Obama budget falls short, includes giveaway to corporate tax evaders, omits Wall Street tax
Today, President Barack Obama released the budget for what will cover his last year in office.
Even though he called for a greater emphasis on “middle-class economics” during the State of the Union address, the president’s budget does not go far enough to make sure that Wall Street and corporations pay their fair share of the cost of government. Notably missing from the budget is a strong stance on closing international tax loopholes and an important tax on stock, bond and derivative trades.
President Obama’s budget addressed the problem of international tax loopholes, but only partially. Though he proposed repatriating corporate profits stashed offshore, he should have proposed bringing these taxes back at a much higher rate. The 14 percent he proposed for immediate taxation to fund infrastructure investments is much too low, since multinational corporations have been milking a bevy of tax breaks for years. Though the president proposes taxing future overseas profits at 19 percent, and compared to the current statutory rate of 35 percent, that’s still leaving a lot on the table of the $2 trillion of profits estimated to be stashed offshore.
Granted, Obama’s 19 percent repatriation proposal is itself stronger than what U.S. Sens. Barbara Boxer (D-Calif.) and Rand Paul (R-Ky.) recently unveiled — a plan to shore up the depleted Highway Trust Fund by repatriating offshore taxes at the bargain-basement rate of only 6.5 percent. The 2015 bipartisan infrastructure reparation proposal is only slightly more than 1 percent higher than the 5.25 percent rate used in the well-documented failure of a similar experiment in 2004. Boxer and Paul’s 2015 proposal is a revenue loser, similar proposals are expected to cost in the range of $100 billion over 10 years, according to the Joint Committee on Taxation. Repatriation holidays such as these are major giveaways that will reward corporations that have for years avoided paying taxes by using accounting gimmicks to shift profits to the books of related foreign corporations.
The president could have done so much more to raise revenue. One glaring absence: a tax on Wall Street financial transactions. Similar to the 0.1 percent “high-roller fee” recently proposed by U.S. Rep. Chris Van Hollen (D-Md.), the president could and should have championed this commonsense idea to make tens of billions a year in revenue while slowing down volatile high-speed trading, which helped lead to the May 2010 “flash crash.”
More than 18,000 Public Citizen members and supporters have signed a petition calling on President Obama to include such a financial transaction tax on Wall Street trades in his budget. Though it didn’t make it this time, the president must still take leadership on this important issue. It doesn’t make sense to ignore this commonsense financial reform, and we urge him to support it as stand-alone policy.
That’s why we’re asking all Americans who want to see multinational corporations and Big Banks pay their fair share to share the image above and urge the president to join the growing wave of leaders calling for a tax on Wall Street.
Just share this image on your social media accounts like Facebook and Twitter using the hashtag #WallStreetTax and link to this blog post so that others can learn more about how President Obama could do more to make sure big corporations no longer dodge taxes and to rein in out of control Wall Street trading.
Susan Harley is the deputy director of Public Citizen’s Congress Watch division.
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February 2, 2015 @ 6:08 pm
Since this idea is not official yet, call it a PREMIUM,instead of a tax. Make Wall Street buy “insurance” BEFORE” they crash the economy, not after the fact. No one gets to drive legally without insurance. Wall Street should not be allowed to endanger our national economy, unless they buy insurance. Jim
February 2, 2015 @ 8:43 pm
Thanks for all you are doing. It is saddening to see the efforts you and so many other advocacy groups put in to no avail. Money is not speech as the Supreme Court wrongly stated; it is not Speech and Corporations are not people; it is one of the great hoaxes that have been perpetuated on mankind.
All natural resources without people to locate, harvest and consume it is of no value; business and workers without consumers are of no value; that is why Mr. Henry Ford said, “It is not the employer who pays the wages. Employers only handle the money. It’s the customer who pays the wages.
That is why China needs America more than America needs China; but our Business and Political leaders preach and tell us otherwise in order to full their pockets at the expense of workers and the common good. It is a Hoax and they know it. It must be stopped, enough is enough.
Following Mr. Ford reasoning it is safe to say, “Businesses don’t pay taxes, it is the consumers who pay the taxes”. When we are told that A.I.G, Fannie Mae, City Group, Bank of America or large corporations making huge profits, it is we the people, the consumer the worker and the natural resources that generate the profits, and we have every right to DEMAND they be TAXED at the same Rate as Labor. This is called Justice; let no Supreme Court Judge, Politician, Business or Religious Leaders continue with this Hoax. The people have the right to know. “Truth is the path, justice is the price”.
William from Brooklyn.
February 3, 2015 @ 1:24 am
All these Banks and other businesses that lost us so much money, need to be paying taxes. They need to pay the people whose money they played with, back. I don’t care how slowly, I have children and grandchildren who can receive these payments if I am dead. As I will be, knowing how slowly they will make the payments. Fortunately, or not, I did not have much invested, but I know it will be years before they “could” pay it back, after all the big shots could not bear to lose a penny of their (unwarranted) yearly raises, although they could take the raises of their employees and pay us with it. Ah, dream on. I know it’s fantasy on my part but I really believe this money needs to be paid back, with interest, and these companies need to pay taxes. They have gotten by, for so many years, as if they were a church of some kind. They need to pay taxes from now on.
February 5, 2015 @ 12:48 am
The idea of taxing High Frequency Trading (HFT) is somewhat problematic. On the surface it would appear that a tax would achieve the desired result by making trading more equitable, and certainly there is the theory that HFT contributed to the 2010 “flash crash”, but was not the sole cause. However, attempting to regulate trading speed by taxing trading transactions could also backfire.
HFT is arbitrage, simply gaming the system. Someone has something for sale at a lower price than I can sell it for and if I get to the market earlier and scoop up the cheap deals I can sell it later and make a profit, and since I already know there is a buyer at the higher price there is no risk involved. Introducing a tax on the transaction simply raises the price that I need to sell it for, plus turning the government into a skimming operation. This will artificially (not market driven) drive up prices for the traders who have spent the $100M or so to get in the HFT game, but it will also tax any and all follow on transactions, meaning the ones that you and I are making, except now we will have to absorb being taxed on our transactions as well as any previous ones. HFT does increase liquidity since there is a good chance there will be someone interested in buying my shares, or selling ones I want to buy, but a tax will likely reduce liquidity since there will be less profit per transaction. Since only 20% of traders actually beat the market in any given year, and not the same traders year to year, that could reduce the profit for ALL trades for anyone investing in the stock market making investment LESS attractive for everyone. At the moment, trades are essentially being “taxed” by HFT, while supplying liquidity. Government taxing of trading transactions will add to the tax burden and will most likely decrease liquidity.
We probably need to find a way to throttle the speed of HFT without adversely impacting ALL trading. I do not believe that taxing trading transactions is the way to accomplish that goal.