.

At the same event at which Warren spoke, Sen. Cory Booker put in his own two cents when it came to the resistance of established financial firms to the “best interest standard” that the DOL has given life to. The New Jersey senator called the previous system that for so long “bilked” investors of their retirement saving “an assault on the ideals of this country.” Under the old rules, brokers only had to honor a level of ethical performance that was euphemistically called a “suitability standard,” and Republicans predictably complained that the Obama administration was trying to place “an undue burden” on finance professionals. Booker, like Warren, would have none of that. “We’re not surrendering to cynicism in this country,” he challenged. . .

Continue reading.

Good news is always a pleasure, and a kudos to Obama for this.

Written by LeisureGuy

23 April 2016 at 10:02 am

Stonewalled by NSA, Members of Congress Ask Really Basic Question Again

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Dan Froomkin writes in The Intercept:

A bipartisan group of lawmakers is none too happy that the executive branch is asking them to reauthorize two key surveillance programs next year without answering the single most important question about them.

The programs, authorized under Section 702 of the Foreign Intelligence Surveillance Act, are called PRISM and Upstream. PRISM collects hundreds of millions of internet communications of “targeted individuals” from providers such as Facebook, Yahoo and Skype. Upstream takes communications straight from the major U.S. Internet backbones run by telecommunication companies such as AT&T and Verizon and harvests data that involves selectors related to foreign targets.

But both programs, though nominally targeted at foreigners overseas, inevitably sweep us massive amounts of data involving innocent Americans.

The question is: How much? The government won’t answer.

Fourteen members of the House Judiciary Committee sent a letter to Director of National Intelligence James R. Clapper on Friday asking for at least a rough estimate.

“In order that we may properly evaluate these programs, we write to ask that you provide us with a public estimate of the number of communications or transactions involving United States persons subject to Section 702 surveillance on an annual basis,” said the letter. Signatories included ranking Democrat John Conyers Jr. and a senior Republican member, James Sensenbrenner.

Sen. Ron Wyden has asked for a number since 2011; the Privacy and Civil Liberties Oversight Board recommended in July 2014 that the government provide several. In October, more than 30 privacy groups asked for an estimate and explained how easy it would be to come up with one. . .

Continue reading.

NSA is refusing to answer because they know that Congress and the American public would be outraged by a true answer. It’s unclear why NSA doesn’t simply lie to Congress. James Clapper, Director of National Intelligence, quite deliberately lied outright to Congress and nothing happened.

Obama, of course, is determined to keep government operations as secret as possible—for example, Obama shows no concern about poor responses to FOIA requests. It’s quite obvious that NSA knows the answer, and if Obama wanted, NSA would answer.

Written by LeisureGuy

22 April 2016 at 1:11 pm

At long last, time-and-a-half for overtime is restored for millions

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Naturally the GOP does not like it. The GOP works hard to ensure that employees are paid as little as possible and receive as few benefits as possible. That’s one reason I’m a Democrat. Nick Hanauer and Robert Reich write in the NY Times:

THIS summer the Department of Labor is expected to introduce new rules to restore overtime pay to millions of Americans — rules that require no congressional approval. From the fearful protests coming from Republican leadership, you’d think the sky was falling. “This mandate on employers will hurt the lowest paid American workers the most, by reducing their opportunities for a promotion or a better job,” said Senator Lamar Alexander of Tennessee, the chairman of the Health, Education, Labor and Pensions Committee.

In fact, far from the right’s end-of-the-world, Chicken-Little economics, restoring time-and-a-half overtime pay would return to American workers a protection they long had, one that made them more secure and productive.

Half a century ago, overtime pay was the norm, with more than 60 percent of salaried employees qualifying. These are largely the sorts of office- and service-sector workers who never enjoyed the protection of union membership. But over the last 40 years the threshold has been allowed to steadily erode, so that only about 8 percent qualify today. If you feel as if you’re working longer hours for less money than your parents did, it’s probably because you are.

Today, if you’re salaried and earn more than $23,600 dollars a year, you don’t automatically qualify for overtime: That means every extra hour you work, you work free. Under the new proposed rules, everyone earning a salary of $50,440 a year or less would be eligible to collect time-and-a-half pay for every hour worked over 40 hours a week.

According to the Economic Policy Institute, it would give 13.5 million more workers a new or stronger right to overtime pay — substantially increasing both middle-class incomes and employment. It’s not as high as the $69,000 threshold it would take to return to 1975 levels, after adjusting for inflation, but it’s a courageous step in the right direction. It’s like a minimum wage hike for the middle class.

Everybody knows Americans are overworked. A 2014 Gallup poll found that salaried Americans now report working an average of 47 hours a week — not the supposedly standard 40 — while 18 percent report working more than 60 hours. And yet overtime pay has become such a rarity that many Americans don’t even realize that a majority of salaried workers were once eligible.

In a cruel twist, the longer and harder we work for the same wage, the fewer jobs there are for others, the higher unemployment goes and the more we weaken our own bargaining power. That helps explain why over the last 30 years, corporate profits have doubled from about 6 percent of gross domestic product to about 12 percent, while wages have fallen by almost exactly the same amount. The erosion of overtime and other labor protections is one of the main factors leading to worsening inequality. But a higher threshold would help reverse this trend.

Under the restored salary threshold, employers would have a choice: They could either pay you time-and-a-half for your extra hours worked, or they could hire more workers at the standard rate to fill your previously unpaid hours. The former would grow your paycheck. The latter would increase your leisure time while directly adding more jobs to the economy. Either would be great for workers and great for economic growth.

Lower- and middle-income workers don’t stash their earnings in offshore accounts the way high-paid chief executives do — the more the typical worker is paid, the more she spends on goods and services. When workers have more money, businesses have more customers; and when businesses have more customers, they hire more workers.

Whether through an increase in consumer demand or a reduction in unpaid hours, a higher overtime threshold would increase total employment, tightening the labor market and driving up real wages for the first time since the late 1990s.

Senate Republicans have introduced legislation to block the Department of Labor from implementing the new rule, arguing that it would hurt workers and employers. True, some businesses predicated on low wages and abusive scheduling practices may struggle to adapt. But the great thing about capitalism is that where one entrepreneur fails, another quickly figures out how to fill his niche. Adapting to new challenges is what successful businesspeople do.

When it comes to labor standards, Senator Alexander and his Republican colleagues always sing the same old trickle-down tune: . . .

Continue reading.

Written by LeisureGuy

21 April 2016 at 11:25 am

Saudi Arabia: Not one’s first choice, but perhaps a necessary evil

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You may have seen this report by Mark Mazzetti in the NY Times:

Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.

The Obama administration has lobbied Congress to block the bill’s passage, according to administration officials and congressional aides from both parties, and the Saudi threats have been the subject of intense discussions in recent weeks between lawmakers and officials from the State Department and the Pentagon. The officials have warned senators of diplomatic and economic fallout from the legislation.

Adel al-Jubeir, the Saudi foreign minister, delivered the kingdom’s message personally last month during a trip to Washington, telling lawmakers that Saudi Arabia would be forced to sell up to $750 billion in treasury securities and other assets in the United States before they could be in danger of being frozen by American courts.

Several outside economists are skeptical that the Saudis will follow through, saying that such a sell-off would be difficult to execute and would end up crippling the kingdom’s economy. But the threat is another sign of the escalating tensions between Saudi Arabia and the United States.

The administration, which argues that the legislation would put Americans at legal risk overseas, has been lobbying so intently against the bill that some lawmakers and families of Sept. 11 victims are infuriated. In their view, the Obama administration has consistently sided with the kingdom and has thwarted their efforts to learn what they believe to be the truth about the role some Saudi officials played in the terrorist plot.

“It’s stunning to think that our government would back the Saudis over its own citizens,” said Mindy Kleinberg, whose husband died in the World Trade Center on Sept. 11 and who is part of a group of victims’ family members pushing for the legislation. . .

Continue reading.

Later in the article:

. . . Saudi officials have long denied that the kingdom had any role in the Sept. 11 plot [19 men were involved, and 15 of them were from Saudi Arabia – LG], and the 9/11 Commission found “no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.” But critics have noted that the commission’s narrow wording left open the possibility that less senior officials or parts of the Saudi government could have played a role. Suspicions have lingered, partly because of the conclusions of a 2002 congressional inquiry into the attacks that cited some evidence that Saudi officials living in the United States at the time had a hand in the plot.

Those conclusions, contained in 28 pages of the report, still have not been released publicly.

The dispute comes as bipartisan criticism is growing in Congress about Washington’s alliance with Saudi Arabia, for decades a crucial American ally in the Middle East and half of a partnership that once received little scrutiny from lawmakers. Last week, two senators introduced a resolution that would put restrictions on American arms sales to Saudi Arabia, which have expanded during the Obama administration.

Families of the Sept. 11 victims have used the courts to try to hold members of the Saudi royal family, Saudi banks and charities liable because of what the plaintiffs charged was Saudi financial support for terrorism. These efforts have largely been stymied, in part because of a 1976 law that gives foreign nations some immunity from lawsuits in American courts.

The Senate bill is intended to make clear that the immunity given to foreign nations under the law should not apply in cases where nations are found culpable for terrorist attacks that kill Americans on United States soil. If the bill were to pass both houses of Congress and be signed by the president, it could clear a path for the role of the Saudi government to be examined in the Sept. 11 lawsuits. . .

Sounds an awful lot like extortion, doesn’t it? “Nice American assets there, don’t you think? Be a shame if anything happened to them.”

And yet, as Kevin Drum points out, alternatives might well be worse.

Written by LeisureGuy

16 April 2016 at 3:17 pm

How the Maker of TurboTax Fought Free, Simple Tax Filing

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While the government’s mission is to improve the general welfare, the mission of a corporation is to make (and increase) profits, regardless the general welfare, which leads to toxic waste sites, fierce opposition to improvements that might damage profits, and a general attitude of narrow self-interest, which is as repellent as it sounds.

Liz Day reports in ProPublica:

Update, April 14, 2016: In 2013, we detailed how Intuit has lobbied against allowing the government to estimate your taxes for you. So this week, we called Intuit and asked if they still oppose free, government-prepared returns. The answer: Yes. “Our legislative, our policy position on that hasn’t changed,” said spokeswoman Julie Miller. She called Intuit “a staunch opponent to government prepared tax returns.” Meanwhile, Massachusetts Sen. Elizabeth Warren proposed a bill yesterday to allow free government-prepped returns. Her office also released a report on the tax industry’s opposition to simpler filing solutions. It cited the article below as well as another story we did on how a rabbi, civil rights activist, and others were misled into supporting Intuit’s campaign.

This story was co-produced with NPR.

Imagine filing your income taxes in five minutes — and for free. You’d open up a pre-filled return, see what the government thinks you owe, make any needed changes and be done. The miserable annual IRS shuffle, gone.

It’s already a reality in Denmark, Sweden and Spain. The government-prepared return would estimate your taxes using information your employer and bank already send it. Advocates say tens of millions of taxpayers could use such a system each year, saving them a collective $2 billion and 225 million hours in prep costs and time, according to one estimate.

The idea, known as “return-free filing,” would be a voluntary alternative to hiring a tax preparer or using commercial tax software. The concept has been around for decades and has been endorsed by both President Ronald Reagan and a campaigning PresidentObama.

“This is not some pie-in-the-sky that’s never been done before,” said William Gale, co-director of the Urban-Brookings Tax Policy Center. “It’s doable, feasible, implementable, and at a relatively low cost.”

So why hasn’t it become a reality?

Well, for one thing, it doesn’t help that it’s been opposed for years by the company behind the most popular consumer tax software — Intuit, maker of TurboTax. Conservative tax activist Grover Norquist and an influential computer industry group also have fought return-free filing.

Intuit has spent about $11.5 million on federal lobbying in the past five years — more than Apple or Amazon. Although the lobbying spans a range of issues, Intuit’s disclosurespointedly note that the company “opposes IRS government tax preparation.”

The disclosures show that Intuit as recently as 2011 lobbied on two bills, both of which died, that would have allowed many taxpayers to file pre-filled returns for free. The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which includes the IRS, from initiating return-free filing. . .

Continue reading.

Written by LeisureGuy

15 April 2016 at 2:20 pm

How the tax-prep industry works to keep the government from simplifying tax forms

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This is worth reading (PDF), and thank God for Senator Elizabeth Warren. Sometimes it seems as if most of Congress is totally focused on doing what businesses tell them to do. Sen. Warren offers a sharp contrast, fighting on behalf of the public, not corporations.  The Executive Summary:

This tax season, Americans will spend billions of dollars and countless hours preparing and filing their annual returns. Taxpayers will spend, on average, 13 hours preparing and filing their returns, and will pay $200 for tax preparation services—a cost equal to almost 10% of the average federal tax refund.1 And no hourly or monetary value can measure the anxiety that taxpayers feel as the April filing deadline looms.2

But tax filing could work far more smoothly for millions of people. In 1998, a Republican Congress passed—and Democratic President Bill Clinton signed—the IRS Restructuring and Reform Act, which required the Treasury Department to develop, by 2008, procedures for the implementation of a “return-free” filing system that would compute an individual’s tax liability by using information already reported to the IRS each year. Such a system would save taxpayers time and money, and would result in more accurate tax returns.3 For many taxpayers, it would take minutes instead of hours to complete their taxes.

But almost a decade after the law’s required 2008 implementation date, the Treasury Department has failed to fulfill its legal obligation to establish procedures for return-free filing. Sen. Warren requested that her staff determine why. This report finds that:

Despite its legal obligations, the IRS has surrendered to industry pressure and other efforts to block access to free and accurate return-free tax filing. Instead of implementing the return-free filing requirements in the 1998 IRS Restructuring and Reform Act, the IRS has time and again acquiesced to industry demands that it avoid developing return-free filing options. The agency has repeatedly yielded to industry demands to administer the “Free File” Program—a public-private partnership between the IRS and the tax preparation industry that offers low-income taxpayers free, industry-prepared electronic tax preparation services. The tax preparationindustry exerts powerful influence over the design and administration of this program; year after year, the IRS has signed Free File agreements with these tax preparation companies, in which the IRS pledges to “not compete…in providing free, online tax return preparation and filing services to taxpayers”— despite the fact that current law requires the Treasury to develop programs to do exactly that.4 The tax preparation industry-run Free File program has failed. It is currently used by only 3% of eligible filers and is described as a “maze of offerings” that can trick taxpayers into purchasing unnecessary products.5 Furthermore, the IRS has failed to implement commonsense tax simplification programs, like the Real Time Tax Initiative, instead bowing to industry complaints that such efforts would be precursors to return-free filing, which the industry opposes.

The tax preparation industry has vehemently opposed return-free filing. Rather than sift through a complex tax code on their own, the majority of Americans hire tax professionals, or use tax preparation software, to prepare their returns. The tax-filing burden is an essential part of the tax preparation industry’s business model, and the industry sees returnfree filing as a fundamental threat to its operations. As a result, the industry has devised numerous ways to oppose a returnfree filing system, spending millions of dollars lobbying Congress against return-free filing and mounting fake “grassroots” campaigns against return-free filing.

While some simplification approaches would be consistent with their goals, antitax groups have nevertheless also opposed return-free filing. Anti-tax groups frequently raise concerns about the complexity of the tax code and the substantial burdens imposed by the current tax filing process: the mission of Americans for Tax Reform, for example, includes creating “a system in which taxes are simpler,” while the National Taxpayers Union rails against the “over 6 billion hours each year for individuals and businesses to comply with the Code.”6 A voluntary return-free filing program would address these concerns, simplifying filing, strengthening taxpayers’ right to know the information the IRS had received on them from third parties, and substantially enhancing taxpayer freedom to choose how to file their taxes. But the same anti-tax groups that champion a simpler tax system have worked closely with the tax preparation industry to oppose free filing.

Return-free filing offers the chance to make tax filing for Americans significantly cheaper, faster and more accurate. But this report finds that vehement and longstanding opposition by the tax preparation industry and anti-tax groups has prevented the IRS from meeting its statutory requirement to develop procedures for return-free filing and has denied American taxpayers the many benefits of this system.

Written by LeisureGuy

14 April 2016 at 12:55 pm

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