Corporate ‘Inversions’ Are The Latest Ploy To Upend The US Tax Code

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Esteban Felix | AP Photo
Chiquita Brands is one of the companies that did a corporate “inversion” deal this year

On July 24, 2014, John W. Schoen writes on CNBC:

A once-obscure tax dodge known as a corporate “inversion” is turning the debate over U.S. tax reform upside down.

In an inversion, a U.S. company sets up or buys another company in a country with a lower corporate tax rate and then calls the new country home—thereby dodging U.S. taxes it would otherwise have had to pay.

The trick is more than three decades old, but a wave of inversions this year has prompted the Obama administration to call on Congress to slam the loophole shut.

Read MoreObama presses to close corporate tax loophole ‘inversions’

How does it work?

When a company undertakes an inversion, it’s basically just moving its legal address outside the country for tax purposes. That lets companies move some of their profits to their new homeland and pay less in taxes to the U.S. Treasury. Nothing else moves; it’s business as usual for their American operations, employees and customers.

The White House estimates the Treasury could lose out on as much as much as $20 billion over the next decade. So the administration wants to require companies that claim they’re no longer American to be more than 50 percent owned by foreigners. That would make new inversions much more difficult to pull off.

Read MoreUS could lose $20B from corporate tax inversions

But aren’t corporate taxes higher in the U.S than most developed countries?

It’s true that the statutory tax rate—including state and local taxes—is close to 40 percent, the highest among the developed world. But U.S. companies apply a long list of tax credits, subsidies, loopholes and other giveaways, so most of them pay much less than the top rate. Some, according to an analysis by Citizens for Tax Justice, have figured out how to pay no tax at all.

Total corporate federal taxes fell to about 12 percent of profits from U.S.-based activity in 2011, according to a Congressional Budget Office report. In a separate study, the CBO found that the average tax rate in 2011 among developed countries was 3 percent of gross domestic product—compared with 2.3 percent of GDP in the U.S.

So how much money is Uncle Sam losing from these corporate tax dodgers?

So far this year, only nine companies have flipped their corporate tax base upside down, including banana distributor Chiquita Brands International and drug maker AbbVie. But those moves have drawn lots of attention—and prompted other U.S. multinationals with large overseas holdings to consider heading for the corporate tax exit.

Some companies have already stashed assets and accumulated earnings outside the country—hoping that Congress will eventually lower the tax rate and allow them to pay less when they bring that money home. By some estimates, as much as $2 trillion in corporate cash is sitting outside the U.S.—money that could otherwise be reinvested at home to expand domestic operations and create more jobs.

Why doesn’t Congress just clean up the corporate tax code?

Corporations have been lobbying Congress for years to lower the corporate tax rate—which would mean paring back a thicket of tax credits, subsidies and complex rules that everyone agrees needs an overhaul. But each of those loopholes has a company or industry lobbying to protect it.

A wave of inversions could make it even harder for Congress to pull off a “revenue neutral” tax reform package. To offset the money lost by lowering the top rate, Congress would have to close loopholes and subsidies. But if more companies dodge the American tax code altogether, those added revenues will be harder to find. The more companies shrink the overall pipe of corporate tax revenues, the harder it will be to make tax reform “pay for itself.”

Read MoreCEOs to Obama: Tax reform, not an inversion Band-Aid

In any case, the tax reform debate has become mired in the ongoing political dysfunction that has already pushed the country near a debt default, temporarily shut down the government and, most recently, exhausted the highway fund that’s needed to fix a national pothole epidemic.

Given that track record, it’s hard to see how Congress will ever be able to tackle an issue as complex and divisive as tax reform. So some companies aren’t waiting.

This is a “big picture” problem that our nation and other nations face. Because the system facilitates non-human capital asset wealth being constantly monopolized by the wealthy ownership class, which is often referred to as “the 1 percent,” who are the primary owners of American corporations, without a stiff corporate income tax it will be virtually impossible to incentivize corporations to pay out fully their earnings to their stockholders, who would be ALL taxed at the personal tax rate. We should want to eliminate double taxation (at the corporate and personal levels) to incentivize corporations to issue and sell new stock to raise monies to invest in new plant and machinery capital assets  to create economic growth. This is the pathway to creating new owners and broadening wealth-creating, income-producing capital ownership to EVERY child, woman and man. EVERY citizen should be empowered equally to have access to insured, interest-free capital credit loans issued by local banks backed by the Federal Reserve to acquire new stock issues in qualified corporations with the principal and insurance fee repayable out of the FUTURE earnings of the investment. This would provide American corporations with all the monies they would need to grow, which in turn would substantially accelerate the growth of the economy, create new capital owners who would benefit from a new income source, and create new job opportunities as the economy revs up to produce general affluence for EVERY citizen. These policies would create a nation of “customers with money,” who overtime can build substantial financial security and eliminate reliance on taxpayer-supported government.

If we further lower or eliminate corporate income tax rates we eliminate our ability to incentivize corporations to finance new growth by creating new owners, without taking away ownership from those who are already owners.

We need to define an American corporation with at least better than 60 percent ownership vested with American citizens. We also need to  look at tariffs on non-American corporations who would have tax advantages over American corporations.

We also need to condition awarding ALL taxpayer-supported federal contracts (corporate welfare) on the basis that EVERY company vying for a government contract demonstrate that they are broadly owned including ownership by their employees. We need to ensure  that if a corporation wants the advantages of being an American company then they should not be able run away from America to avoid paying taxes.  Either American corporations pay a stiff corporate tax and remain narrowly owned or they pay no corporate tax but are structured such that they are owned broadly and by their employees. Such policies will stimulate a new era in American technological innovation.

Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/.

Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

The Nick Hanauer Debate: Trickledown, Trickle Dee, And Trickle Dumb

On July 23, 2014, Richard Levick writes in Forbes Magazine:

As professionals whose work includes a fair amount of crisis management, we’re often asked to articulate the best practices of what has for obvious reasons become a discipline of increased interest to the public. Inevitably, we include, as a fundamental point, the need to anticipate the future: the changing social and business forces that expose our clients to risk and exacerbate their liabilities.

Typically, such crystal-balling occurs within well-defined boundaries. What new regulations threaten new problems? How will a change in some overseas government put the company in harm’s way? Where are plaintiffs’ lawyers choosing to focus their energies?

Yet, for both private and public sector interests, there is also the abiding need for something more – for a discussion of the macro forces that will, for better or worse, transform the entire environment in which businesses and countries operate.

A very public dialogue of this type is occurring this summer, and it’s a dilly. NickHanauer, a successful entrepreneur who co-founded the Second Avenue Partnersventure capital firm in Seattle, delivered a forceful warning in Politico about the dire impact of wealth disparity in the U.S. It was the most widely shared article in that publication’s history – and Politico isn’t exactly Mother Jones. The alarm has apparently struck a chord with all sorts of people.

Hanauer – who, among other marketplace triumphs, was one of the first non-family investors in Amazon – is a confirmed capitalist and true believer in the potential power of capitalism to grow prosperity at every level. But the key word is “potential” as Hanauer’s message is all about how, with the massive disparities that divide the very rich from the rest of us, we’ve only been squandering the power of capitalism since 1980 when those disparities accelerated. According to Hanauer, such wastefulness has perilous consequences in terms of civil unrest, further political polarization, and the speedy isolation of those who are supposed to lead from those who desperately crave leadership.

Hanauer’s stern prognostications for the future are all the more vivid in light of the recent past. In 1980, the top 1% of Americans controlled about 8% of the national income. The bottom 50% shared about 18 percent. “By 2030, at current course and speed, the top 1% will share about 35% and the bottom 50% will share just 6%,” advises Hanauer. “Any capitalist who does not find this trend worrisome is either stupid or a sociopath.”

Hanauer urges the full panoply of corrective measures to reverse what he describes as a “death spiral of falling demand.” These measures include higher minimum wages, progressive taxation, aggressive antitrust enforcement, and more. Such discussions naturally resonate for crisis and risk managers as they ponder the varied alternatives ahead. How should companies and institutions respond if some combination of these policy adjustments is adapted? How, say, might a groundswell of support for skyrocketing minimum wage increases affect you as a retailer or manufacturer?

Conversely, what if no palliatives interpose? Well, in that instance, the risk strategy would likely hinge on worst-case scenarios, from anti-corporate demagogues in Washington to social media attacks randomly targeting industry leaders in diverse sectors, likely combined with on-the-street tactics.

In the context of increasingly foreseeable worst-case scenarios, Hanauer’s detractors have largely missed the point. Their rebukes were widespread and extensive, including a discourse on taxation and labor supply here in Forbes, a publication that Hanauer affectionately dubs “The Trickle-Down Gazette.” Yet these critics have yet to grapple with the intensity of public support that Hanauer has received. At the very least, such support confirms a pandemic anxiety about the future – a future that will be driven as much by perception and symbolism as by substantive argument.

There is no reason to expect that the passions informing the discussion will abate, and every reason to expect sustained media attention. Wealth disparity is not a one-day story. To the contrary, the topic will remain a fixture on the American scene for years to come: in fact, a prolonged battle, a sophisticated and Internet-based confrontation that will define who and what we are as a 21st century society.

As a new leader in this battle, Hanauer is no mere gadfly or self-designated prophet of doom. As we learned during an extended conversation, his vision is multifaceted and, at least to some extent, practicable. As he noted in Politico, Henry Ford’s proverbial imperative, to pay workers more so they can buy more cars, is a reliable if unscientific place to start.

Yet Henry Ford never had any intention to close the gap between rich and not-so-rich. (If you don’t believe me, ask Walter Reuther.) Hanauer certainly understands that and, in fact, harbors no illusion or even desire to close the gaps inherent in capitalist activity. “It’s therunaway gap that I foresee will lead to disruptions right and left, from the Tea Party to Occupy Wall Street.”

Perhaps the most important point omitted from the public debate over Hanauer’s article is his own definition of what real capitalist growth means. “The orthodox definition of capitalism as efficient is wrong,” he says. “Capitalism doesn’t increase prosperity byefficiently allocating resources. It creates prosperity by effectively creating solutions to human problems. The genius of capitalism is that it provides incentives for people to solve other people’s problems. And growth is the rate at which we solve those problems and disseminate the solutions.”

From a strictly financial perspective, any corrective measure, including those espoused by “progressives” like Hanauer, cannot just be sops to an increasingly alienated populace. They must be based on some force of sound business judgment. Hanauer, for instance, is widely associated with the unprecedented $15 per hour minimum wage now in force in Seattle.

“But that’s $15, not $30,” advises Hanauer. “Just because you believe that increasing the minimum wage will be good for the economy, doesn’t mean you think the higher it goes, the better. $15 is half way between where the minimum wage would be if it had tracked inflation and where it would be if it had tracked productivity gains. When you also take into account the overall affluence of our city, $15 is defensible and, in fact, conservative.”

Meanwhile, current Department of Labor numbers directly link minimum wage increases to strong overall growth.

History provides cautionary lessons with respect to other oft-cited solutions. Remember the 1950s? It was a period of unprecedented growth girded by a progressive tax regime that significantly levelled the playing field. People got rich, but not so rich as to tear the very fabric of national unity. And their businesses just kept growing.

The culture of the 1950s encouraged the belief that money was indeed being adequately reinvested in business and growth. By contrast, in this age of disparity, the executive compensation issue has equal but inverse symbolic importance as an ominous sign (whether true or not in terms of actual numbers) that money is being taken out of business and, instead of reinvested for growth, wasted on those who really don’t need it.

The fly in the progressives’ ointment is that no amount of well-intentioned policy can close the wealth gap; that, no matter what combination of “solutions” are implemented, $100 million will always grow exponentially faster than $1 million. It’s the Iron Law of Affluence.

Yet that law does not necessarily compel our retreat from democracy to feudalism. Shared wealth does not mandate equal wealth, and competition can never be a zero sum game. If history teaches anything, it’s that the more of us who succeed, the more we all succeed.

I reckon that’s what Henry Ford was really talking about.

Entrepreneur and venture capitalist Nick Hanauer has written and talked about income inequality and warned rich Americans that “pitchforks are coming” if inequality continued to rise. Yet Hanauer never uses the term “OWNERSHIP,” that is wealth-creating, income-producing capital asset ownership, to explain why the rich are rich.

Here is my comment on the piece that appeared in Politico:

Norman Kurland and  my colleagues and I at the Center for Economic and Social Justice (www.cesj.org) as well as the Unite America Party see Nick Hanauer’s solution (raising the minimum wage) to closing the income gap would necessarily add to the costs of food and other necessities for poor and middle income Americans and would increase the outsourcing of jobs when higher labor cost are added to U.S.-produced goods and services.  The Capital Homestead Act ( http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ ) would grow the U.S. economy faster in a non-inflationary way, create new private sector jobs, finance new productive capital and provide capital incomes for all Americans from the bottom-up by enabling them to own trillions annually in new capital formation and transfers in current assets . . . without taking private property rights away from billionaires such as Nick Hanauer over their existing assets.  Remember the wage system is the cancer.  The ownership system is the answer to address the problem Hanauer wants to solve.

If you want to change this gross economic inequality support the Platform of the Unite America Party.

What Hanauer, other billioinaries, the Democrats and Republicans and all third party leaders need to advocate is their ability to lead America on a path based on a paradigm shift to an equal opportunity economic democracy.

The JUST Third Way is a radical overhaul of the economic system (i.e., the Federal tax system, Federal Reserve policy, inheritance law, welfare and entitlement system, etc.) that will achieve genuine economic democracy, based on the Platform of the Unite America Party and its links and the proposed Capital Homestead Act. Our Platform is a call for a vision of political economy that can unite the left and the right, based on Louis Kelso’s ownership-based paradigm. Now is the time to cure America’s political cancer (Crony Capitalism) and restore America to again becoming a model for global citizens in all countries.

For a new vision see http://www.foreconomicjustice.org/?p=12331 andwww.facebook.com/uniteamericaparty. Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

Congress Must Put The Interest Of The American People First

On July 24, 2014, Philip G. Cohen writes on The Hill Congress Blog:

There have been in the last few months a plethora of U.S. companies that have announced plans to engage in an inversion transaction. Probably the most famous one involved Pfizer Inc.’s attempt to acquire AstraZeneca PLC with the merged parent company to be incorporated outside the U.S. While AstraZeneca rebuffed Pfizer, other transactions are being undertaken or being actively considered.

On July 18, AbbVie Inc. announced it had agreed to buy Irish pharmaceutical company Shire PLC in a $54 billion deal that would result in the parent company incorporated in the U.K. dependency of Jersey, a small island and tax haven in the English Channel. The combined company would be one of the 50 largest companies in the world. Medtronic Inc., a $60 billion medical device company, announced last month its plan to relocate its place of incorporation outside the United States in conjunction with its acquisition of Coviden PLC. Walgreen Co., the giant U.S. drug retailer, is also reported to be considering an inversion in conjunction with exercising its option to acquire the 55 percent of a Swiss entity Alliance Boots GmbH that it doesn’t currently own.

An inversion transaction involves a U.S. incorporated company becoming a foreign incorporated company that is generally continued to be managed in the United States. It’s undertaken to address a provision in the Internal Revenue Code that determines whether a company will be considered to be domestic by virtue of the entity’s place of incorporation.

U.S. incorporated companies are subject to tax on income earned anywhere in the world although active non-U.S. earnings of foreign subsidiaries are generally not taxed until repatriated back to the U.S. parent company. If the parent company is considered foreign for U.S. income tax purposes, it will still pay U.S. income tax on earnings from its U.S. activities but will be able to avoid tax on foreign earnings. Furthermore, the inverted companies will also have available techniques to reduce tax on its U.S. operations by, e.g., paying interest and royalties to its new foreign parent company or other low taxed foreign group members. These techniques are presently available to traditional foreign companies with U.S. operations.

Internal Revenue Code section 7874 currently provides that in general if at least 80 percent of the stock of a former U.S. company is owned by the former shareholders of the inverted company, the company is treated as a U.S. corporation for U.S. income tax purposes. To avoid this provision, inversion transactions are currently being structured so that shareholders of the foreign target company hold more than 20 percent of the merged company.

Inversion transactions are legal, and CEOs have a primary responsibility to act in the best interest of their shareholders. Since inversion transactions can be structured legally under current law and may substantially increase after-tax earnings, they need to be considered by corporate management.

Some members of Congress, especially Republicans, have argued that the answer to inversion transactions is to undertake as part of fundamental tax reform, territorial taxation pursuant to which active foreign earnings become exempt from U.S. taxation. Some refer to inversions as self-help territorial taxation. While adopting territorial taxation would do away with the need to undertake the transaction, it could also lead to further increased migration of good jobs, facilities and taxable income from the U.S.

In a July 15, 2014 letter to House Ways and Means Committee Chairman David Camp (R.-Mich.), Secretary of Treasury Jacob Lew urged Congress to immediately enact anti-inversion legislation. Senator Ron Wyden (D-Ore.), chairman of the Senate Finance Committee responded to Secretary Lew’s request by stating that “[t]his inversion loophole must be plugged.”  Democratic members in both houses of Congress have proposed legislation to halt inversion activity with a retroactive effective date.

Under the proposals, the 80 percent threshold under current law would drop to 50 percent and regardless of the degree of legacy shareholder continuity, the company would be treated as domestic if both management and control of the group remains in the U.S. and the company has significant business activities in the U.S. The legislation is a sensible response to a real problem that can exacerbate the nation’s budget deficit unless addressed.

There are legitimate problems with the current U.S. corporate tax system. The statutory corporate tax rate is the highest in the world. Foreign earnings are trapped overseas, known as the lockout effect, because U.S. companies don’t want to pay tax on these earnings. Our corporate tax base needs to be broadened. These should be addressed in the near term, but they shouldn’t serve as an excuse for members of Congress doing nothing about inversions.

While the CEO’s chief responsibility is to his shareholders, Congress’ obligation is to the best interests of the American people. Inaction or flawed legislation may be welcome by many U.S. multinational companies, but it is the duty of Congress to balance the legitimate needs of U.S. multinationals to compete with foreign rivals headquartered in countries utilizing territorial taxation, with other objectives of our tax system including expanding businesses in the U.S. and meeting the need for tax revenue. While the goals for our tax system by U.S. multinationals and those that are in the best interest of the American people may in many instances overlap, they are not concurrent.

This is a “big picture” problem that our nation and other nations face. Because the system facilitates non-human capital asset wealth being constantly monopolized by the wealthy ownership class, which is often referred to as “the 1 percent,” who are the primary owners of American corporations, without a stiff corporate income tax it will be virtually impossible to incentivize corporations to pay out fully their earnings to their stockholders, who would be ALL taxed at the personal tax rate. We should want to eliminate double taxation (at the corporate and personal levels) to incentivize corporations to issue and sell new stock to raise monies to invest in new plant and machinery capital assets  to create economic growth. This is the pathway to creating new owners and broadening wealth-creating, income-producing capital ownership to EVERY child, woman and man. EVERY citizen should be empowered equally to have access to insured, interest-free capital credit loans issued by local banks backed by the Federal Reserve to acquire new stock issues in qualified corporations with the principal and insurance fee repayable out of the FUTURE earnings of the investment. This would provide American corporations with all the monies they would need to grow, which in turn would substantially accelerate the growth of the economy, create new capital owners who would benefit from a new income source, and create new job opportunities as the economy revs up to produce general affluence for EVERY citizen. These policies would create a nation of “customers with money,” who overtime can build substantial financial security and eliminate reliance on taxpayer-supported government.

If we further lower or eliminate corporate income tax rates we eliminate our ability to incentivize corporations to finance new growth by creating new owners, without taking away ownership from those who are already owners.

We need to define an American corporation with at least better than 60 percent ownership vested with American citizens. We also need to  look at tariffs on non-American corporations who would have tax advantages over American corporations.

We also need to condition awarding ALL taxpayer-supported federal contracts (corporate welfare) on the basis that EVERY company vying for a government contract demonstrate that they are broadly owned including ownership by their employees. We need to ensure  that if a corporation wants the advantages of being an American company then they should not be able run away from America to avoid paying taxes.  Either American corporations pay a stiff corporate tax and remain narrowly owned or they pay no corporate tax but are structured such that they are owned broadly and by their employees. Such policies will stimulate a new era in American technological innovation.

Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/.

Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

http://thehill.com/blogs/congress-blog/economy-budget/213152-congress-must-put-the-interest-of-the-american-people

What Does the Minimum Wage Do? An Interview With Author/Economist Paul Wolfson

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On July 24, 2014, Jared Bernstein writes on The Huffington Post:

To celebrate the fifth anniversary of the last increase in the federal minimum wage and to call attention to the fact that the federal wage floor has not risen in five years, the US Department of Labor has declared July 24th to be a “Day of Action.”

Coincidentally, a new book surveying the scholarly literature on the effects of the minimum wage, What Does the Minimum Wage Do? came out earlier this month, written by Dale Belman and Paul Wolfson. Below, I interview Mr. Wolfson (who’s an old friend, btw).

JB: What does your work suggest about the Fair Minimum Wage Act (FMWA): the proposal to raise the federal minimum wage from its current value of $7.25 to $10.10 in three annual steps and then index it to inflation?

PW: First, our work: in our book, we surveyed more than 70 analyses of the effect of the minimum wage on employment. By and large, the strongest studies in terms of statistical rigor reported an effect on employment that ranged between negligible and none. In addition, we performed our own meta-analysis, a procedure that combines the results of different studies in a statistically rigorous way, and this confirmed the result of “negligible to none.”

How does this relate to the FMWA? The proposal would increase the federal minimum in three $0.95 steps of 13%, 12% and 10% each. In the last 35 years, increases in the Federal Minimum Wage have ranged between 7% and 14%, with an average increase of 11%-12%. Thus, the proposed increases are quite typical of historical experience, and this suggests that if there is any effect on employment it will be too small to be detectible.

JB: At least as interesting as the question of the minimum wage and employment is “What is the effect of the minimum wage on low income families?” What can you say about this?

PW: We discovered in the course of writing the book that there’s actually little useful work that addresses this issue. Nearly all of the studies in this area instead ask whether the minimum wage has reduced the percentage of families whose income places them below the poverty line. For several reasons, this turns out not to be an interesting question. First, the poverty line was developed about a half century ago and is widely regarded as an out-of-date measure of economic well-being. Second, it leaves out a variety of government programs that effectively increase family income.

A more interesting question asks whether the minimum wage has a noticeable effect on the incomes of low income families, some of whom are officially poor, some of whom are not.

Economist Arin Dube of the University of Massachussetts-Amherst recently completed a statistically sophisticated analysis of the effect of the minimum wage on different parts of the income distribution, from the incomes of very poor families all the way up to those we might call the lower middle class or solidly middle class. He reports that “the evidence clearly points to moderate income gains for low income families as a result of minimum wage increases.”

JB: Your book is titled: What Does the Minimum Wage Do? How about giving us the elevator ride answer to that question.

PW: Limiting my answer to the historical experience, it does not have much or any effect on either the level of employment or on the unemployment rate. It appears to reduce churn in the labor market, both the amount of hiring and the amount of quits and firings. In fact, this may be one way in which the wage increase is absorbed: by lowering costs to low-wage employers of turnovers, vacancies, and training new workers.

The minimum wage increases wages for the lowest paid 10% of all employees and perhaps as much as the lowest paid 30% of women. This is pretty much all that we can be fairly confident about, and it is these effects that led my co-author to say that the American experience of the minimum wage is largely one of intended consequences. Despite the hundreds of studies in just the last 25 years, much remains unknown or known with insufficient certainty: the effect of the minimum wage on low incomes, on prices and output, on the different employment and unemployment experience of men and women, on the people’s choices to remain in or leave school, to name just a few. Work has been done in each of these areas, but either too little to be yet confident of the results or too much of what exists turns out to be plagued by statistical problems of one sort or another.

JB: So, if it’s not through cutting jobs, how do low-wage firms absorb the increase in labor costs?

PW: Again, we don’t know for sure, but one possibility mentioned above is the reduction in turnover. This has two effects. One is a more experienced labor force (since employees hang around longer). The second is lower hiring costs, perhaps low enough to encourage firms to expand slightly since they expect to have a longer period for amortizing these expenses. In addition to the reduction in turnover, there is mixed evidence that restaurants (and other firms) respond by increasing prices, somewhat more evidence in favor than against. Similarly, studies that look for the response in lower levels of firm profits also report mixed evidence, generally considerably weaker than that for prices. Finally, there are hints that the higher minimum wage draws people into the labor force who had been sitting it out, leading to an increase in the average quality of prospective employees and thus more efficient firms. All of these things may be in play, each individually too small to be easy to detect in the available data with current techniques.

This post originally appeared at Jared Bernstein’s On The Economy blog.

 

Whether or not raising the minimum wage is harmful and will cause less employment should be discussed within the larger scope of economic inequality. The proposed measures are at best a sedative to ease the pain of deteriorating livelihoods, but not the solution that is necessary to significantly address income disparities between the wealthy ownership class and the propertyless, non- and under-capitalized American majority.

A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production and global competitive pressures.

There is a solution, which will result in double-digit economic growth and significant job opportunities, and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows over time, providing the means to support themselves and their families with an affluent lifestyle. The JUST Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.

See two references to the proposed Capital Homestead Act, the centerpiece of legislation of The JUST Third Way at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.

See two references to the proposed Capital Homestead Act, the center piece of legislation of The JUST Third Way at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.

For more on how to accomplish necessary structural reform, see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.

See the article “Ownership––The Minimum Wage Replacement” at http://www.nationofchange.org/ownership-minimum-wage-replacement-1392301004.

http://www.huffingtonpost.com/jared-bernstein/what-does-the-minimum-wag_b_5617352.html

Why Voters Aren’t Angrier About Economic Inequality

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A demonstration in Washington in January 2012 connected to the Occupy Wall Street protest.CreditDoug Mills/The New York Times

On July 24, 2014, Edurado Porter writes in The New York Times:

Why don’t governments in democratic societies do more to combat income inequality?

Scholars have grappled with this question for years. The median voter theory, a longstanding workhorse of political science, predicts that politicians hoping to get elected will seek to close a growing income gap to woo the big bulk of voters in the middle who feel left behind by the fortunate few.

Yet elegant as it is, this idea doesn’t quite mesh with reality. Researchreveals little connection between the income gaps in any given country and its government’s effort to close it by taxing the rich to spend on the poor.

There are good reasons why not. The poor vote less than the rich, reducing their electoral clout. And they don’t vote exclusively on the basis of their economic self-interest, but are often swayed by noneconomic issues, like abortion, the environment or gun control.

What’s more, the rich might simply buy political power and use it to maintain their privilege. The political scientist Larry Bartels hasdocumented that the rich have about three times as much influence as the poor on votes in the United States Senate.

Researchers at the University of Hannover in Germany propose a simpler reason: Voters don’t demand more redistribution because they don’t grasp how deep inequality is.

Using data from the International Social Survey Programme, in which respondents were asked to locate their relative income status on a scale of 1 to 10, Carina Engelhardt and Andreas Wagener built a measure of perceived inequality, defined as the gap between the median income, smack in the middle of the distribution, and the average income of the population.

Evidently, nobody has a clue: In every one of the 26 nations, most of them in the developed world, for which they collected data, people believe that the income gap is smaller than it really is. And using perceived rather than actual inequality, the median voter theory works much better: Where people believe inequality is worse, governments tend to redistribute more.

“If citizen-voters see an issue, politics has to respond – even if there is no issue,” they concluded. “Conversely, if a real problem is not salient with voters, it will probably not be pursued forcefully.”

This could go some distance toward explaining the American experience. People in the United States not only tolerate one of the widest income gapsin the developed world, but its government also ranks among the stingiestin terms of efforts at redressing the imbalance.

Unsurprisingly, Americans suffer from a pretty big perception gap. They think an American in the middle of the income distribution makes only 4 percent less than the national average, according to Ms. Engelhardt and Mr. Wagener’s research. In truth, the American in the middle makes 16 percent less.

Misjudgments in Inequality

Inequality of income is underestimated everywhere.

1
1.1
1.2
1.3
1.4
1.5
1.4
1.2
1
Actual Income Gap
Perceived Income Gap
Denmark
Mexico
Slovenia
South Korea
Turkey
Britain
United States
Actual gap equals perceived gap
The income gap in Mexico is much higher than Mexicans perceive it to be.

Source: O.E.C.D.; Carina Engelhardt and Andreas Wagener
Inequality is measured by the gap between the income of a citizen in the middle of the income distribution and the average income of the population.

Much is made of Americans’ particular ideological bent. Many, rich and poor, distrust government. They support free-market capitalism and tend to view the distribution of the nation’s economic fruits as roughly fair.

Would Americans demand more Robin Hood policies if they understood the depth of inequity? Research by economists at Harvard and the Universidad Nacional de Las Plata in Argentina found that Argentines who had overestimated their rank on the national income scale demanded more redistribution when they were confronted with the truth.

When Dan Ariely of Duke and Michael Norton of Harvard Business School asked an online panel to build a “Better America,” respondents proposed ideal distributions of wealth that were much more equitable than what they thought was reality.

And, of course, reality is much more unequal than they thought.

Unfortunately, the author and the referenced researchers are stuck in the unworkable paradigm that the solution to economic inequality is redistribution––the taking from those who are productive and spreading money or welfare services out to those who are not productive.
The REAL solution is not redistribution, except in the most dire emergency situations, but FUTURE distribution via broadened individual ownership of new, wealth-creating, income-producting capital assets. This can be accomplished using insured, interest-free capital credit loans repayable out of the FUTURE earnings of the investments in the economy’s FUTURE growth.
For specifics of this solution read the proposed Capital Homestead Act beginning with the overviews at athttp://www.cesj.org/…/capital-homestead-act-a-plan-for…/ andhttp://www.cesj.org/…/capital-homestead-act-summary/.

A 401(k) For All

On July 22, 2014, Gene B. Sperling writes in The New York Times:

ONE compelling way to turn the ongoing national discussion on wealth inequality into a tangible policy to help Americans increase their wealth and savings would be to fix what I have long called our “upside-down” tax incentive system for retirement savings. In its current form, it makes higher-income Americans triple winners and people earning less money triple losers.

How so? First, the federal government’s use of tax deductibility to encourage savings turns our progressive structure for taxing income into a regressive one: While earners in the highest income bracket get a 39.6 percent deduction for savings, the hardest-pressed workers, those in the lowest tax bracket, get only a 10 percent deduction for every dollar they manage to put away.

Second, while less than 1 percent of lower- and moderate-income Americans can put aside enough to fully “max out” their benefits on I.R.A. contributions, higher-income Americans can maximize their return on savings by sampling from a menu of tax-preferred savings options. A business owner could theoretically benefit from a 401(k), a SEP I.R.A. of up to $52,000 and a state-based 529 program that allows tax-free savings for college education.

Finally, a far larger share of upper-income Americans get matching incentives for savings from their employers. Members of Congress and the White House staff, for example, get an 80 percent match for saving 5 percent of their income. But while half of Americans earning more than $100,000 get an employer match, only 4 percent of those earning under $30,000 and less than 2 percent of those making under $20,000 get any employer match for saving.

The results are stunning. Last year, of the $137 billion in tax benefits that went to encourage retirement savings, three times more went to the top 10 percent of taxpayers than to the bottom 60 percent. The top 5 percent of taxpayers get more tax relief for savings than the bottom 80 percent. If the main justification for savings incentives is to help workers overcome shortsightedness about the benefits of long-term accumulated savings, how is it defensible to focus so many of our resources on those best poised to save anyway?

One intermediate step would be to replace our regressive system of relying on tax deductibility with a flat tax credit that would give every American a 28 percent tax credit for savings, regardless of income. But why should we stop there? If we know that 401(k)’s with automatic payroll deductions and matching incentives work beautifully for those with access to them, why would we not institute a 401(k) for everyone?

A government-funded universal 401(k) would give lower- and moderate-income Americans a dollar-for-dollar matching credit for up to $4,000 saved annually per household. Upper-middle-class Americans could get at least a 60 percent match — doubling the incentive they get today. The match would be open to workers even if their employers were already matching, which would encourage employers to keep contributing to savings. The match would also be available through I.R.A. contributions for those who were self-employed or who wanted to keep saving even while they were temporarily not working.

Employers would have to provide automatic payroll deductions for their employees (while allowing those who still wanted to opt out to do so). Setting the default at “opting in” would ensure that workers did not miss out on the match provided by a universal 401(k). The government could set requirements for low fees, transparency and safety to allow for vigorous competition in the private sector while allowing individual savers access to a version of the plan that members of Congress use for their own retirement savings.

Costs need not be a roadblock. Among many ways to do it, moderate reforms to the estate tax could allow married couples to leave up to $7 million to their heirs tax-free (instead of the current $10.7 million) while generating over $200 billion in resources over the next decade, which could be used to help tens of millions of savers build their own estates. Even if a universal 401(k) ended up costing the government more than expected, it would still increase national savings overall if the public incentives led to additional private savings.

While President Clinton put forward a similar USA Account proposal in 1999 and President Obama has promoted automatic savings proposals since 2009, these ideas have gotten lost in partisan debates on fiscal and Social Security reform.

But with the economy recovering and many Americans beginning to focus on rebuilding lost nest eggs, politicians on all sides should see something they like in a policy that would both reduce wealth inequality and encourage individual wealth creation.

Instead of a focus on “past savings” and depletion of monthly wage earnings through contributions to 401(k)s, we should create equal opportunities for EVERY child, woman and man to build a wealth-creating, income-producing Capital Homestead Account (CHA) using the financial mechanism of insured, interest-free capital credit local bank loans backed by the Federal Reserve that would be repayable out of the FUTURE (“future savings”) earnings of the capital asset investments, without requiring a reduction in their consumption income, and without taking anything from those who are already in the wealthy ownership class.

What Gene Sperling, the Democrats and Republicans and all third party leaders need to advocate is their ability to lead America on a path based on a paradigm shift to an equal opportunity economic democracy not requiring “past savings” to build financial security.

The JUST Third Way is a radical overhaul of the economic system (i.e., the Federal tax system, Federal Reserve policy, inheritance law, welfare and entitlement system, etc.) that will achieve genuine economic democracy, based on the Platform of the Unite America Party and its links and the proposed Capital Homestead Act. Our Platform is a call for a vision of political economy that can unite the left and the right, based on Louis Kelso’s ownership-based paradigm. Now is the time to cure America’s political cancer (Crony Capitalism) and restore America to again becoming a model for global citizens in all countries.

For a new vision see http://www.foreconomicjustice.org/?p=12331 andwww.facebook.com/uniteamericaparty. Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

http://www.nytimes.com/2014/07/23/opinion/a-401-k-for-all.html?smid=fb-share&_r=0

Positively Un-American Tax Dodges

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Bigtime companies are moving their “headquarters” overseas to dodge billions in taxes … that means the rest of us pay their share.

On July 7, 2014, Alan Sloan writes in Fortune Magazine:

Ah, July! What a great month for those of us who celebrate American exceptionalism. There’s the lead-up to the Fourth, countrywide Independence Day celebrations including my town’s local Revolutionary War reenactment and fireworks, the enjoyable days of high summer, and, for the fortunate, the prospect of some time at the beach.

Sorry, but this year, July isn’t going to work for me. That’s because of a new kind of American corporate exceptionalism: companies that have decided to desert our country to avoid paying taxes but expect to keep receiving the full array of benefits that being American confers, and that everyone else is paying for.

Yes, leaving the country–a process that tax techies call inversion–is perfectly legal. A company does this by reincorporating in a place like Ireland, where the corporate tax rate is 12.5%, compared with 35% in the U.S. Inversion also makes it easier to divert what would normally be U.S. earnings to foreign, lower-tax locales. But being legal isn’t the same as being right. If a few companies invert, it’s irritating but no big deal for our society. But mass inversion is a whole other thing, and that’s where we’re heading.

We’ve also got a second, related problem, which I call the “never-heres.” They include formerly private companies like Accenture  ACN 0.37% , a consulting firm that was spun off from Arthur Andersen, and disc-drive maker Seagate  STX , which began as a U.S. company, went private in a 2000 buyout and was moved to the Cayman Islands, went public in 2002, then moved to Ireland from the Caymans in 2010. Firms like these can duck lots of U.S. taxes without being accused of having deserted our country because technically they were never here. So far, by Fortune’s count, some 60 U.S. companies have chosen the never-here or the inversion route, and others are lining up to leave.

All of this threatens to undermine our tax base, with projected losses in the billions. It also threatens to undermine the American public’s already shrinking respect for big corporations.

Inverters, of course, have a different view of things. It goes something like this: The U.S. tax rate is too high, and uncompetitive. Unlike many other countries, the U.S. taxes all profits worldwide, not just those earned here. A domicile abroad can offer a more competitive corporate tax rate. Fiduciary duty to shareholders requires that companies maximize returns.

My answer: Fight to fix the tax code, but don’t desert the country. And I define “fiduciary duty” as the obligation to produce the best long-term results for shareholders, not “get the stock price up today.” Undermining the finances of the federal government by inverting helps undermine our economy. And that’s a bad thing, in the long run, for companies that do business in America.

Finally, there’s reputational risk. I wouldn’t be surprised to see someone in Washington call public hearings and ask CEOs of inverters and would-be inverters why they think it’s okay for them to remain U.S. citizens while their companies renounce citizenship. Imagine the reaction! And the punitive legislation it could spark.

WATCH: Inversion: How some major U.S. companies are dodging taxes

Fortune contacted every company on our list of tax avoidersand asked why they incorporated overseas. Four of them–Carnival  CCL , Garmin  GRMN 0.49% , Invesco  IVZ -0.31% , and XL  XL 0.63% –said they were never U.S. companies. In other words, they are never-heres. Five more–Actavis  ACT 1.51% , Allegion  ALLE -0.82% , Eaton  ETN -0.37% , Ingersoll Rand  IR -0.42% , and Perrigo  PRGO 1.26% –said they inverted mainly for strategic purposes. The tenth, Nabors  NBR 1.21% , refused to respond to our multiple requests.

Companies that have gone the inversion or never-here route but that act American include household names like Garmin, Michael Kors  KORS -0.62% , Carnival, and Nielsen  NLSN 0.56% . Pfizer  PFE -0.33% , the giant pharmaceutical company, tried to invert this spring, but the deal fell through. Medtronic  MDT 1.05% , the big medical-device company, is trying to invert, of which more later. Walgreen  WAG 0.05%  is talking about inverting too–it’s easier to boost earnings by playing tax games than by fixing the way you run your stores.

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Then there’s the “Can you believe this?” factor. Carnival, a Panama-based company with headquarters in Miami, was happy to have the U.S. Coast Guard, for which it doesn’t pay its fair share, help rescue its burning Carnival Triumph. (It later reimbursed Uncle Sam.) Alexander Cutler, chief executive of Eaton, a Cleveland company that he inverted to Ireland, told the City Club of Cleveland, without a trace of irony, that to fix our nation’s budget problems, we need to close “those loopholes in the tax system.” Inversions, I guess, aren’t loopholes.

Before we proceed, a brief confessional rant: The spectacle of American corporations deserting our country to dodge taxes while expecting to get the same benefits that good corporate citizens get makes me deeply angry. It’s the same way that I felt when idiots and incompetents in Washington brought us to the brink of defaulting on our national debt in the summer of 2011, the last time that I wrote anything angry at remotely this length. (See “American Idiots.”) Except that this is worse.

Inverters don’t hesitate to take advantage of the great things that make America America: our deep financial markets, our democracy and rule of law, our military might, our intellectual and physical infrastructure, our national research programs, all the terrific places our country offers for employees and their families to live. But inverters do hesitate–totally–when it’s time to ante up their fair share of financial support of our system.

Inverting a company, which is done in the name of “shareholder value”–a euphemism for a higher stock price–is way more offensive to me than even the most disgusting (albeit not illegal) tax games that companies like Apple  AAPL 2.61%  and GE  GE -0.42%  play to siphon earnings out of the U.S. At least those companies remain American. It may be for technical reasons that I won’t bore you with–but I don’t care. What matters is the result. Apple and GE remain American. Inverters are deserters.

Even though I understand inversion intellectually, I have trouble dealing with it emotionally. Maybe it’s because of my background: I’m the grandson of immigrants, and I’m profoundly grateful that this country took my family in. Watching companies walk out just to cut their taxes turns my stomach.

Okay, rant over.

The current poster child for inversion outrage is Medtronic Inc., the multinational Minnesota medical-device company that once exuded a cleaner-than-clean image but now proposes to move its nominal headquarters to Ireland by paying a fat premium price to purchase Covidien  COV 0.45% , itself a faux-Irish firm that is run from Massachusetts except for income-taxpaying purposes. For that, it’s based in Dublin. That’s where the new Medtronic PLC would be based, while its real headquarters would remain on Medtronic Parkway in Minneapolis. Of course, the company is unlikely to return any of the $484 million worth of contracts the federal government says it has awarded Medtronic over the past five years.

If the Medtronic deal goes through, which seems likely, it will open the floodgates. Congress could close them, as we’ll see–but that would require our representatives and senators to get their act together. Good luck with that.

Now let’s have a look at some of the more interesting aspects of the proposed Medtronic-Covidien marriage. I’m not trying to pick on Medtronic–but its decision to become the biggest company to invert makes it fair journalistic game.

Medtronic is one of those U.S. companies with a ton of cash offshore: something like $14 billion. That’s money on which U.S. income tax hasn’t been paid. Medtronic told me it would have to pay $3.5 billion to $4.2 billion to the IRS if it brought that money into the U.S.: That’s the difference between the 35% U.S. tax rate and the 5% to 10% it has paid to other countries. Among other things, inverting would let Medtronic PLC use offshore cash to pay dividends without subjecting the money to U.S. corporate tax.

I especially love a little-noticed multimillion-dollar goody that Medtronic is giving its board members and top executives. Years ago, in order to discourage inversions, Congress imposed a 15% excise tax on the value of options and restricted stock owned by top officers and board members of inverting companies. Guess what? Medtronic says it’s going to give the affected people enough money to pay the tax.

We’re talking major money–major money that I’m glad to say isn’t tax-deductible to Medtronic. The company wouldn’t tell me how much this would cost its stockholders. So I did my own back-of-the-envelope math, starting with chief executive Omar Ishrak. Using numbers from Medtronic’s 2014 proxy statement and adjusting for its stock price when I was writing this, I figure that his options and restricted shares are worth at least $40 million, and the “equity incentive plan awards” that he might get are worth another $23 million. Allow for the fact that Medtronic will “gross up” Ishrak et al. by giving them enough money to cover both the excise tax and the tax due on their excise tax subsidy, and you end up with $7.1 million to $11.2 million just for Ishrak. And something more than $60 million for Medtronic as a whole.

Why does Medtronic feel the need to shell out this money? The company’s answer: “Medtronic has agreed to indemnify directors and executive officers for such excise tax because they should not be discouraged from taking actions that they believe are in the best interests of Medtronic and its shareholders.”

But you know what, folks? These people are fiduciaries, who are legally required to put shareholders’ interests ahead of their own. If they believe that inverting is the right thing to do (which, it should be obvious by now, I don’t) they ought to pay any expenses they incur out of their own pockets, not the shareholders’. It’s not as if these people lack the means to pay–the directors get $220,000 a year (and up) in cash and stock for a part-time job, and Ishrak gets a typical hefty CEO package.

One more thing: Normally, a company’s shareholders don’t have to pay capital gains tax if their firm makes an acquisition. But because this is an inversion, Medtronic shareholders will be treated as if they’ve sold their shares and will owe taxes on their gains. However, the deal won’t give them any cash with which to pay the tab.

The company asked me to mention that its executives and directors, like other holders, will be subject to gains tax on shares that they own outright, and Medtronic won’t compensate them for it. Okay. Consider it mentioned.

Second, the company contends that this deal will be so good for shareholders that it will more than offset their tax cost triggered by the board’s decision to invert. Well, we’ll see.

A major barrier to inversion used to be that companies moving offshore were kicked out of the Standard & Poor’s 500 index. Given that more than 10% (by my estimate) of the S&P 500 stocks are owned by indexers, getting tossed out of the index–or being added to it–makes a big, short-term difference in share price. In 2008 and 2009, S&P, which has a few never-heres, tossed nine companies off the 500 for inverting. But four years ago, S&P changed course, for business reasons. Companies were angry at being excluded, and index investors wanted to own some of the excluded companies. Moreover, S&P feared that a competitor would set up a more inclusive, rival index.

So in June 2010, S&P changed its definition of American. Now all it takes to be in the S&P 500 is to trade on a U.S. market, be considered a U.S. filer by the Securities and Exchange Commission, and have a plurality of business and/or assets in the U.S.

The result: S&P now has 28 non-American companies in the 500.

How much money are we talking about inverters sucking out of the U.S. Treasury? There’s no number available for the tax revenue losses caused by inverters and never-heres so far. But it’s clearly in the billions. Congress’s Joint Committee on Taxation projects that failing to limit inversions will cost the Treasury an additional $19.5 billion over 10 years–a number that seems way low, given the looming stampede. But even $19.5 billion–$ 2billion a year–is a lot, if you look at it the right way. It’s enough to cover what Uncle Sam spends on programs to help homeless veterans and to conduct research to create better prosthetic arms and legs for our wounded warriors.

Rep. Sandy Levin (D-Mich.) and his brother, Sen. Carl Levin (D-Mich.), have introduced legislation that would stop Medtronic in its tracks by making inversions harder. Under current law, adopted in 2004 as an inversion stopper, a U.S. company can invert only if it is doing significant business in its new domicile and shareholders of the foreign company it buys to do the inversion own at least 20% of the combined firm.

The Levins propose to require that foreign-firm shareholders own at least 50% of the combined company for it to be able to invert and also that the company’s management change. This would really slow down inversions–but the chances of Congress passing the Levin legislation are somewhere between slim and none.

Conventional wisdom holds that companies are inverting now because they’ve despaired of getting clean-cut reform that would widen the tax base and lower rates. But John Buckley, former chief Democratic tax counsel for the House Ways and Means Committee, has a different view. Buckley thinks that we’re seeing an inversion wave not because there’s no prospect of tax reform but because there is a prospect of reform. If reform comes, he says, there will be winners and losers–and it’s the likely losers-to-be that are inverting. “Even minimal tax reform would hurt a lot of these companies badly,” he says.

For example, Buckley says, a company that inverts before reform takes effect will be able to suck income out of the U.S. to lower-tax locales much more easily than if it were still a U.S. company. “A revenue-neutral tax reform requires there to be winners and losers,” Buckley says. “But by inverting, the companies that would be losers are taking themselves out of the equation … They’re taking advantage of both U.S. individual taxpayers and other corporations.”

If you’re a typical CEO who has read this far, about now you’re shaking your head and thinking, “What a jerk! Just cut my tax rate and I’ll stay.” To which I say, “I wouldn’t bet on it.” In the widely hailed 1986 tax reform act, Congress cut the corporate rate to 34% (now 35%) from 46%, and closed some loopholes. Corporate America was happy–for awhile. Now, with Ireland at 12.5% and Britain at 20% (or less, if you make a deal), 35% is intolerable. Let’s say we cut the rate to 25%, the wished-for number I hear bandied about. Other countries are lower, and could go lower still in order to lure our companies. Is Corporate America willing to pay any corporate rate above zero? I wonder.

So what do we need? I’ll offer you a bipartisan solution–no, I’m not kidding. For starters, we need to tighten inversion rules as proposed by Sandy and Carl Levin, who are both bigtime Democrats. That would buy time to erect a more rational corporate tax structure than we have now–bolstered, I hope, by input from tough-minded tax techies.

We also need loophole tighteners along the lines of proposals in the Republican-sponsored, dead-on-arrival Tax Reform Act of 2014. One part would have imposed a tax of 8.75% a year on cash and cash equivalents held offshore, and 3.5% a year on other retained offshore earnings.

Another thing we need to do–which the SEC or the Financial Accounting Standards Board could do in a heartbeat, but won’t–is require publicly traded U.S. companies and U.S. subsidiaries of publicly traded foreign companies to disclose two numbers from the tax returns they file with the IRS: their U.S. taxable income for a given year, and how much income tax they owed. This would take perhaps one person-hour a year per company.

That way we would know what firms actually pay instead of having to guess at it. Then we could compare and contrast companies’ income tax payments.

What we don’t need is another one-time “tax holiday,” like the one being proposed by Sen. Harry Reid (D-Nev.), to let companies pay 9.5% rather than 35% to bring earnings held offshore into the U.S. It would be the second time in a decade we’ve done that, and would signal tax avoiders that they should keep sending tons of money offshore, then wait for a tax holiday–presumably not on the Fourth of July–to bring it back.

Until–and unless–we somehow get our act together on corporate tax reform, companies will keep leaving our country. Those that try to do the right thing and act like good American corporate citizens will come under increasing pressure to invert, if only to fend off possible attacks by corporate pirates–I’m sorry, “activist investors”–who see inversion as a way to get a quick uptick in their targets’ stock price.

Now, two brief rays of sunshine: one in England, one here.

Starbucks  SBUX 0.51% , embarrassed by a 2012 Reuters exposé showing that it paid little or no taxes in England despite telling shareholders it made big profits there, has recently apologized and now makes substantial British tax payments. And eBay  EBAY 1.17% , God bless it, decided to bring $9 billion of offshore cash into the U.S. and pay taxes on it.

So I’m feeling a bit better about July than when I started writing this. In any event, a happy summer to you and yours.

Additional reporting: Marty Jones Mehboob Jeelani, Phil Wahba, and Michael Casey

This story is from the July 21, 2014 issue of  Fortune.

 

This is a “big picture” problem that our nation and other nations face. Because the system facilitates non-human capital asset wealth being constantly monopolized by the wealthy ownership class, which is often referred to as “the 1 percent,” who are the primary owners of American corporations, without a stiff corporate income tax it will be virtually impossible to incentivize corporations to pay out fully their earnings to their stockholders, who would be ALL taxed at the personal tax rate. We should want to eliminate double taxation (at the corporate and personal levels) to incentivize corporations to issue and sell new stock to raise monies to invest in new plant and machinery capital assets  to create economic growth. This is the pathway to creating new owners and broadening wealth-creating, income-producing capital ownership to EVERY child, woman and man. EVERY citizen should be empowered equally to have access to insured, interest-free capital credit loans issued by local banks backed by the Federal Reserve to acquire new stock issues in qualified corporations with the principal and insurance fee repayable out of the FUTURE earnings of the investment. This would provide American corporations with all the monies they would need to grow, which in turn would substantially accelerate the growth of the economy, create new capital owners who would benefit from a new income source, and create new job opportunities as the economy revs up to produce general affluence for EVERY citizen. These policies would create a nation of “customers with money,” who overtime can build substantial financial security and eliminate reliance on taxpayer-supported government.

If we further lower or eliminate corporate income tax rates we eliminate our ability to incentivize corporations to finance new growth by creating new owners, without taking away ownership from those who are already owners.

We need to define an American corporation with at least better than 60 percent ownership vested with American citizens. We also need to  look at tariffs on non-American corporations who would have tax advantages over American corporations.

We also need to condition awarding ALL taxpayer-supported federal contracts (corporate welfare) on the basis that EVERY company vying for a government contract demonstrate that they are broadly owned including ownership by their employees. We need to ensure  that if a corporation wants the advantages of being an American company then they should not be able run away from America to avoid paying taxes.  Either American corporations pay a stiff corporate tax and remain narrowly owned or they pay no corporate tax but are structured such that they are owned broadly and by their employees. Such policies will stimulate a new era in American technological innovation.

Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/.

Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

http://fortune.com/2014/07/07/taxes-offshore-dodge/

http://fortune.com/2014/07/22/corporate-tax-dodge-inversions-congress/

http://fortune.com/2014/07/18/are-u-s-corporate-tax-inversions-a-necessary-crisis/

http://fortune.com/2014/07/22/allan-sloans-congressional-testimony-on-tax-inversions/

Jacob Lew Calls For ‘Economic Patriotism,’ Seeks To Limit Offshore Tax Moves

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Treasury Secretary Jacob Lew says a trend of U.S. companies reorganizing as foreign firms serves “to hollow out the U.S. corporate income tax base.” Above, Lew at a forum this month in Washington. (Saul Loeb / AFP/Getty Images)

On July 17, 2014, Jim Puzzanghera writes in the Los Angeles Times:

Calling for “a new sense of economic patriotism,” a top Obama administration official urged Congress to take immediate action to stop U.S. companies from reorganizing as foreign firms to avoid paying taxes.

The maneuver, known as tax inversion, serves “to hollow out the U.S. corporate income tax base,” Treasury Secretary Jacob J. Lew wrote in a letter Tuesday to congressional leaders that was obtained by the Times.

“What we need as a nation is a new sense of economic patriotism, where we all rise or fall together,” Lew wrote to the top Democrats and Republicans on the congressional tax-writing committees.

“We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes,” he said.

Some lawmakers have pushed to restrict the practice, in which a U.S.-based multinational company restructures so the parent company is a foreign corporation.

The maneuver allows firms to avoid paying corporate taxes in the U.S., which has the highest rate among major developed nations.

Starting Salaries For College Grads Lag Behind Pay For Workers Overall

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A new report says the median wages of recent college graduates have not kept pace with the pay of the overall U.S. workforce. Above, UCLA’s 2013 commencement. (Wally Skalij / Los Angeles Times)

On July 22, 2014, Chris Kirkham writes in the Los Angeles Times:

Starting salaries for recent college graduates have risen far more slowly than the average earnings of all U.S. workers since the recession, an analysis by the Federal Reserve Bank of San Francisco found.

The study, released Monday, found that median earnings for recent college graduates rose only 6% in the seven years between 2006 and 2013, less than half the rise of 15% for the overall U.S. workforce over roughly the same period.

Such disparities in pay growth rates have been seen in previous recessions, but the report says the current one “is substantially larger and has lasted longer than in the past.”

“The gap between the two groups of employees appears to be substantially wider and their paths appear more divergent,” the report found.

College graduates are particularly susceptible to wage stagnation during weak labor markets because older, experienced employees tend to have more job protections.

In trying to pinpoint the lackluster wage growth for recent college graduates, researchers at the San Francisco Fed had a key question: Are graduates getting different jobs that pay lower wages, or are salaries in the traditional career fields not growing?

The study concluded that college graduates are going into the same fields as before the recession, but that wage growth has been slow. In the two most popular categories for recent graduates — professional occupations and management, business & finance — there was only a 2.6% growth in median earnings since 2007.

“For almost all occupations and skill groups … we find that recent graduates experienced lower wage growth than other workers,” the report said.

Such sluggish growth could dissuade potential college students from enrolling, the report said, but the authors cite ample research showing that the lifetime earnings of college graduates far outpace those of non-graduates.

Entering the job market during an economic downturn, however, is likely to make it more difficult to pay back debt in the near term, the report finds.

“Low growth in starting wages does not mean that going to college is a poor investment,” the study concluded. “It just reflects that it will take longer to recoup the cost of the college.”

Just what IS the purpose of an education? To pay a few gazillion dollars to prepare you for a job that doesn’t exist? Or is there something else?

Conventional wisdom says you need to get a “good education” to get a “good job.” A college diploma is a sure ticket to a lifetime of employment with the money just rolling in… hopefully enough to repay all those student loans that were taken out to pay for the education that was guaranteed to get you that good job.

That’s the economics of the wage system, yet why is it that college graduates are having such a hard time finding jobs at all, much less “good” ones that pay well.

As for those majoring in economics: “The Georgetown University ‘Hard Times’ study reports that recent graduates of economics have an unemployment rate of 10.4 percent. That seems quite high for a degree that, according to the College Board, teaches important lessons on how to understand economic models and how factors such as labor disagreements, inflation, and interest rates affect them. . . . [E]conomics degrees often have a strong theoretical component but not enough real-world, practical experience to entice an employer.”

Of course, as a culture we never really address the question of what an education is for. Did you go to school to get a job? Or to get an education? For those who went to school to get a job they will eventually learn a lesson in supply and demand when it comes time for he or she to pay for the education that supposedly will guarantee him or her a good job. What you are supposed to learn in college is theory. The practical experience comes after you get out of college.

A primary reason that the American and other global economies are empowering their citizens to fulfill their desires for prosperity, affluence, opportunity and economic justice is the economics taught today is such a concatenation of bad assumptions and worse theory that all it’s good for is getting a Ph.D. to teach bad assumptions and worse theory to new generations of students and old generations of politicians.

To get a good grade, the students tell the professor what he or she wants to hear, while to get a good grant, the professor tells the politicians what they want to hear. In neither case does anybody truly address what is really true or practical.

Sound theory leads to good practice and planning begins with a goal. If a practice is bad, first look to the underlying theory. Are employers finally catching on to the fact that so-called “mainstream” economics doesn’t exactly reflect reality?

My colleague at the Center for Economic and Social Justice (www.cesj.org) poses the question: “As an employer, are you going to hire somebody who is convinced that the government produces wealth, and your goal as a company should therefore be to become as dependent on government as possible as the source of all wealth? Or are you going to hire somebody who believes in the Just Third Way principle based on Say’s Law of Markets that the only way to have wealth is to produce it yourself by means of your labor and capital?

“Who is the better prospect for employment? The guy who is waiting for government to redistribute what somebody else produced, or the gal who rolls up her sleeves and gets to work helping the company produce a marketable good or service?”

In today’s technological world where tectonic shifts in the technologies of production are destroying jobs and devaluing the worth of labor, even if EVERY citizen achieved a Ph.D they would still be faced with the reality that labor’s input in the production of products and services is exponentially declining with fewer and fewer job opportunities that pay well. Given this reality then how is one to contribute to society as a productive citizen? The answer is to structure the economy so that there would be an infusion of credit into productive capital investment. This would result in a majority of Americans earning additional income from wages and salaries and dividends, interest, and capital gains from other opportunities created beyond the dividend income payout from the productive capital investments. The accelerated growth rate would produce jobs that pay well and would significantly expand markets due to rising consumer demand, which in turn would generate greater business profits and opportunity for more productive capital investment. Everyone would benefit––rich and poor. There would be lower unemployment (making for the elimination of make-work), higher personal incomes, lower deficits due to greater tax revenues, lower tax rates, and better government services, with every citizen benefiting from a higher standard of living.

Such a path to prosperity would empower ordinary citizens, the majority of which are capitalless, to own a substantial percentage of the future productive capital formation creating the growth of the economy. The GOAL would be to assure that every child, woman and man would be able to accumulate a portfolio of productive capital assets large enough to provide a secure source of income. After a few decades, dividend income from the ownership of productive capital assets would become the primary source of income, though well-paying job opportunities would be plentiful for those who want to work for the satisfaction that can come from employment, whether in business, education, healthcare, science, and government or other self-rewarding contributions to society.

What our leaders and those in academia need to advocate is their ability to lead America on a path based on a paradigm shift to an equal opportunity economic democracy.

The JUST Third Way is that paradigm shift. It calls for a radical overhaul of the economic system (i.e., the Federal tax system, Federal Reserve policy, inheritance law, welfare and entitlement system, etc.) that will achieve genuine economic democracy, based on the Platform of the Unite America Party and its links and the proposed Capital Homestead Act. Our Platform is a call for a vision of political economy that can unite the left and the right, based on Louis Kelso’s ownership-based paradigm. Now is the time to cure America’s political cancer (Crony Capitalism) and restore America to again becoming a model for global citizens in all countries.

http://www.latimes.com/business/la-fi-college-graduate-earnings-20140721-story.html

Krugman’s Latest Debt Denial: Why His Two Magic Numbers Don’t Cut It

On July 22, 2014, David Stockman writes on Contra Corner:

Professor Krugman is at it again—–conjuring fairy tales about a benign long-term fiscal outlook. Notwithstanding that the public debt has surged from 40% to 75% of GDP during the six short years since 2008, he claims there is no reason to fret and that there is no debt spiral anywhere in the future. In part that’s because the Keynesian priesthood has declared that interest rates have down-shifted on a permanent basis. CBO has therefore dutifully incorporated this assumption into its long-term projections:

“This (interest rate) markdown has the effect of making the budget outlook — which was already a lot less dire than conventional wisdom has it — look even less dire. But there’s a further point worth emphasizing: the CBO has just declared an end to the debt spiral.”

Even accepting CBO’s “rosy scenario” outlook (see below), it’s not evident that it has declared an end to the debt spiral. In fact, it projects publicly-held treasury debt to soar from $12 trillion today to about $52 trillion by 2039. Most people would judge that a spiral. Indeed, as shown in the CBO graph below based on “current policy”, the public debt ratio is heading sharply upwards to more than 100% of GDP.

Federal Debt Held by the Public

So how does professor Krugman turn this dismal chart into an “all clear” reassurance–when it actually shows public debt heading to above WWII levels at a time when the baby boom is at peak retirement? Well, it seems that Krugman unearthed two numbers in a 182 page report that purportedly render harmless the $52 trillion of bonds, notes and bills that CBO projects will need to find a home at the historically low interest rates it forecasts for the next 25 years.

“So we turn to Table A-1 on page 104 of the CBO report, and we learn that for the next 25 years CBO projects an average interest rate on federal debt of 4.1 percent and an average growth rate of nominal GDP of 4.3 percent. And this means no debt spiral at all.”

A GDP growth rate higher than the average carry cost of the public debt sounds all good, but here’s the thing. Given outcomes during the 21st century to date, there is simply no plausible reason to believe that nominal GDP can grow at a 4.3% CAGR for the next 25 years. In fact, since the pre-crisis peak in early 2008, nominal GDP has grown at only a 2.5% CAGR, and even during the last two years when “escape velocity” was expected any day, the compound growth rate has been only 3.0%. Indeed, during the entire 14 years of this century—encompassing nearly two complete business cycles—-nominal GDP has expanded at just 3.8% per annum.

Needless to say, when you are crystal balling a quarter century ahead, CAGRs make a big difference, and that’s profoundly true of the Federal budget. Specifically, revenue is highly sensitive to nominal GDP growth because it is always money income, not real GDP, that is on the radar screen of the tax-man.

Thus, owing to the miracle of compounding under the CBOs 4.3% CAGR, nominal GDP is projected to amount to about $49 trillion by 2039. By contrast, if money incomes grow at a 3.3% CAGR, or at the upper end of the last seven year’s experience, nominal GDP a quarter century forward would be only $38 trillion. And at CBO’s 19.4% of GDP tax take on the $11 trillion difference—-that’s nearly a $2.0 trillion annual revenue shortfall by the terminal year.

At the same time, the spending side will be driven by the soaring social insurance tab for retiring baby boomers during the decades ahead, regardless of nominal GDP. Accordingly, CBO forecasts that outlays for Social Security and Medicare will rise from 8% to 11% of GDP during the next quarter century, and that this will cause primary Federal spending (i.e. ex-interest expense) to grow at a 4.8% CAGR.

But that’s where professor Krugman fairly tale of two magic numbers hits the shoals. Based on the above demographic/social insurance dynamics, CBO projects that non-interest Federal spending will rise from $3.3 trillion this year to about $10.3 trillion by 2039. Yet were nominal GDP growth to track the lower 3.3% CAGR suggested above, there would be little off-setting reduction in the primary spending path.

That is especially the case because CBO’s forecast continues to embody a modern version of “rosy scenario”—that is, it assumes that real output will grow at a 2.3% CAGR for the next 25 years. Yet that ignores the numerous and compounding headwinds lurking down the road. These include baby boom demographics and the massive overhang of $60 trillion of public and private debt domestically; and global troubles everywhere—from the bankrupting old age colony in Japan, to the tottering house of cards known as “red capitalism” in China, to the crushing burden of the socialist welfare state in Europe. Given these adversities, there is no reason to assume that US real growth will sharply accelerate from the tepid trends of the recent past.

To wit, real GDP has averaged only 1.0% annually since the pre-crisis peak in early 2008, 1.5% during the last 8 quarters, and just 1.8% during the last fourteen years—including the false prosperity of the Greenspan housing and credit bubble after 2001. So why will GDP growth accelerate by nearly one-third for a quarter century running—when even under CBO’s own forecast, labor force demographics will turn sharply negative in the years ahead?

Whereas 1.0-1.5% of annual real output growth during the second half of the 20th century was accounted for by labor force expansion, CBO projects this foundational component will drop to just a 0.5% annual rate during the next several decades. This demographically baked in reality, in turn, requires CBO to project that labor productivity will rise by 1.8% annually in order to meet its 2.3% output growth bogey.

But that just can’t happen. During the next 25 years the US economy will be shedding its most productive labor—which is to say, the now aging baby boom work force. At the same time, the US economy will also be laboring under a severe, cumulative deficit in domestic investment in productive plant and equipment—the sine quo non of future labor productivity growth. Since the turn of the century, in fact, real CapEx growth have averaged only 0.8% annually, or hardly one-third of its prior historical rate; and the true measure of future productivity growth— net investment in real plant and equipment after capital consumption allowances—has actually declined by 20% since 1999-2000.

Real Business Investment - Click to enlarge

Real Business Investment – Click to enlarge

In a word, the shortfall from CBO’s 4.3% nominal growth scenario is likely to come almost entirely out of the “real” component of GDP rather than its 2.0% GDP deflator assumption. This means that nominal Federal spending would likely remain consistent with CBO’s projections as outlined above (i.e. COLA adjustments would be about the same), and could possibly rise considerably higher due to a larger caseload of safety net beneficiaries.

The baleful bottom line is this. Under the CBO’s rosy scenario, the primary Federal deficit by 2039 is just under $1 trillion annually or a modest 1.8% of GDP, meaning that the primary deficit is not fueling an uncontrolled debt spiral. By contrast, under the 3.3% nominal GDP scenario with realistic assumptions about labor productivity and real growth, the primary deficit would soar to nearly $3 trillion annually, and reach 7.5% of GDP.

It goes without saying that a primary deficit that massive would fuel a hellacious debt spiral—the very opposite of the benign outlook espied by professor Krugman. Rather than the 106% of GDP already built into the CBO forecast, the public debt over the next 25 years would literally spiral off the charts.  We would end up exactly in the fiscal briar patch that professor Krugman so insouciantly mocks:

“… because people will fear that we’re about to turn into Greece, Greece I tell you.”

So talk about unjustified complacency with respect to the public debt spiral! The best outcome we can imagine per CBO’s rosy scenario case is a clearly dangerous level of public debt relative to GDP. But the probable path under sober economics is orders of magnitude worse.  Indeed, with primary debt accumulating at a nearly double digit rate against GDP, the CBO’s average 4.1% interest expense assumption would give way to higher rates, meaning that neither of professor Krugman’s two magic numbers cut it. Under a regime of even modest monetary normalization over the next quarter century, current fiscal policy will lead to interest rates that are far higher, not lower, than the growth rate of nominal income.

So its time to put Greece right back into the front and center of the US fiscal picture, I tell you!

As David Stockman states, “there is no reason to assume that U.S. real growth will sharply accelerate from the tepid trends of the recent past” unless the system is radically reformed to balance production with consumption and simultaneously create new ownership with EVERY child, woman and man a share owner participant as the economy grows.

The  debate about a fairer tax code and ending the Bush tax cuts relates to what percent of Gross Domestic Product (GDP) should the federal government spend and what percent of GDP should be collected in taxes. Unfortunately, the current economy is growing at the Congressional Budget Office projected rate of less than 3 percent. This is pitiful, especially in light of the advances in technological production processes that are capable of producing a quality material lifestyle for ALL American citizens. The focus needs to be on growth with a targeted 20 percent growth rate, which would allow the society to maintain promised health care and Social Security commitments to a growing elderly population, stabilize taxes at 15 percent of GDP, and balance the budget. With growth rates well over 6 percent, health care and Social Security benefits could be increased, taxes could be lowered, while achieving a surplus.

The path to such prosperity requires recharting the financial system to empower ALL citizens to acquire long term viable private, individual ownership portfolios representing full divident-payout assets of new productive capital (the non-human factor of production embodied in super-automated, robotic and computerized processes that require less labor worker or no labor worker input) and pay for their acquisition out of the future earnings of the productive capital investments financed by credit insured by the Federal Reserve.

The accelerated growth rate, due to the the infusion of credit into productive capital investment, would result in a majority of Americans earning additional income from wages and salaries and dividends, interest, and capital gains from other opportunities created beyond the dividend income payout from the productive capital investments. The accelerated growth rate would produce jobs that pay well and would significantly expand markets due to rising consumer demand, which in turn would generate greater business profits and opportunity for more productive capital investment. Everyone would benefit––rich and poor. There would be lower unemployment (making for the elimination of make-work), higher personal incomes, lower deficits due to greater tax revenues, lower tax rates, and better government services, with every citizen benefiting from a higher standard of living.

Such a path to prosperity would empower ordinary citizens, the majority of which are capitalless, to own a substantial percentage of the future productive capital formation creating the growth of the economy. The GOAL would be to assure that every child, woman and man would be able to accumulate a portfolio of productive capital assets large enough to provide a secure source of income. After a few decades, dividend income from the ownership of productive capital assets would become the primary source of income, though well-paying job opportunities would be plentiful for those who want to work for the satisfaction that can come from employment, whether in business, education, healthcare, science, and government or other self-rewarding contributions to society.

If you want to change this gross economic inequality support the Platform of the Unite America Party.

What our leaders and those in academia need to advocate is their ability to lead America on a path based on a paradigm shift to an equal opportunity economic democracy.

The JUST Third Way is that paradigm shift. It calls for a radical overhaul of the economic system (i.e., the Federal tax system, Federal Reserve policy, inheritance law, welfare and entitlement system, etc.) that will achieve genuine economic democracy, based on the Platform of the Unite America Party and its links and the proposed Capital Homestead Act. Our Platform is a call for a vision of political economy that can unite the left and the right, based on Louis Kelso’s ownership-based paradigm. Now is the time to cure America’s political cancer (Crony Capitalism) and restore America to again becoming a model for global citizens in all countries.

For a new vision see http://www.foreconomicjustice.org/?p=12331 andwww.facebook.com/uniteamericaparty. Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

http://davidstockmanscontracorner.com/krugmans-latest-debt-denial-why-his-two-magic-numbers-dont-cut-it/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+AM+Tuesday