Friday, July 20, 2012

US Government Can't Tax Its Own Super-rich

Hayes: We Are No Longer Able To Tax The Very Rich In Our Country

Chris Hayes, MSNBC commentator, live on cable, July 19, 2012

"Look, the taxes of high -- of extremely wealthy people are bizarre, strange and alienating," MSNBC's Chris Hayes said on "The Last Word" tonight. "And the reason is that they pay people a lot of money to game the system. That's explicitly what it is. And the more of that you see -- literally if you chose someone with Mitt Romney's net worth at random and looked at their tax returns, they would look crazy. You wouldn't be able to understand them. They would have all sort of bizarrely constituted corporations incorporated in the Cayman Islands. They might have a Swiss bank account to bet against the dollar. They would have all these things."

"What's so remarkable to me about the story is that the embarrassment here isn't personal," Hayes observed. "The embarrassment is about what this says about how the entire system functions. This is how the system functions.

We no longer have the ability in this country to really tax people at the top.

And that is the existential statement about the strength of the American state which is: Can you actually tax the wealthiest people in your society? If you can't, if you can't like Greece couldn't, we see how that goes."

"Societies that are in decline or low on the development index have a very hard time extracting money, taxing money from the elites in their society. And that is the direction which we are headed and that is what is represented in the Mitt Romney tax return," he concluded.

"Okay, that is an officially brilliant observation about what's going on here and what's at stake," host Lawrence O'Donnell said.


-- link for all of the above is:
[a liberal blog site which included a transcription of the cable tv editorial]

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Critical Comment by the Blog Author

I'm a retired certified public accountant and an expert on federal taxation research. I used to work for a very large nonprofit organization that intentionally set up a subordinate financial division in Bermuda.

If I were preparing Willard Romney's tax return, I would advise him to spin off money offshore to protect himself. It would be incompetent not to do so, considering a prime need to protect capital.

The seminal events that make it impossible to tax the very rich were created by liberals as part of following their inflexible ideology. To wit:

In 1976 the US began running incessant trade deficits. Jimmy Carter was elected. He set up a "Department of Energy." One of their first tasks was to prepare a white paper on how to use nuclear power to cook coal into synthetic gas, synthetic diesel and synthetic natural gas. It only took a few months to prepare the report (which is still on line today). Nothing was done. The central function of the Energy Department was to achieve energy independence. It still hasn't happened. Reagan wisely wanted to burn down the Department of Energy. Democrats blocked that. The energy industry watched this closely and correctly guessed that the department would be around forever and could be politicized. So the agency has become in the long run a huge roadblock to keep energy right where it is. It takes forever to get anything approved. The status quo is still the status quo. And this means that the energy trade deficit continues and grows decade by decade -- which is half the entire trade deficit.

In 1980 Jimmy Carter came up with another liberal, one-world, peacemaking idea: let's give "most favored nation status" to Red China. They still execute their own citizens in public at rural town meetings, they still don't allow any personal rights, but, hey, the cold war is still going on, they set up a two-against-one ploy to raise hell with the Kremlin, and it looks peppy and progressive going into Carter's reelection campaign in 1980. So we made a huge trade deal with a government that has killed more of its own people in peacetime than any other government, anywhere, at any time in recorded history. And their dirt cheap labor was able to produce mediocre goods that could be sold very cheaply in the United States. The Middle Class is being hollowed out, and the trade deficit has skyrocketed.

So liberals have given us an unmanageable trade deficit. Once the middle class reached a tipping point (late in 2008), a manufactured derivatives crisis (created on a bi-partisan basis late in the Clinton administration) led to huge federal deficits. Why? Why such large deficits? Because TAX RECEIPTS HAVE COLLAPSED, cash coming in from the middle class and small businesses.

We now have a liberal president who will not touch, won't even freeze, entitlements. He borrows from abroad. He runs the printing press. He postures. He risks hyper-inflation (the most inhumane course of action for the poor, disabled and underprivileged). He takes risks to keep recessions on other continents like Europe from "spreading" and doesn't tell the public what deals are being made.

Suppose a rich guy comes to me, a pro, and asks me for tax advice. I tell him to protect capital, to isolate some of it overseas in countries with strong currency like Switzerland. I tell him not to worry much about being hassled by the IRS or Treasury -- because -- the USA is so deeply in debt to overseas bondholders that it dare not interfere with international money transfers and thus spook the central banks holding American government bonds, let alone the rich and the multi-nationals.

So, my liberal friends: Having created a stagnant economy in which our nation is no longer in charge of its own financial destiny, you've forced the rich to bend the rules. And none of you have any idea at all about how to correct the tax problem -- which is the collapse of middle class tax REVENUE. Overtaxing the rich won't raise enough money to dent these deficits. Reelecting Obama risks hyperinflation.  Have you thought about raising the Medicare payroll tax to at least cover yearly expenses on a cash basis?

Maybe we should put Romney in for four years and fire him in one term if he can't fix it? Independent voters like me are starting to think that way.... since the liberals are so detached from reality and from problems they created and lovingly incubated.

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