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Tax justice and the coronavirus

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The Covid-19 Coronavirus pandemic is, at least on available evidence, striking rich western countries the hardest so far. Lower-income countries will be hit hard too, however: massive capital flight is already underway. And in all societies, as ever, the impacts fall hardest on those who are already marginalised and vulnerable.

But for now, rich countries have an abundance of resources to feed, house and care for all their citizens adequately. The question of how those resources are shared out is a political choice. Tax plays an important role.

 

Western nations are now in conditions like wartime. (The world is in a kind of war, against an unseen enemy.) Today’s blogger, based in Berlin, isn’t allowed in the streets with more than one companion, without documents to show they’re a family member. In Britain, a standard-bearer for “free” [in reality, rigged] markets, the first nationalisations have begun, and a national lockdown has (belatedly) been ordered. Italian mayors are threatening “to send the police over, with flamethrowers” to people breaking curfew. As workers stay at home to avoid contagion, a shutdown threatens massive job losses: perhaps a fifth of all U.S. workers, on one estimate. A huge global economic crisis looms. And this won’t go away soon.

Governments and societies face colossal economic costs now, as they are confronted by millions of workers losing their jobs and millions of businesses going broke. Old economic orthodoxies are toppling, one by one.

Business as usual is over.

How will societies and economies deal with these costs? First, by accepting that when millions of people stop work, overall economic output must fall. The next question is, who in society will bear the burden, where will they be, and how and when will they bear it? Again, these will be political choices. We can, we must, influence those choices.

Second, governments will massively, suddenly, have to boost public spending: if they don’t, there will be riots. Denmark, for instance, has said it will pay 75 percent of the salaries of employees who would otherwise be fired. Others are following suit with a raft of measures including cash transfers for individuals and support for businesses.

How will states “pay for” this? There are two main ways.

The first, most important, will be through borrowing. There is no inflation on the horizon, interest rates are low and in some cases negative, and financial markets have been eating up government debt without so much as a burp. If there’s a time to borrow, it’s now. And it is already happening. In a move that would have been astonishing just a few weeks ago, Germany has suddenly punched through its long-held (and idiotic) “Black Zero” policies to balance its budgets and not take on new debt. As the Financial Times reports:

The time has come for governments to spend. To protect vulnerable people, broad populations, essential workers, institutions, and the economy. Even the financial sector, where its collapse could pose a threat.

But we are generally a revenue-side organisation, not a spending-side organisation, so we’ll focus on the second way governments can “pay for” the massively expensive new measures coming in, which is tax. Although tax receipts don’t need to match spending, they do still need to be collected, where possible.

Tax systems play another crucial role in that economic question at the heart of this crisis: they help governments choose how the pain of lost output is shared out.

And with all the old ideological orthodoxies are suddenly up in the air, and despite the special interests clamouring for yet more tax breaks, NOW is the time to push hard for tax justice.

In short, tax justice campaigners should be calling for a strong fiscal stimulus which will lead to poor and vulnerable people paying less and rich people and strong, profitable corporations paying more.

Lessons from history

History provides some grounds for optimism as to what comes next. In times of war, governments have tended to make wealthier sections of the population and large businesses carry a larger share of the burden than before. In the First World War, for instance, both Britain and the United States imposed an 80 percent tax rate on excess corporate profits (above an 8% annual return,) and the top income tax rate on the highest earners rose from 15 percent to 77 percent. Something similar happened in the Second War, when top income tax rates rose to 94 percent. In the United Kindgom, the top income tax rate rose to an even more eye-watering 99.25%. Similar tax measures were adopted by other countries at war.

Over time, from one war to the next, taxes have assumed a growing share of the revenue mix, as this graph shows.

Source: Goldin, C. (1980). War. In G. Porter (Ed.),Encyclopedia of American economic history: Studies of the principal move-ments and ideas(pp. 935–957). New York: Charles Scribner’s Sons. Via FT.

Taxes were preferred above borrowing or other measures at times when support for wars was high. Famed economist John Maynard Keynes produced a radical plan for funding the UK’s involvement in WW2 which involved a sharply progressive surtax on high incomes and personal wealth, and he was keen to shift as much of the cost of financing the war effort onto richer people.

It is worth adding that very high rates persisted for at least a couple of decades after the Second World War’s end, accompanied by a raft of other progressive policies and the highest and most broad-based economic growth in world history, before or since. People who have been until recently gloomy about the prospects of an increasingly entrenched, lawless, powerful and tax-free global oligarchy may have grounds for optimism.

Is this time different?

There is a big difference between now and the time of World Wars, however. Back then, employment was running at full tilt, with men heading off to fight and women flooding into the factories. Right now, the opposite is happening: workers are heading home, and millions of businesses face bankruptcy.

So is this the time to be raising taxes? Should we not be cutting taxes instead?

The simple answer is: it is time to be smart about this. Taxes should be cut to help those worst affected — but for those companies that are still making profits, and the wealthiest sections of society, they should now be increased significantly – even massively. Public appetite for this was already in place before the crisis.

But let’s start with all-important measures to support collapsing businesses and workers’ incomesWomen will pay a heavy price, since they will disproportionately be working on the health frontlines, and in the social care sectors, while also caring for children ejected from schools, and the elderly.

The most important measures to help are on the spending side and on other policy measures, such as enforced rent or mortgage delays or freezes or forgiveness. These are beyond the scope of this blog.

On the tax side, there are many ways to support people and struggling businesses. For instance, targeted reductions to value added taxes, focused on basic necessities, would help ordinary people, as would property taxes. Taxes on payrolls, business rates (on real estate) and other taxes which add to the costs of doing business, should be judiciously cut, at least for those businesses facing hardship due to Covid-19. Measures such as “accelerated depreciation” (to allow affected businesses to offset investment costs against tax more quickly) will help shore up investment, though great care is required so they don’t become expensive and pointless loopholes.

But in other areas, taxes should be raised – and raised A LOT.

Tax profitable corporations more

Take corporate income taxes, for instance. These are levied on profits. If companies are struggling, they won’t be making profits, so they won’t pay this tax. So corporate income tax rates can be increased right now, because they will only strike profitable businesses. (There are timing issues: a teetering company could be bankrupted by a crippling tax bill from a previous quarter, but these are details to be managed skilfully.)

Some businesses will do very well out of this catastrophe. Lots of people locked down at home are now turning to Zoom, for instance, to communicate with loved ones. Its share price is now several times what it was in early January.

Source: screenshot (24 March 2020, 13h24)

Likewise, many bricks-and-mortar shops (the ones that hadn’t already been slaughtered by the Amazon steamroller) are now facing temporary or permanent closure – and the American behemoth is ready to hoover up the pieces. Antitrust authorities are nowhere (as we recently remarked.) Let corporate tax pick up some of the slack.

And from a justice perspective, we have to agree with Pope Francis.

Those who do not pay taxes do not only commit a felony but also a crime: if there are not enough hospital beds and artificial respirators, it is also their fault.”

It is not only just and right that the wealthiest people and profitable corporations pay, but if they are still wealthy or still profitable, they also have a greater ability to pay.

So let’s not mess around here. In recent years mainstream governments have been bickering over whether corporate taxes should be at 25 percent, or 20 percent, or 18 percent. All that needs to go out of the window now.

Let’s now start to talk about hiking corporate income tax rates dramatically. Let’s start with a 50 percent rate, and start thinking about 75 percent on excess profits, above, say, a five percent hurdle rate. This is way out there on past consensus, but who knows where we’ll be in five years’ time.

This protects the weak, and gets the strong to support the weak.

Barely profitable firms that aren’t making excess profits would pay nothing: it’s those hedge funds profiting from currency collapses, tech firms eating distressed companies’ lunches, or private equity firms buying distressed assets cheaply and financially engineering them for profit – which can and must now pay their share.

Obviously, different countries, and different sectors, face different conditions. But what’s most important now is to start to shift the “Overton Window” – the realm of what is politically possible and what the public is willingly to accept – firmly in the direction of tax justice. Make no mistake: there are powerful forces that want to use the opportunity of this crisis to push exactly in the other direction.

Tax rich people more

Income tax is another flexible mechanism to tax different segments of society at different rates. Under a healthy progressive tax system, the first portion of an individual’s income (say, from 0 to $10,000 per year) isn’t taxed at all; the next portion (say, $10-20,000) is taxed at a low rate; the next portion, let’s say $20-50,000, is taxed at a higher rate, and then above a certain income level, the top rate is applied. In rich countries, that top rate is often of the order of 40-50 percent.

Remember, though, that the top rate has historically been as high as 99.25 percent. Now is a time to raise this rate a long way. It won’t hurt people in the lower tax brackets – if it means more public spending on hospitals, say, it will help them.

How high should they go? Well, there’s research suggesting that the revenue-maximising rate in the United States is somewhere like 75 percent. So let’s start shifting the Overton Window, and push our governments to aim in this direction. And let’s beef this up with wealth taxes, land value taxes, and other progressive taxes. If you’re wealthy, you can afford these.

Tighten up

People will of course shriek at these proposals. High tax rates will discourage investment, they will cry. Clever rich folks will run away with their money to Geneva or Hong Kong or Dubai, where they can get ‘friendlier’ tax rates. Or corporations and rich folk will get busy with their tax advisers, to use offshore trusts and many other subterfuges to escape paying their fair share. It’s like a balloon, they cry: if you squeeze in one place, it will just displace somewhere else, but the volume will remain the same.

Despair! The poor must pay!

Not so. As we and many others have shown many times, high corporate tax rates may affect corporate profit-shuffling, but they do not generally discourage the kinds of investment that healthy economies need. (They do, however, tend to discourage more predatory forms of investment, which is another benefit.)

Corporations say they need corporate tax cuts to invest, in the same way that my children say they need ice cream. And do not buy the old argument that corporations and rich people will stop avoiding tax or invest more if only you cut their effective tax rates. As a recent book explains:

More on all this soon.

No, the answer isn’t to kowtow and appease mobile capital and rich people. The time has come to start tightening up. Crack down properly, to stem leakage, to reduce loopholes, increase transparency, and so on. It’s not like a balloon: it’s more like a sponge. When you squeeze, you may get some displacement – but you’ll also wring out a bunch of water too.

So a slighty better slogan is this: tax the poor and fragile and vulnerable less, tax the rich and profitable more, and tighten up to make sure they pay.

We have been working for years on a whole tax justice toolkit, to achieve just this. It includes

And plenty more. The main point is that the time has come to get much more ambitious about all of these.

Source: Tax Justice Network

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As the Golden Globes lose their luster, can we create a better version of Hollywood?

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Something interesting is happening in Hollywood. People are walking away from the Golden Globe Awards.

And for good reason.

Anyone who has ever worked in the filthy abyss of Hollywood, New York, or any major entertainment city will know first hand how these systems work. Sycophants, parasites and moguls and talent agents willing to step all over each other just for the sake of another prize. Some will even kill for a shot at the brass ring.  And industry divided cannot succeed.

The only good thing I found in the Golden Globes was watching Ricky Gervais lampoon the stars and their handlers from the stage. Bravo to Gervais, it doesn’t make a difference what you think of him, afterall, he had something that most of Hollywood doesn’t have. Balls. Guts. And a way of delivering amusing reality dosed insults to their face only to find he’s been re-instated as the show host for the next years showing.

 

The annual Golden Globes ceremony has been unable to find a broadcasting partner or any celebrities willing to present or collect its awards after a Hollywood boycott over its diversity and ethics scandal, resulting in a pared-down event with the emphasis on philanthropy.

According to Variety, the Globes’ talent bookers have failed to persuade any big Hollywood figures to attend the 2022 edition of the awards ceremony, a hitherto glittering annual event that traditionally kicked off the lucrative awards season. In March 2021 more than 100 public relations firms announced they would withdraw cooperation with the Globes, a series of high-profile Hollywood figures, including Tom Cruise and Scarlett Johansson, made stinging public criticisms, and TV network NBC cancelled its broadcast of the 2022 edition. (-The Guardian)

 
eguardian.com/film/2022/jan/09/golden-globes-lose-their-shine-as-a-listers-shun-unethical-ceremony

But this years showing not only lacked the luster of Hollywood today, but doesn’t even have a Network or Livestream to cover it.  I guess we’ll have to rely on celeb Twitter Feeds.

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How The Pentagon and CIA Have Shaped Thousands of Hollywood Movies into Super Effective Propaganda

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By David Swanson, World BEYOND War, January 5, 2022

Propaganda is most impactful when people don’t think it’s propaganda, and most decisive when it’s censorship you never knew happened.

 

When we imagine that the U.S. military only occasionally and slightly influences U.S. movies, we are extremely badly deceived. The actual impact is on thousands of movies made, and thousands of others never made. And television shows of every variety.

The military guests and celebrations of the U.S. military on game shows and cooking shows are no more spontaneous or civilian in origin than the ceremonies glorifying members of the U.S. military at professional sports games — ceremonies that have been paid for and choreographed by U.S. tax dollars and the U.S. military. The “entertainment” content carefully shaped by the “entertainment” offices of the Pentagon and the CIA doesn’t just insidiously prepare people to react differently to news about war and peace in the world. To a huge extent it substitutes a different reality for people who learn very little actual news about the world at all.

The U.S. military knows that few people watch boring and non-credible news programs, much less read boring and non-credible newspapers, but that great masses will eagerly watch long movies and TV shows without too much worrying about whether anything makes sense. We know that the Pentagon knows this, and what military officials scheme and plot as a result of knowing this, because of the work of relentless researchers making use of the Freedom of Information Act. These researchers have obtained many thousands of pages of memos, notes, and script re-writes. I don’t know whether they’ve put all of these documents online — I certainly hope they do and that they make the link widely available. I wish such a link were in giant font at the end of a fantastic new film. The film is called Theaters of War: How the Pentagon and CIA Took Hollywood. The Director, Editor, and Narrator is Roger Stahl. The Co-Producers are Matthew Alford, Tom Secker, Sebastian Kaempf. They’ve provided an important public service.

In the film we see copies of and hear quotations from and analysis of much of what has been uncovered, and learn that thousands of pages exist that nobody has yet seen because the military has refused to produce them. Film producers sign contracts with the U.S. military or CIA. They agree to “weave in key talking points.” While unknown quantities of this sort of thing remain unknown, we do know that nearly 3,000 films and many thousands of TV episodes have been given the Pentagon treatment, and many others have been handled by the CIA. In many film productions, the military effectively becomes a co-producer with veto power, in exchange for allowing the use of military bases, weapons, experts, and troops. The alternative is the denial of those things.

But the military is not as passive as this might suggest. It actively pitches new story ideas to movie and TV producers. It seeks out new ideas and new collaborators who might bring them to a theater or laptop near you. Act of Valor actually began life as a recruitment advertisement.

Of course, many movies are made without military assistance. Many of the best never wanted it. Many that wanted it and were denied, managed to get made anyway, sometimes at much greater expense without the U.S. tax dollars paying for the props. But a huge number of movies are made with the military. Sometimes the initial movie in a series is made with the military, and the remaining episodes voluntarily follow the military’s line. Practices are normalized. The military sees huge value in this work, including for recruitment purposes.

The alliance between the military and Hollywood is the main reason that we have lots of big blockbuster movies on certain topics and few if any on others. Studios have written scripts and hired top actors for movies on things like Iran-Contra that have never seen the light of day because of a Pentagon rejection. So, nobody watches Iran-Contra movies for fun the way they might watch a Watergate movie for fun. So, very few people have any notions about Iran-Contra.

But with the reality of what the U.S. military does being so awful, what, you might wonder, are the good topics that do get lots of movies made about them? A lot are fantasy or distortion. Black Hawk Down turned reality (and a book it was “based on”) on its head, as did Clear and Present Danger. Some, like Argo, hunt for small stories within large ones. Scripts explicitly tell audiences that it doesn’t matter who started a war for what, that the only thing that matters is the heroism of troops trying to survive or to rescue a soldier.

Yet, actual U.S. military veterans are often shut out and not consulted They often find movies rejected by the Pentagon as “unrealistic” to be very realistic, and those created with Pentagon collaboration to be highly unrealistic. Of course, a huge number of military-influenced films are made about the U.S. military fighting space aliens and magical creatures — not, clearly, because it’s believable but because it avoids reality. On the other hand, other military-influenced films shape people’s views of targeted nations and dehumanize the humans living in certain places.

Don’t Look Up is not mentioned in Theaters of War, and presumably had no military involvement (who knows?, certainly not the movie-watching public), yet it uses a standard military-culture idea (the need to blow up something coming from outerspace, which in reality the U.S. government would simply love to do and you could hardly stop them) as an analogy for the need to stop destroying the planet’s climate (which you cannot easily get the U.S. government to remotely consider) and not one reviewer notices that the film is an equally good or bad analogy for the need to stop building nuclear weapons — because U.S. culture has had that need effectively excised.

The military has written policies on what it approves and disapproves. It disapproves depictions of failures and crimes, which eliminates much of reality. It rejects films about veteran suicide, racism in the military, sexual harassment and assault in the military. But it pretends to refuse to collaborate on films because they’re not “realistic.”

Yet, if you watch enough of what is produced with military involvement you’ll imagine that using and surviving nuclear war is perfectly plausible. This goes back to the original Pentagon-Hollywood invention of myths about Hiroshima and Nagasaki, and runs right up through military influence on The Day After, not to mention the transformation — paid for by people who throw a fit if their tax dollars help prevent someone freezing on the street — of Godzilla from a nuclear warning to the reverse. In the original script for the first Iron Man movie, the hero went up against the evil weapons dealers. The U.S. military rewrote it so that he was a heroic weapons dealer who explicitly argued for more military funding. Sequels stuck with that theme. The U.S. military advertised its weapons of choice in Hulk, Superman, Fast and Furious, and Transformers, the U.S. public effectively paying to push itself to support paying thousands of times more — for weapons it would otherwise have no interest in.

“Documentaries” on the Discovery, History, and National Geographic channels are military-made commercials for weapons. “Inside Combat Rescue” on National Geographic is recruitment propaganda. Captain Marvel exists to sell the Air Force to women. Actress Jennifer Garner has made recruitment ads to accompany movies she’s made that are themselves more effective recruitment ads. A movie called The Recruit was largely written by the head of the CIA’s entertainment office. Shows like NCIS push out the military’s line. But so do shows you wouldn’t expect: “reality” TV shows, game shows, talk shows (with endless reunifications of family members), cooking shows, competition shows, etc.

I’ve written before about how Eye in the Sky was openly and proudly both completely unrealistic nonsense and influenced by the U.S. military to shape people’s ideas about drone murders. A lot of people have some small idea of what goes on. But Theaters of War: How the Pentagon and CIA Took Hollywood helps us to grasp the scale of it. And once we’ve done that, we may gain some possible insights into why polling finds much of the world fearing the U.S. military as a threat to peace, but much of the U.S. public believing that U.S. wars benefit people who are grateful for them. We may begin to form some guesses as to how it is that people in the United States tolerate and even glorify endless mass-killing and destruction, support threatening to use or even using nuclear weapons, and suppose the U.S. to have major enemies out there threatening its “freedoms.” Viewers of Theaters of War may not all immediately react with “Holy shit! The world must think we’re lunatics!” But a few may ask themselves whether it’s possible that wars don’t look like they do in movies — and that would be a great start.

Theaters of War ends with a recommendation, that movies be required to disclose at the start any military or CIA collaboration. The film also notes that the United States has laws against propagandizing the U.S. public, which might make such a disclosure a confession of a crime. I would add that since 1976, the International Covenant on Civil and Political Rights has required that “Any propaganda for war shall be prohibited by law.”

To learn more about this film, view it, or host a screening of it, go here.

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The Grinch That Stole Christmas

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Back in the mid 70’s as my wife and I were starting our photography business Wally Miller, a successful local businessman, invited us to his office to offer help in the form of business advice. He asked only that we bring a financial statement and of course we complied.  The business startup process was new to us and after two years we were still losing money, and there it was in plain sight on the financial statement.  Wally welcomed us warmly and after a few minutes of careful study of our financials offered this observation, “You have no bad debts.”

Naturally I took this as a compliment.  I was proud that we had no bad debts, but that is not what Wally meant.  He elaborated, “If you have no bad debts that means that your credit is too tight and that translates into lost business.” His meaning was clear.  To be successful, really successful, you have to accept reasonable losses.  It’s the very nature of business.  If you want 100% certainty there can be no risk and without risk there can be no profits.

There’s a lesson in this thinking for Joe “McFuqwad” Manchin, the tight-ass, penny-pinching Grinch ruining Christmas for every American under the cover of “fiscal responsibility.”  His staffers gave us a look into his rationale, revealing two of the real reasons behind Joe’s decision to be the big NO.

Apparently Manchin believes that giving money to the poor in the form of a child tax credit is unwise because in his view, many will spend the extra dollars on drugs.  Likewise he is opposed to paid leave, stating that people will just call in sick and then go off deer hunting.

Now let’s all agree that in a free society, there are good and bad actors.  No law can legislate what is in the hearts of men.  No law can dictate integrity or honor.  If that were the case, there would be no GOP, no Jim Jordan, no Ted Cruz, no Matt Gaetz, No Marjorie Taylor Green, no Lauren Boebert. You get my drift, but I digress.

Once you agree to recognize that the actions of individuals are beyond your control, you must the adjust your decisions and subsequent actions to affect the greatest good for the majority.  Charity benefits the worthy and unworthy alike, without discrimination.  To withhold benefits from the worthy because there will always be unworthy recipients is to succumb to the devil’s play, a game of reduction that punishes all for the few.

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Mobilized TV on Free Speech TV  takes a deep look at our world, the consequences of human activity on our planet, and how we can reverse and prevent existing and future crises from occurring. Mobilized reveals life on our planet as a system of systems which all work together for the optimal health of the whole. The show delves into deep conversations with change-makers so people can clearly take concerted actions.

Produced by Steven Jay and hosted by Jeff Van Treese.

Mobilized’s TV series Mobilized TV  premieres on Free Speech TV on Friday, October 15, 2021. All episodes appear:

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January 7, 8, 9, 2022

Leading Environmental Justice Attorney, Thomas Linzey of the Center for Democratic and Environmental Rights is a leading force helping communities implement successful rights of nature laws. Find out how your community could take on big business to serve the health of all.

 

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