Tax Avoidance by the Wealthy on the Rise: It’s Twice the Amount of Social Security and Medicare

Three trillion dollars a year—that's how much the wealthiest Americans avoid through the system of subsidies and schemes and sweet deals that deprive middle-class workers of their earned benefits. That's three times more than the deficit. That's enough for a full-time job for every middle-class household in America. Here are the distressing details:
1.       Tax Expenditures: $1.25 trillion
These subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes are estimated to be worth 7.4 percent of the GDP or about $1.1 trillion. They largely benefit the richest taxpayers. Business subsidies bring the total to $1.25 trillion.
That alone is almost enough to pay for Social Security ($884 billion) and Medicare ($524 billion).
But there's so much more.
2.       Tax Underpayments: $450 billion

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According to the IRS, 17 percent of taxes owed were not paid in 2006, leaving an underpayment of $450 billion. The largest share of that came from underreporting of income.  3. Tax Havens: up to $250 billion
(a) It's estimated that between $21 and $32 trillion is hidden offshore, untaxed.(b) 40 percent of the world's richest individuals are Americans. That's $8 to $12 trillion of the total.(c) The historical annual stock market return is 6 percent. That's a return of $480 to $720 billion.(d) The 20 percent to 35 percent tax loss amounts to a minimum of $96 billion, a maximum of $252 billion.

4. Corporate Taxes: $250 billion  For over 20 years, from 1987 to 2008, corporations paid an average of 22.5 percent in federal taxes. Since the recession, this has dropped to 10 percent—even though their profits have doubled in less than ten years. The missing 12.5 percent on $2 trillion in profits amounts to $250 billion a year.
5. Financial Transaction Tax (FTT): $500 billion
The absence of an FTT constitutes tax avoidance. Not a penny of sales tax is paid on U.S. financial transactions, which have been estimated at about three quadrillion dollars annually, or three thousand times the deficit. No sales tax is paid despite the high-risk nature of "flash trading" that can lose entire pension funds in a few seconds.
Just a half penny from every dollar of total U.S. financial transactions would pay off the national debt—not just the deficit, but the whole $15 trillion debt. More conservative estimates by the Center for Economic and Policy Research and the Chicago Political Economy Group suggest FTT revenues of half-trillion dollars annually.
6. Payroll Tax: $300 billion
This extremely regressive tax costs the richest Americans only a small fraction of what everyone else pays. If the12.4 percent tax (half employer, half employee) were assessed on the full $3.84 trillion claimed by the richest 10% in 2006 (instead of on $1.43 trillion: $110,000 times 13 million payees), an additional $300 billion in revenue would have been realized.
7. Estate Tax: $100 billion
A repeal of the estate tax, which is designed to impact only the tiny percentage of Americans with multi-million dollar estates that have never been taxed, would cost the nation about $100 billion per year.
Conclusion
The total surpasses $3 trillion. The figures may be on the high end, and there may be some overlap, and wealthy Americans may argue that much of it is legal. But the system of loopholes and deductions and exclusions is a statement by the rich that they don't have to pay for their lopsided share of benefits, and that middle-income Americans should give up their own earned benefits to pay the country's bills.
And if tax avoidance is legal it's because the people with money have redefined 'legal.'

Sterling faces destructive 'triple cocktail' in 2013 – HSBC

Sterling will weaken this year as Britain faces a potentially testing triple cocktail of destructive factors, says HSBC.

"The pound's fiscal credibility is under threat as a sovereign downgrade looms," the bank said in its 2013 HSBC View published on Monday.

Alongside that, the bank says austerity is now kicking in at a time when the MPC appears less activist which could see a 'what's wrong with a weaker currency' attitude prevail.

And the UK's failings will start to "grab attention" as the US steps back from the fiscal cliff, momentum grows in China, and eurozone break-up fears diminish.

"The pound looks set to lose the contest of the uglies," the HSBC report said, as its "frailties emerge from the shadows".

HSBC forecasts the pound will be trading around $1.52 against the US dollar by the end of the year, down 5pc from $1.60 at present.

While a falling currency will help boost exports and is good for big British companies that do most of their business abroad, it increases the cost of imports and makes holidays abroad more expensive.
HSBC expects to see big swings up and down for shares this year but ultimately eking out a decent return of around 15pc, against 5pc-6pc in fixed income.
Like other fund managers and economists, the bank believes that investor who have piled into bonds over the past four years, could switch to shares in search of higher returns.
"Investors now are paid very little for owning bonds: 10-year US inflation-protected securities now yield -0.8%, and credit spreads are at their lowest level since 2007. As equity volatility continues to fall, we think investors will slowly appreciate again the merits of equities." HSBC said.
This view is echoed by a number of large fund managers such as Fidelity, Black Rock, and Goldman Sachs Asset Management who have seen signs that investors could start to switch from high priced “safe haven” assets into shares.
Equity strategists at Investec expect Britain's FTSE 100 index of leading shares to end the year up nearly 10pc at 6,650 as investor dump bonds for equities.
"We are particularly bullish on dividend yielding stocks. Growth stocks should also benefit from a sustained negative real interest rate environment as a lower discount is applied to the longer-dated cash flows of such stocks, " said Andrew Fitchie and Roger Cursley.
From a macro perspective, Investec foresees sustainable growth from the US and a more encouraging turn in economic momentum in China will buoy stock markets. They expect no sudden rebound in the "chronically ill" eurozone.
The UK is a "mixed picture but on balance, recent data indicates very modest, but nonetheless positive, momentum in the economy".
"Amid talk of a 'triple dip' recession, we see an economy that has been bumping along around 0pc growth (plus or minus a little) as fiscal tightening and spending cuts have played a tug-of-war with quantitative easing. Of late, we see some encouraging signals.
"There have been some positive indications from housing market transactions and the consumer picture has been better than expected. No one is pretending it will be an easy road ahead. However, momentum, whilst slow, in our opinion, is positive for the UK in 2013."
Investec forecasts GDP growth on 1.5pc in 2013 and 2.2pc in 2014, up from -0.1pc in 2012. It also predicts a weakening of the pound against the dollar.
Investec is positive about the prospect for consumer goods. In financials, it sees real estate benefiting from the flow of funds into equities.
However, the analysts are neutral on banks – "The sharp rebound in the shares during the second half of 2012 has eliminated much of the upside and continuing low interest rates are not conducive to earnings upgrades".
They are bearish on oil and gas producers, but see growth in companies supplying oil equipment and services. Other sectors regarded as out of favour are retailers, particularly food, and mobile telecom’s "given structural challenges".
The FTSE 100, which was trading down 25 points or 0.4pc on Monday afternoon, is up just under 3pc in the first few days of trading in the New Year. The index rose 5.8pc last year.

The Truth About the Fiscal Cliff

Foreign Direct Investment by China in the US hits record level

Help, we’ll be brainwashed by subversive movies any minute now

Chinese foreign direct investment in the United States hit record levels in 2012 and shows little sign of slowing, despite lingering worries among some that the inflow of Chinese money presents a growing security risk to the country.
Chinese companies concluded deals worth $6.5 billion in 2012, an increase of 12 percent from the record $5.8 billion in 2010, according to a new report by New York-based Rhodium Group, which tracks Chinese FDI…

The most appealing US sectors to Chinese investors were oil and gas exploration, advanced manufacturing that helps Chinese firms move up the value chain, and assets that allow investors to gain solid returns such as utilities, real estate and hospitality, according to the report.
Headlining the year’s activities were Dalian Wanda Group’s $2.6 billion acquisition of AMC Entertainment, the second largest US theater operator, Sinopec Corp’s $2.5 billion investment in a third of Devon Energy’s five shale gas assets in the US, and auto parts maker Wanxiang Group’s $420 million investment in GreatPoint Energy, a company based in Cambridge, Massachusetts, that converts coal into cleaner-burning natural gas.

Meanwhile, a number of major Chinese FDI deals are still awaiting regulatory approval in the US, signaling that the growth is expected to continue into 2013.
For example, a group of Chinese investors has agreed to buy an 80.1 percent stake in American International Group’s aircraft leasing unit for $4.2 billion, and Wanxiang has already been announced as the winner of a bid for battery producer A123 Systems, in a bankruptcy auction.
The Rhodium report highlights that the fast-growing Chinese FDI was in fact one of the few bright spots in a gloomy year for the US economy, which has seen overall global FDI decline sharply since 2009 and the outbreak of global financial crisis.

Reflect upon the two-faced hacks who complain, first, about Chinese investors “taking profits from the United States without investing in our economy” – and, then, run whining to Homeland Security whenever investors from China make an offer to buy into any American corporation – pissing their pants over Cold War security concerns.

Large Cities All Over America Are Degenerating Into Gang-Infested War Zones

Michael Snyder, Contributor
Activist Post

Large U.S. cities that the rest of the world used to look at in envy are now being transformed into gang-infested hellholes with skyrocketing crime rates.  Cities such as Chicago, Detroit, Camden, East St. Louis, New Orleans and Oakland were once bustling with economic activity, but as industry has fled those communities poverty has exploded and so has criminal activity.

Meanwhile, financial problems have caused all of those cities to significantly reduce their police forces.  Sadly, this same pattern is being repeated in hundreds of communities all over the nation.  The mainstream media loves to focus on mass shooters such as Adam Lanza, but the reality is that gang violence is a far greater problem in the United States than mass shooters ever will be.  There are approximately 1.4 million gang members living in America today according to the FBI.  That number has shot up by a whopping 40 percent just since 2009.

There are several factors fueling this trend.  Unemployment among our young people is at an epidemic level, about one out of every three U.S. children lives in a home without a father, and there are millions of young men who have come into this country illegally and have no way to legally support themselves once they arrive in our cities.  Gangs provide a support system, a feeling of "community", and a sense of purpose for many young people.  Unfortunately, most of these gangs use violence and crime to achieve their goals, and they are taking over communities throughout America.

If your community is not a gang-infested war zone yet, you should consider yourself to be very fortunate.  If nothing is done about this, the violence and the crime that is fueled by these gangs will continue to spread, and eventually nearly every single community in the United States will be affected by it.

Let's take a closer look at some of the large cities all over America that are degenerating into gang-infested war zones...
 East St. Louis

East St. Louis has a national reputation for being a city that you want to avoid.  The following is from a recent Bloomberg article about the growing crime in that community...

Dodging open manholes where thieves had swiped cast-iron covers, Stephen Wigginton drives the crumbling streets of his hometown, East St. Louis, Illinois, pointing out new landmarks in America’s most violent city.

There’s the shopping mall where a police officer was shot in the face, a youth center that saw a triple homicide in September, and scattered about the city of 27,000 are brightly lit gas stations that serve as magnets for carjackers, hit-and-run robbers and killers.

“It’s the Wild West,” said Wigginton, the U.S. attorney for the Southern District of Illinois.

Today, the murder rate in East St. Louis is 17 times higher than the national average, but financial problems have forced huge cuts to the police budget.  The number of police patrolling the streets of East St. Louis was reduced by 33 percent between 2008 and 2011.  Police in the city admit that they are outgunned and outmanned, but there is not much that can be done about it.

Camden

 Camden, New Jersey is another city that has experienced huge cuts to the police budget.  Their police force shrank by about a third between 2008 and 2011.  Today, Camden is considered to be one of the most dangerous cities in America and it has a murder rate that is about ten times higher than New York City.

The gangs have a very strong hold over Camden, and kids kill kids on a regular basis in the city.  The following is a brief excerpt from a recent article about the horrible violence that is plaguing Camden…

At the vigil last week, residents prayed that Camden would simply find peace and that the masked gunman who killed Jewel Manire and Khalil Gibson would be caught.

As it grew darker, Michael Benjamin stood toward the back of the crowd, his son huddled even closer now, and shook his head.

'I’ve known at least 45 kids who’ve been killed in my lifetime,' he said, the boy holding his finger. 'I stopped counting in 2004, though.'

Chicago

In recent years there have been massive cuts to the police budget in Chicago due to financial difficulties.  At the same time, gang activity has dramatically increased in the city.

As a result, Chicago has become known for murders and violence.  The murder rate in Chicago was about 17 percent higher in 2012 than it was in 2011, and Chicago is now considered to be "the deadliest global city".

If you can believe it, the number of murders in Chicago during 2012 was roughly equivalent to the number of murders in the entire country of Japan during 2012.

And the primary reason for all of this violence in Chicago is the gangs.  As I have written about previously, there are only about 200 police officers assigned to Chicago's Gang Enforcement Unit.  It is their job to handle the estimated 100,000 gang members living in the city.

Approximately 80 percent of all murders and shootings in the city of Chicago are gang-related, and as the gangs continue to grow in size the violence in the city is going to get even worse.  If Barack Obama wants to do something about violence in America, perhaps he should start with his home city.

Detroit

I write a lot about Detroit, but that is because they are a perfect example of where the rest of America is headed if something dramatic is not done.

 Detroit used to be one of the greatest manufacturing cities the world has ever seen, but over the past several decades the economic infrastructure of Detroit has been gutted and now there is very little industry left in the city.

Over half the children in the city live in poverty and a sense of hopelessness hangs in the air.  At the same time, financial problems have forced the city to lay off huge numbers of cops.  Back in 2005, there were about 4,000 police officers in Detroit.  Today there are only about 2,500 and another 100 are scheduled to be eliminated from the force soon.

Meanwhile, crime in Detroit just continues to get even worse.  There were 377 homicides in Detroit in 2011.  In 2012, that number rose to 411.

Things have gotten so bad that even even the Detroit police are telling people to "enter Detroit at your own risk".

New Orleans

New Orleans was a crime-infested city even before Hurricane Katrina hit it in 2005, but life has never quite been the same since that time.

The gangs have a very strong presence in the city, and there simply are not enough financial resources to keep crime in check.

If New Orleans was considered to be a separate nation, it would have the 2nd highest murder rate on the entire planet.  There are some areas of New Orleans that you simply do not ever want to venture into at night.

Meanwhile, the police force has been such a mess in recent years that the federal government finally decided to step in.  It is hoped that the "reforms" will mean less crime in New Orleans in future years, but I wouldn't count on it.

Oakland

 Today, there are 626 police officers in Oakland, California.  That is about a 25 percent decline from the 837 police officers that were patrolling the streets of Oakland back in December 2008.

Predictably, criminals have stepped in and have taken advantage of the situation.  At one point in 2012, burglaries in the city of Oakland were up 43 percent over the previous year.

If you can believe it, more than 11,000 homes, cars and businesses were burglarized in Oakland during 2012.  That breaks down to approximately 33 burglaries a day.

Stockton

Police cuts in the city of Stockton, California have been so severe that the Stockton Police Officers' Association ran a billboard advertisement with the following message at one point: "Welcome to the 2nd most dangerous city in California: Stop laying off cops!"

At the same time, crime in Stockton continues to get even worse.  there have been more than 250 gold chain robberies in Stockton since the month of April, and there is no indication that crime in the city is going to slow down any time soon.

So what is the solution?

Should we have everyone turn in their guns?

No, that would just make the problem even worse.  The gangs aren't going to turn in their guns.  The only people who would turn in their guns would be law-abiding citizens.  That would just make them even more vulnerable to the violence and crime that are starting to spread like wildfire all over the nation.

We don't have a gun problem in America.  What we have is a gang problem.

In 2006, the Justice Department’s National Drug Intelligence Center reported that Mexican drug cartels were actively operating in 50 different U.S. cities.  By 2010, that number had risen to 1,286.
Many of these gang members run up long criminal records, but our overcrowded prison systems just keep releasing them back into the streets.  The results of this philosophy have been predictable.  The following is from a recent article by Daniel Greenfield...

A breakdown of the Chicago killing fields shows that 83% of those murdered in Chicago last year had criminal records. In Philly, it’s 75%. In Milwaukee it’s 77% percent. In New Orleans, it’s 64%. In Baltimore, it’s 91%. Many were felons who had served time. And as many as 80% of the homicides were gang related.

Chicago’s problem isn’t guns; it’s gangs. Gun control efforts in Chicago or any other major city are doomed because gangs represent organized crime networks which stretch down to Mexico, and trying to cut off their gun supply will be as effective as trying to cut off their drug supply.

This is not a time to take away the ability of law-abiding American families to defend themselves.  Instead, people need to put even more emphasis on self-defense as police forces all over the country are cut back.

 ust recently, the city attorney of San Bernardino, California told citizens living there to "lock their doors and load their guns" because the police force in that city is being cut back again.

And that is good advice.  As the economy continues to decline and as millions more Americans fall into poverty, the violence is going to get even worse.

What would you do if a desperate criminal broke into your house and started searching through your home room by room?  That is the horrifying situation that one young mother down in Georgia was recently faced with...

She quickly retreated to an attic crawlspace with the children, but not before she also picked up her handgun.

The burglar, whom police identified as Paul Ali Slater, did a room-by-room search of the home, and when he reached the attic, she was ready.

Walton County Sheriff Joe Chapman told WSBTV: 'The perpetrator opens that door. Of course, at that time he’s staring at her, her two children and a .38 revolver.'

She reportedly fired all six rounds, missing only once. The other shots hit Slater about the face and neck.

Sheriff Chapman told the Atlanta Journal-Constitution: 'The guy’s face down, crying. The woman told him to stay down or she’d shoot again.'

What would have happened if she had not had any way to defend herself and her children?
That is something that we all need to think about.

For the last couple of decades, we have been fortunate to live in an era of falling crime rates.  Unfortunately, that era is now over.  Large cities all over the country are degenerating into gang-infested war zones, and what we are seeing right now is just the tip of the iceberg.

After the economy collapses, millions of people are going to become incredibly desperate and things are going to get much, much worse than this.

So what are you seeing in your area of the country?  Please feel free to leave a comment with your thoughts below...

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

House GOP seeks to abolish IRS, replace income tax with consumption tax

Fifty-four House Republicans on Thursday reintroduced legislation that would terminate the IRS and replace the system of income taxes on people and corporations with a consumption tax.
The FairTax Act, from Rep. Rob Woodall (R-Ga.), would abolish the 16th Amendment, which was ratified 100 years ago this February. That amendment gives Congress the power to impose income taxes without having to spend the revenues evenly among the states.
Woodall's bill, H.R. 25, would replace the current tax system with a 23 percent consumption tax on all new goods and services. He said Thursday that this change would eliminate the need for a complicated tax code, and would be the kind of tax reform that helps reinvigorate the economy.
Read more: http://thehill.com/blogs/floor-action/house/275697-house-gop...

Flashback: Obama Bailout Funds Went To MSNBC

Jia Lynn Yang, Neil Irwin and David S. Hilzenrath
Washington Post
Thursday, December 2, 2010
Wikipedia: NBC Universal was formed in May 2004 by the merger of General Electric’s NBC with Vivendi’s Vivendi Universal Entertainment.[5][6] General Electric (GE) owns 80% of NBC Universal with the remaining 20% owned by Vivendi.
The financial crisis stretched even farther across the economy than many had realized, as new disclosures show the Federal Reserve rushed trillions of dollars in emergency aid not just to Wall Street but also to motorcycle makers, telecom firms and foreign-owned banks in 2008 and 2009.
The Fed’s efforts to prop up the financial sector reached across a broad spectrum of the economy, benefiting stalwarts of American industry including General Electric and Caterpillar and household-name companies such as Verizon, Harley-Davidson and Toyota. The central bank’s aid programs also supported U.S. subsidiaries of banks based in East Asia, Europe and Canada while rescuing money-market mutual funds held by millions of Americans.
The biggest users of the Fed lending programs were some of the world’s largest banks, including Citigroup, Bank of America, Goldman Sachs, Swiss-based UBS and Britain’s Barclays, according to more than 21,000 loan records released Wednesday under new financial regulatory legislation.The data reveal banks turning to the Fed for help almost daily in the fall of 2008 as the central bank lowered lending standards and extended relief to all kinds of institutions it had never assisted before.
Full story here.