There's A Hidden 9 In Herman Cain's 9-9-9 Plan

From Peter Schiff of Asia-Pacific capital

SOUNDS GOOD, BUT WAIT, There is something hidden behind all those 9's...

Theres A Hidden 9 In Herman Cains 9-9-9 Plan

http://www.businessinsider.com/theres-a-hidden-9-in-herman-cains-9-9-9-plan-2011-10

October 18, 2011

Herman Cain has been gaining much traction with his 9-9-9 Plan, a bold proposal to replace our dysfunctional tax code with what could be a simpler, less invasive, and more economically stimulative alternative.

While I don't agree with the full spectrum of Mr. Cain's policy choices, I applaud his courage on the tax front.

Judging by his rising poll numbers, this appreciation is widely shared.

However, the plan has deep flaws, the most glaring of which is its creation of a hidden payroll tax which represents a fourth "nine." This serious pitfall has been unmentioned by Mr. Cain and overlooked by those who have analyzed his plan.

Cain would replace the current system of income and payroll taxes with a 9% flat-rate personal income tax, a 9% corporate tax, and a 9% national sales tax. Great idea. Such a system would unburden businesses, provide a tax cut for most Americans, and shift taxation to consumption and away from income generation. \
This is exactly what our economy needs. But unlike our current corporate tax system, the plan eliminates the deductibility of wages and salaries from corporate income. The net effect is the creation of a brand new 9% tax on wages. When this fourth 9 falls from Cain's sleeve, many of his opponents will likely accuse him of cheating.
Much of the plan's virtue lies in its elimination of Social Security and Medicare taxes (payroll taxes) that fall heaviest on lower income workers. This includes the 6.2% Social Security tax and the 1.5% Medicare tax paid directly by the worker. But it also includes the 6.2% and 1.5% portions paid indirectly by workers through their employers. Payroll taxes are, in reality, a cost of employment.
From the employer's perspective these costs are part of the wage package. Absent these taxes, employers could raise wages by an equivalent amount without raising labor costs. Inclusive of this portion, payroll taxes currently cost workers 15.4% of their wages.

The Cain plan scraps this tax. But the elimination of wage deductibility from corporate taxes replaces it with a 9% payroll tax. Therefore a more honest name for Cain's proposal is the 9-9-9-9 plan. The forth nine changes everything.

Cain admits that the 9% sales tax would fall heaviest on the poor, but he claims that the elimination of the payroll tax would more than compensate. But when the hidden 9% payroll tax is factored in, more than 50% of workers who currently pay an average income tax rate of just 3% would see a huge tax hike, from 18.4% (former payroll tax plus income tax) to 27%: 9% payroll tax, 9% income tax and 9% consumption tax (poorer workers generally spend all their income).

On the other hand, high income tax payers get a huge break. Not counting the consumption tax, the 9-9-9 plan reduces the highest marginal tax rate from 38% (35% income tax and 3% payroll tax - on income over $105,000) to just 18% (9% income tax plus 9% payroll).

For the self-employed, who can transform their wages into dividends (that are deductible business expenses under the 9-9-9 plan), the rate would fall to just 9% (all income tax, no payroll or business tax). Of course, in either case, the 9% sales tax will apply to spending, but even if 100% of earnings are spent (which is generally not true of high earners) the top rate would still top out at only 27% for the highest salaried employees and just 18% for the self-employed. In essence, tax cuts for the rich are paid for with tax hikes on the poor and middle class. If these aspects were widely known the plan would become a political dead letter.

Even with its flaws, the 9-9-9-9 plan would create an economic windfall by lowering the top corporate rate to 9% from 50% (35% at the corporate level and 15% on dividends taxed at the individual level), and simplifying the tax code to reduce unnecessary compliance costs and the economically inefficient behavior that is created by perverse tax incentives.

These changes alone will make America far more globally competitive. Also by taxing individuals based more on what they spend rather than on what they earn, the plan will encourage more savings (which is a key ingredient for economic growth). As a result, the economy will grow faster, generate greater output of goods and services, and create more jobs.

The problem for Herman Cain is that unless he slashes government expenditures, his pro-growth tax structure will inevitably shift more of the tax burden to low and moderate-income people. The only way to combine tax reform with tax reductions for most taxpayers is to shrink government to a more manageable scale.

The size of the tax increases required to keep Cain's 9-9-9-9 plan revenue neutral demonstrates just how high a percentage of our current taxes are being paid by affluent taxpayers. Couples making more than $250,000 and individuals making more than $125,000 only constitute about 3% of taxpayers but pay almost half of all taxes. Any policy that cuts their taxes will inflict a disproportional hit on government revenue.

Contrary to the rhetoric emanating from the American left, the "rich" are currently paying a lot more than "their fair share." It is only a handful of mega-rich, those whose entire incomes are derived from dividends and capital gains, rather than salaries or business profits, who have the ability to pay lower tax rates than some members of the middle class. The left knows this but continues to build their "free loading millionaire" straw man because it makes good politics.

In the final analysis, if Cain really wants a 9-9-9 plan that doesn't raise taxes he needs to remove the hidden 9% payroll tax. However, the only way this could be done, without blowing an even bigger hole in the federal deficit, is to combine his plan with significant spending cuts. If he can pull that off, three nines may be a winning hand after all.

There's A Hidden 9 In Herman Cain's 9-9-9 Plan

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Nine things that 9-9-9 and the 'Other 99' have in common - By David Rothkopf | David Rothkopf

Nine things that 9-9-9 and the 'Other 99' have in common

Posted By David Rothkopf

Monday, October 17, 2011 - 11:58 AM

Little could seem so remote from one another than the 9-9-9 tax reform plan of Herman Cain and the chants of the "other 99 percent" as they occupy Wall Street. One is the politically motivated brain-child of a millionaire businessman while the other is a product of the barely contained anger of young people frustrated by the corruption and inequity inherent in the global politics and business today. Yet these two movements are actually linked together in more ways than you might think, nine to be exact:
1.) Both are products of the politics of alienation. Vast majorities on the right and left feel that the system is no long the means by which we fix our problems -- it is the problem. They feel that politicians and Wall Street and big business are self-dealing and leaving the vast majority of Americans
2.) Both are fueled by a belief that the American dream is broken. The self-dealing has essentially gutted the promise of a better future for all those willing to work for it. The essentials of that dream -- a home, the value one can build in that home, rising wages, a better tomorrow for our kids -- they're all gone or compromised for most Americans. For those who didn't go to college there was once an opportunity to join the middle class and have a life of dignity -- also gone. The idea of retiring seems also destined to soon become an exhibit in the Smithsonian as few Americans indeed will be able to afford it.
3.) Both turn on a common theme -- driven by an intense indignation at inequity. It's not just that they system is broken, as Nick Kristof writes compellingly in yesterday's New York Times, it is that it has been gamed. A tiny few benefit and the rest of us of the country -- the 99 percent, the residents of Main Street -- are falling hopelessly, helplessly behind.
4.) Both a reactions against "the establishment" -- although different halves of the establishment. The Tea Partiers think government is the problem. The Occupy Wall Street crowd think it's the financial community or big corporations. The reality is that it is the collaboration between the two for decades (centuries actually) to change the rules of the system to give monied interests the upper hand, a free ride, bailouts when they need it (even when average home owners get nothing), etc.
5.) Both have "good hooks" -- they are easily digested, communicated, understood. The reason that 59 point plans and 1000 page pieces of legislation get no traction is that they are difficult to communicate, understand, debate effectively. Condemn Cain or the protestors all you want, they are connecting because they are dealing at a visceral level with a problem that actually lives in people's guts.
6.) Neither is truly radical. One is the defense of the status quo dressed up in the garb of "change" (where have we seen that before?). The other is unfocused anger. Radical would require an effort to really, truly and deeply challenge and change the system -- to get money out of politics through federally financed elections, to limit the size of banks, to demand transparency and tighter regulation of derivative products, to effectively challenge corporate compensation systems, to toss out the current tax code and start over with something simpler...and, sorry Herman, fairer. We are at a time that demands real, constructive radicalism, a willingness to question everything, to embrace "dangerous' ideas, to ask why we have markets, why we have the system of government we have, what our collective goals are, what our core political philosophies are and to be willing to remake and rebuild those institutions and systems and processes that don't conform to our vision and our ideals
7.) Both are preludes to real change -- but neither in its current form is the ultimate vehicle for that change. Because there is no "ask" for the Occupy Wall Street people, because 9-9-9 doesn't add up and would be deeply unfair to poor and middle income Americans, the movements are more noteworthy for what fuels them than where they are going. The frustration will either lead to a real constructive change agenda...or it won't, problems will deepen...and the real call for change will come more emphatically later.
8.) Each is being misinterpreted by the other. The Occupy Wall Streeters are not, as accused by the right, "anti-American." At their core what they are doing is as fundamentally American as can be. The Tea Partiers may not be my cup of...well, they may be hard for me to swallow...but they do have a legitimate beef that the government needs to operate in their interests and within its budget. That's not to say one side will agree with the other...it's to say that both should listen carefully for what is the same in their arguments. (So too should politicians on both sides who are too quick to view all this as politics as usual...and to play it as such.)
9.) Both should be welcomed by everyone -- they are a sign of long-overdue activism. Now the job is to translate that activism into meaningful change...which I think may require a very different set of political leaders and parties than we have today.

Mario Tama/Getty Images


Nine things that 9-9-9 and the 'Other 99' have in common - By David Rothkopf | David Rothkopf

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Keynes and Hayek, the Great Debate (Part 1): Nicholas Wapshott - Bloomberg

This is a Four Part Series on Hayek and Keynes from Nicholas Wapshott's new book, “Keynes Hayek: The Clash that Defined Modern Economics.”

Part One is below:

Keynes and Hayek, the Great Debate (Part 1): Nicholas Wapshott

By Nicholas Wapshott - Oct 5, 2011

The greatest debate in the history of economics began with a simple request for a book. In the early weeks of 1927, Friedrich Hayek, a young Viennese economist, wrote to John Maynard Keynes at King’s College, Cambridge, in England, asking for an economic textbook written 50 years before: Francis Ysidro Edgeworth’s exotically titled “Mathematical Psychics.” Keynes replied with a single line on a plain postcard: “I am sorry to say that my stock of ’Mathematical Psychics’ is exhausted.”
Why did Hayek, an unknown economist with little experience, approach, of all people, Keynes, perhaps the best-known economist in the world? For Keynes, Hayek’s request was just another item in his bulging postbag. Cambridge’s economics prodigy retained no record of Hayek’s request, even though he was so conscious of the contribution he was making to posterity through his daring approach to the study of political economy that he had taken to hoarding each scribbled note and every last letter. His posthumously published papers, even when edited, fill dozens of volumes.
Hayek, meanwhile, seemed fully aware of the significance of his request. He treasured Keynes’s bald reply and preserved it for the next 65 years as a personal memento and professional trophy. The postcard sits today in the Hayek archive at the Hoover Institution on the Stanford University campus in California -- tangible evidence that Hayek had instigated the first contact in what would become an intense duel over the role of government in society and the fate of the world economy.

Scarce Resources

Edgeworth interested Hayek because one of the subjects he explored at length was a topic that would come to engage both Keynes and Hayek: how scarce resources can best maximize the “capacity for pleasure.” The forbiddingly titled “Mathematical Psychics: An Essay on the Application of Mathematics to the Moral Sciences,” published in 1881, was Edgeworth’s best-known work. It anticipated a great number of the debates that would entangle economists over the next century, including notions of “perfect competition,” “game theory” and, most important for the impending battle between Keynes and Hayek, the belief that an economy will reach a state of “equilibrium” with every able- bodied adult fully employed. Edgeworth was also an early expounder of theories about money and the monetary system, which by 1927 both Keynes and Hayek had already addressed at length.

MARK CUBAN: "Tax The Hell Out Of Wall Street And Give It To Main Street" (And Other Advice For The Protesters...) @hblodget, 10/15/11 14:06

MARK CUBAN: "Tax The Hell Out Of Wall Street And Give It To Main Street" #OccupyWallStreet (And Other Advice For The Protesters...) My Soapbox Advice to the OWS Movement and then some Oct 14th 2011 8:53PM I may not know much, but I know a lot of it. So I decided to share my opinions and thoughts on what I would do if the OWS movement either elected me Grand Poobah or asked for my advice: 1. The Great Lie of Wall Street. Every CEO tells the same great white lie. It is at the heart of every communication. It is at the heart of every financial decision. It is, at it's very base, the reason why you all are in the 99pct and they are in the 1pct. The Lie ? Great CEO  White Lie = "We are acting in the best interests of shareholders." When a CEO utters this lie, everyone automatically forgives whatever they do. Add 10k jobless to the unemployment rolls ? Sorry, we did it in the BEST INTEREST OF SHAREHOLDERS.  Merge or buy a company and cut back across the board ? We did it in the Best Interest of Shareholders. The problem is that unless the company is losing money and it is the only way to keep the company alive, in this era of 9.1pct unemployment  it NEVER is in the BEST INTEREST OF SHAREHOLDERS. Shareholders , whether they own shares directly or through mutual funds or pensions do not live in a corporate vacuum.  Their lives are impacted by far more than the share price of a stock. Every layoff in the name of more earnings per share puts a stress on the economy, on the federal, state and local governments which is in turn paid for through taxes or assumption of government debt by….wait for it.. the same shareholders CEOs say they want to benefit. If OWS really wants to change corporate structure and impact the economy, talk to shareholders. Talk to your parents, uncles/aunts, cousins, friends who own shares of stocks either directly or indirectly and have them state loudly and clearly that they would rather have a higher Price to Earnings Ratio and even a lower stock price than have their TAXES increase in order to support all the people laid off from their jobs in the name of shareholders !   You might even consider buying a share of stock. Just 1. Maybe you can all pitch in and then go to a shareholders meeting and let them know how you feel about the best interests of shareholders. 2.  Push to Make All Financial Institutions Partnerships We should make all investment banks become reporting partnerships (meaning they still have the same reporting requirements they have today ). I would have no problem with our government loaning money to the partners of Goldman Sachs and Morgan Stanley and other Too Big To Fail Institutions so that they can buy back all public shares of their stock. Of course all those  partners would become personally liable for repaying that money back to the government.  It would probably be about 120B dollars in total to take these 2 companies private. That is far, far less than a possible bailout would cost. Those personal guarantees would change EVERYTHING in the banking industry. It would change the decision making process across the board.   There would be a moral hazard to every decision. Today , a wrong decision and they vacation on their yacht. As a partner,  the wrong decision and they are protesting right next to the OWS crowd as a 99pct er.  It would be the definition of having "skin in the game" 3.  Limit the Size of Student Loans to $2,000 per year

America's Pacific Century - By Hillary Clinton | Foreign Policy

America's Pacific Century
The future of politics will be decided in Asia, not Afghanistan or Iraq, and the United States will be right at the center of the action.
BY HILLARY CLINTON | NOVEMBER 2011



As the war in Iraq winds down and America begins to withdraw its forces from Afghanistan, the United States stands at a pivot point. Over the last 10 years, we have allocated immense resources to those two theaters. In the next 10 years, we need to be smart and systematic about where we invest time and energy, so that we put ourselves in the best position to sustain our leadership, secure our interests, and advance our values. One of the most important tasks of American statecraft over the next decade will therefore be to lock in a substantially increased investment -- diplomatic, economic, strategic, and otherwise -- in the Asia-Pacific region.

The Asia-Pacific has become a key driver of global politics. Stretching from the Indian subcontinent to the western shores of the Americas, the region spans two oceans -- the Pacific and the Indian -- that are increasingly linked by shipping and strategy. It boasts almost half the world's population. It includes many of the key engines of the global economy, as well as the largest emitters of greenhouse gases. It is home to several of our key allies and important emerging powers like China, India, and Indonesia.

At a time when the region is building a more mature security and economic architecture to promote stability and prosperity, U.S. commitment there is essential. It will help build that architecture and pay dividends for continued American leadership well into this century, just as our post-World War II commitment to building a comprehensive and lasting transatlantic network of institutions and relationships has paid off many times over -- and continues to do so. The time has come for the United States to make similar investments as a Pacific power, a strategic course set by President Barack Obama from the outset of his administration and one that is already yielding benefits.



With Iraq and Afghanistan still in transition and serious economic challenges in our own country, there are those on the American political scene who are calling for us not to reposition, but to come home. They seek a downsizing of our foreign engagement in favor of our pressing domestic priorities. These impulses are understandable, but they are misguided. Those who say that we can no longer afford to engage with the world have it exactly backward -- we cannot afford not to. From opening new markets for American businesses to curbing nuclear proliferation to keeping the sea lanes free for commerce and navigation, our work abroad holds the key to our prosperity and security at home. For more than six decades, the United States has resisted the gravitational pull of these "come home" debates and the implicit zero-sum logic of these arguments. We must do so again.

Deficits for Dummies

If you still don't get it with regards to the US Deficit, here is an illustration to make it sink in...:

 Get it now?


this is how we got here (courtesy of Richard Russell):

Private and public debt surged during the period from 1971 to today increasing by $50 trillion. During the same period GDP in the US rose from $1.1 trillion to $16 trillion today. Figure the ratio of debt to GDP at about 3 to 1. In other words, it's taken about $3 trillion in additional debt to produce each additional $1 trillion in GDP.

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Government logo fail of the day

This is just ridiculous! Shows the State of Nation


Government logo fail of the day: "


This is like an Onion parody on steroids. Only it’s 100 percent real.
Inspired by President Obama’s “Sputnik moment” speech back in January, the government-sponsored Smithsonian Institute has launched a new blog called “Department of Innovation”. As they describe it:
Seems a long time ago, but it was only back in January when Barack Obama told us that America had reached a “Sputnik moment.” He was referring to the competition with China to be the Big Dog of the 21st century global economy, but the subtext was that the country needs an attitude adjustment, that we need to start channeling Silicon Valley, a place where people may pledge to “Do no evil” but the true religion is innovation.
It made for one fine sound bite. But it hasn’t exactly inspired a bunch of innovation rallies and bake sales. So in the spirit of banging the drum for new ideas and fresh thinking, this blog will track all things innovative, not just in science and technology, but also in how we live, how we learn, how we entertain ourselves.
Sharp-eyed reader Rob M. certainly found the “Department of Innovation”s logo entertaining. You will, too.
Take a closer look:

As Rob wrote me this morning: “Check out the logo. 3 interlocking gears arranged in this fashion will not move in any direction. They are essentially locked in place. Which when you think about it, is a perfect analogy of today’s government!”Also a perfect analogy for a hapless administration’s pretense of entrepreneurial expertise: Total non-starter.
And that, my friends, is your government logo fail of the day…

***

Another commenter at the Smithsonian blog also noticed: “I love this feature. I thought, however, that I would comment on the Department of Innovation meshing gears logo. The gears can’t turn. Perhaps that was the intended effect?”
Yeah, that’s the ticket.
Our commenter Cynosura adds: “Not to pick at nits, but the position of the gears (interlocking, thus unable to turn) is not the only problem with the logo. The gear pitch (space between tooth centers) is not consistent. I realize that it’s a logo and not a technical drawing, but it hurts my eyes to look at it. Even if the small gears were separated, the gears would likely jam during the first revolution…”
Snortalicious!

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Egyptian Muslim Brotherhood Creeping its Way into Power

Egyptian Muslim Brotherhood on the March, but Cautiously

 Stratfor Geopolitical Diary: May 19, 2011

The Egyptian Muslim Brotherhood (MB) officially registered Wednesday for the formation of a new political wing, paving the way for the establishment of the Freedom and Justice Party. With parliamentary elections scheduled in September, Freedom and Justice is expected to do well at the first polls of the post-Mubarak era. Just how well is the main question on the minds of the country's ruling military council, which would prefer to hand off the day-to-day responsibilities of governing Egypt, while holding onto real power behind the scenes.

Leading MB official Saad al-Katatny, one of the founders of Freedom and Justice, said he hopes for the party to officially begin its activities June 17, and to begin selecting its executive authority and top leaders one month later. Members of Egypt's Political Parties Affairs Committee will convene Sunday to discuss the application and will announce their decision the next day. They are expected to approve the request. Three and a half months after the fall of Hosni Mubarak, Egypt's leading Islamist group is on the verge of forming an official political party for the first time in its history.

Following Mubarak's ouster, MB wasted little time in seizing what it saw as the group's historical moment to enter Egypt's political mainstream. They announced plans to form a political party on Feb. 14. The Supreme Council of the Armed Forces (SCAF), which took over administration of the country following the deposal of Mubarak, did nothing to hinder this development, despite the military's deep antipathy toward Islamist groups. Political instability was (and is) rampant in the country, and the military sought to find a balance that would allow it to maintain control while appearing amenable to the people's demands, and bring life back to normal. Opening up political space to Islamist groups, including at least two emerging Salafist parties, and announcing plans for fairly rapid elections, was seen by the military as the most effective way to achieve this balance.

It bears repeating that what happened in Egypt in January and February did not constitute a revolution. There was no regime change; there was regime preservation, through a carefully orchestrated military coup that used the 19 days of popular demonstrations against Mubarak as a smokescreen for achieving its objective. Though a system of one-party rule existed from the aftermath of the 1967 War until Feb. 11 of this year, true power in Egypt since 1952 has been with the military and that did not change with the ouster of Mubarak. What changed was that for the first time since the 1960s, Egypt's military found itself not just ruling, but actually governing, despite the existence of an interim government (which the SCAF itself appointed).

The SCAF wants to get back to ruling and give up the job of governing, but it knows that there has been a sea change in Egypt's political environment that prevents a return to the way things were done under Mubarak. The days of single-party rule are over. If the military wants stability, it is going to have to accept a true multiparty political system, one that allows for a broad spectrum of participation from all corners of Egyptian society. The generals can maintain control of the regime, but the day-to-day affairs of governance will fall under the control of coalition governments that could never have existed in the old Egypt.

This opens the door for MB to gain more political power than it has ever held and explains why its leaders were so quick to announce their plans for the formation of Freedom and Justice in February. But the group has tempered eagerness with caution. MB is aware of its reputation in the eyes of the SCAF (and the outside world, for that matter) and is playing a shrewd game to dispel its image as an extremist Islamist group.

The Post Office Has Lost Nearly $20 Billion In Four Years: THE NEXT BAILOUT?

They're losing enough to qualify...

Fannie, Freddie, and the Banksters come to mind...

Announcing a $2.2 billion first quarter loss for 2011, the U.S. Postal Service warned it would become insolvent unless Congress takes action.

The amount of mail sent through the Post Office dropped by 12 billion pieces a year from 2006 to 2009 — from 213 billion to 177 billion pieces. And it is expected to drop to 150 billion by 2020, according to the WSJ

THE NEXT BAILOUT? The Post Office Has Lost Nearly $20 Billion In Four Years

Robert Johnson | May 16, 2011, 3:38 PM

Announcing a$2.2 billion first quarter loss for 2011, the U.S. Postal Service warned it would become insolvent unless Congress takes action.

The institution has already lost a shocking $20 billion since 2007.

The reasons are obvious. The amount of mail sent through the Post Office dropped by 12 billion pieces a year from 2006 to 2009 — from 213 billion to 177 billion pieces. And it is expected to drop to 150 billion by 2020, according to the WSJ.

The USPS has cut costs in light of this decline, but not enough. The USPS does not plan on making any money any time soon.

To cover its losses, the Post Office took a soon to be depleted, $15 billion line of credit from the U.S. Treasury in the early 1990's, and has been drawing on it ever since. Even this, combined with $9 billion in cost cuts, and the elimination of 105,000 full time jobs in the last two years, has done nothing to help.

Thus USPS officials are now asking Congress to skip their annual $5.4 billion retiree health benefit prepayment and to adopt a pay-as-you go system; the same method currently used by states like California, that can't meet their obligations.
In fact, the Postal Regulatory Commission claims that the Post Office has overpaid the system $50 to $75 billion throughout the years, and consequently it asks the Federal Government to assume the health care burden of its retired workers. The postal union says this would cover retiree who earned pensions prior to 1970, when the law that reformed the Post Office came into effect.
Some kind of bailout is coming, or the end of an institution.

businessinsider.comhttp://www.businessinsider.com/post-office-bailout-2011-5

THE NEXT BAILOUT? The Post Office Has Lost Nearly $20 Billion In Four Years

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G.E.’s Strategies Let It Avoid Taxes Altogether - NYTimes.com

G.E.'s Strategies Let It Avoid Taxes Altogether

By DAVID KOCIENIEWSKI

Published: March 24, 2011

BUT NOBODY PAYS THAT

General Electric, the nation's largest corporation, had a very good year in 2010.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion

Drew Angerer/The New York Times

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.'s giant tax department, led by a bow-tied former Treasuryofficial named John Samuels, is often referred to as the world's best tax law firm. Indeed, the company's slogan "Imagination at Work" fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.

In a regulatory filing just a week before the Japanese disaster put a spotlight on the company's nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back.

Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation's tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.

Yet many companies say the current level is so high it hobbles them in competing with foreign rivals. Even as the government faces a mounting budget deficit, the talk in Washington is about lower rates. President Obama has said he is considering an overhaul of the corporate tax system, with an eye to lowering the top rate, ending some tax subsidies and loopholes and generating the same amount of revenue. He has designated G.E.'s chief executive, Jeffrey R. Immelt, as his liaison to the business community and as the chairman of the President's Council on Jobs and Competitiveness, and it is expected to discuss corporate taxes.

"He understands what it takes for America to compete in the global economy," Mr. Obama said of Mr. Immelt, on his appointment in January, after touring a G.E. factory in upstate New York that makes turbines and generators for sale around the world.

A review of company filings and Congressional records shows that one of the most striking advantages of General Electric is its ability to lobby for, win and take advantage of tax breaks.

Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law, from more generous depreciation schedules on jet engines to "green energy" credits for its wind turbines. But the most lucrative of these measures allows G.E. to operate a vast leasing and lending business abroad with profits that face little foreign taxes and no American taxes as long as the money remains overseas.

Company officials say that these measures are necessary for G.E. to compete against global rivals and that they are acting as responsible citizens. "G.E. is committed to acting with integrity in relation to our tax obligations," said Anne Eisele, a spokeswoman. "We are committed to complying with tax rules and paying all legally obliged taxes. At the same time, we have a responsibility to our shareholders to legally minimize our costs."

The assortment of tax breaks G.E. has won in Washington has provided a significant short-term gain for the company's executives and shareholders. While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion.

But critics say the use of so many shelters amounts to corporate welfare, allowing G.E. not just to avoid taxes on profitable overseas lending but also to amass tax credits and write-offs that can be used to reduce taxes on billions of dollars of profit from domestic manufacturing. They say that the assertive tax avoidance of multinationals like G.E. not only shortchanges the Treasury, but also harms the economy by discouraging investment and hiring in the United States.

Read the rest of the article here:

http://www.nytimes.com/2011/03/25/business/economy/25tax.html?_r=1&ref=business&nl=business&emc=dlbka

Prescient profile of Omar Suleiman from 2009 in FP: Egypt's Next Strongman FP_Magazine

Prescient profile of Omar Suleiman from 2009 in FP: Egypt's Next Strongman

Egypt's Next Strongman

Meet the two men most likely to succeed Egypt's aging president: His son, Gamal Mubarak, and his spy chief, Omar Suleiman. But does either one really represent desperately needed change?

BY ISSANDR AMRANI | AUGUST 17, 2009

Gamal Mubarak (left) and Omar Suleiman, the would-be heirs to b Egyptian presidency.

Egyptian President Hosni Mubarak arrived in Washington today, bringing with him a large retinue of advisors, ministers, and assorted hangers-on. But only two of them really count, at least for those trying to figure out who will succeed one of the Middle East's longest-serving leaders.

The first is Mubarak's son Gamal, who is accompanying his father even though he has no formal position in the Egyptian government. (He is the assistant secretary-general of the ruling National Democratic Party, or NDP.) A more justified member of the entourage is Omar Suleiman, the head of Egypt's General Intelligence Service (GIS), known as the Mukhabarat.

Each has been touted for most of the past decade as a potential heir to the 81-year-old Mubarak, who has never appointed a vice president or publicly stated his preference for a successor. Most speculation in Egypt focuses on Gamal. His rise to political prominence earlier this decade spurred opposition figures to form the "Kefaya" movement, which rallies against both Mubaraks. But many well-informed Egyptians think the next president will come from the military -- and that the powerful Suleiman is the most likely candidate.

This is not a fringe sentiment. The prolonged fin de régime mood has unnerved many Egyptians, who worry that a Syrian-style inheritance-of-power scenario would usher in an era of instability. Many consider the prospect of such father-to-son nepotism humiliating for a country that has long claimed the mantle of Arab leadership. In this political environment -- in which democratic alternatives are locked out, but the population wants change -- Suleiman appears the only viable alternative to Gamal Mubarak. But who is this once-mysterious power player? And would he really mean a new era for Egypt?

Like the elder Mubarak, Suleiman rose to national prominence through the armed forces. The arc of his career followed the arc of Egypt's political history. He attended the Soviet Union's Frunze Military Academy in the 1960s -- as Mubarak did a few years earlier -- and became an infantryman. He then took part in the 1967 and 1973 Arab-Israeli wars, likely as a staff officer. When Cairo switched its strategic alliance from Moscow to Washington, he received training at the John F. Kennedy Special Warfare School and Center at Fort Bragg, N.C., in the 1980s. Suleiman continues to have privileged contacts with U.S. intelligence and military officials, with whom he has now been dealing for at least a quarter-century.

As the head of the Mukhabarat, Suleiman's political and military portfolio is vast. The GIS combines the intelligence-gathering elements of the CIA, the counterterrorism role of the FBI, the protection duties of the Secret Service, and the high-level diplomacy of the State Department. It also includes some functions unique to authoritarian regimes, such as monitoring Egypt's security apparatus for signs of internal coups. It is an elite institution, with a long reach inside government as well as abroad. It also crosses over the civilian and military worlds: Suleiman is one of a rare group of Egyptian officials who hold both a military rank (lieutenant general) and a civilian office (he is a cabinet minister, though he rarely attends meetings).

Traditionally, the identity of the head of the GIS is kept secret. But after 2001, when Suleiman began to take over key dossiers from the Foreign Ministry, his name and photograph began appearing in Al-Ahram, the staid government-owned daily. He even appeared on the top half of the front page, a space usually reserved for Mubarak. Since then, his high-profile assignments have garnered high-profile coverage. He has intervened in civil wars in Sudan, patched up the tiff between Saudi King Abdullah and Libyan leader Muammar el-Qaddafi over the latter's alleged attempt to assassinate the former, and put pressure on Syria to stop meddling in Lebanon and to dissociate itself from Iran.

Most importantly, Suleiman has mediated in the Israel-Palestine conflict, Egypt's most pressing national security priority. Since the June 2007 Hamas takeover of Gaza, Cairo has acted as an interlocutor and mediator between Hamas and Fatah. Although its attempts to reconcile the two groups have led to few clear victories -- in part, perhaps, because Egypt is clearly hostile to the Islamists -- its foreign policy has won the approval of the United States and the European Union.

Hamas' taking control of Gaza was a major setback for Suleiman, whose agents had, until that point, played an important role in the territory. His attempts at Palestinian reconciliation, which petered out by December 2008, were also unsuccessful, prompting some diplomats to wonder if his reputation was undeserved. But since last winter's Gaza war, Suleiman has regained standing. Egypt emerged out of that conflict once again with its role confirmed as an essential mediator in the Middle East peace process. Indeed, Suleiman is now arguably the region's most important troubleshooter -- Foreign Policy recently listed him as one of the most powerful spooks in the Middle East.

It isn't surprising, then, that he is so often described as a likely successor to Mubarak, who is showing increasingly signs of frailty. Every president of Egypt since 1952 has been a senior military officer, and the military remains, by most measures, the most powerful institution in Egypt.

Publicly, Suleiman has started to gain endorsements for the job from Egyptians across the political spectrum as the increasingly public discussion plays out of who will follow Mubarak. A leftist leader of the Kefaya movement, Abdel Halim Qandil, has urged the military to save the country from a Mubarak dynasty. The liberal intellectual Osama Ghazali Harb -- a former Gamal acolyte who turned to the opposition and founded the National Democratic Front party -- has openly advocated a military takeover followed by a period of "democratic transition." Hisham Kassem, head of the Egyptian Organization for Human Rights, also has stated that a Suleiman presidency would be vastly preferable to another Mubarak one. On Facebook, Twitter, and blogs, partisans of a Suleiman presidency make the same argument, often seemingly driven as much by animosity toward the Mubaraks as admiration for the military man.

But amendments made in 2005 and 2007 to the Egyptian Constitution's provisions for presidential elections might have rendered Suleiman's candidacy moot. Active-duty military officers are not allowed membership in political parties, meaning Suleiman would have to retire before running. Then, candidates must be members of their party's highest internal body for at least one year before the election, a significant obstacle for Suleiman. Plus, it is virtually impossible for independent candidates to run; to get on the ballot, candidates must garner the support of numerous elected officials, most of whom are NDP members and presumably loyal to Gamal Mubarak. And, finally, the NDP is a powerful electoral machine, closely connected to security services at the local and national level.

In other words, most Suleiman supporters recognize that to gain the presidency he would most likely have to carry out a coup -- perhaps a soft, constitutional one, but a coup nonetheless. (It is possible, one analyst told me, that "the day Mubarak dies there will be tanks on the street.") Strange though it sounds, many Egyptians would find such a coup acceptable. The amendments to the Constitution were broadly viewed as illegitimate, and the regime's standing may be at an all-time low.

Such a coup would prove more problematic for Egypt's foreign allies. Washington would likely be embarrassed by the rise of a new strongman, particularly after nearly a decade of fanfare around democracy promotion in Egypt. But what would the United States do about it, particularly if the plotters were pro-American and the strongman broadly supported?

Other scenarios are possible, of course. Gamal Mubarak could successfully make his bid for the presidency and keep Suleiman in place -- perhaps as the power behind the throne, or simply a guarantor of the military's corporate interests. Some previously unknown military figure could emerge as a contender. Or Hosni Mubarak could hang on to power, running again in 2011 at the ripe old age of 83. (Suleiman will be 75.)

Lost in this Egyptian Kremlinology is the fact that neither Gamal Mubarak nor Omar Suleiman presents a clear departure from the present state of affairs. Neither offers the new social contract that so many of Egypt's 80 million citizens are demanding in strikes and protests. The prevalence of the Gamal vs. Omar debate, more than anything, highlights the low expectations ordinary Egyptians have for a democratic succession to Hosni Mubarak's 28-year reign. Those low expectations come with their own quiet tyranny, too.

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Mubarak: Anwar Amro/AFP/Getty Images; Suleiman: Hussein Hussein/PPO/Getty Images

Issandr Amrani is an independent journalist and political analyst based in Cairo. He blogs at www.arabist.net.

Foreign Policy (@FP_Magazine) 1/29/11 4:31 PM RT @blakehounshell Prescient profile of Omar Suleiman from 2009 in FP: Egypt's Next Strongman http://bit.ly/gwrAD0

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THE U.S. IS BROKE

A college student explains Obamanomics. 

Obama announced that over the next 90-days he is going to work to cut 100-Million dollars of spending out of the Federal Budget.

This is worth spending one minute and thirty eight seconds to watch!


http://www.youtube.com/user/10000Pennies#p/u/9/cWt8hTayupE

http://www.wimp.com/budgetcuts/

Venezuela Inflation reading Island Canuck inflation Index closes at 59.7% in 2010

Venezuela Inflation reading via The Devils Excrement:

Island Canuck inflation Index closes at 59.7% in 2010The MasterBlog

Island Canuck inflation Index closes at 59.7% in 2010 moctavio | January 23, 2011 at 9:26 am | Categories: Uncategorized | URL: http://wp.me/ppwPU-35e

Our friend and reader Island Canuck sent me a while back his final numbers for inflation in 2010. Recall that at the end of June the expat sent us his numbers and inflation was running at a 30% clip for the first half of the year. Well, despite the fact that there was no devaluation in the second half of 2010, his food and beverage index essentially doubled in 2010 as you can see in the table below. Note that most vegetables had triple digit increases in the year (They are mostly produced locally). Note also that things that are not available had small increases. Any insights by readers are welcome.

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Assange To Be Indicted Under US Espionage Act on The MasterBlog

Assange To Be Indicted Under US Espionage Act

Submitted by Tyler Durden on 12/10/2010 11:00 -0500

• ABC News
• First Amendment

Here it comes, via ABC News:

Wikileaks founder Julian Assange, the man behind the publication of more than a 250,000 classified U.S. diplomatic cables, could soon be facing spying charges in the U.S. related to the Espionage Act, Assange's lawyer said today.

"Our position of course is that we don't believe it applies to Mr. Assange and that in any event he's entitled to First Amendment protection as publisher of Wikileaks and any prosecution under the Espionage Act would in my view be unconstitutional and puts at risk all media organizations in the U.S.," Assange's attorney Jennifer Robinson told ABC News.

Robinson said a U.S. indictment of Assange was imminent.

Justice Department officials declined to comment on the possible coming charges, but earlier this week, U.S. Attorney General Eric Holder said the release of the documents had put the United States at risk and said he authorized a criminal investigation into Assange.

"The lives of people who work for the American people has been put at risk; the American people themselves have been put at risk by these actions that are, I believe, arrogant, misguided and ultimately not helpful in any way. We are doing everything that we can," Holder said Tuesday. "We have a very serious, active, ongoing investigation that is criminal in nature. I authorized just last week a number of things to be done so that we can hopefully get to the bottom of this and hold people accountable, as they -- as they should be."

Very soon, we expect that every jouranlism degree will come with a free indictment of treason and a sentence of public stoning.

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