1) I am a great believer that taxes should be as low as possible for both businesses and individual citizens. Governments should be as small as possible, doing only those functions that can be handled by an efficient central entity vs. having individuals be responsible for those functions. These functions would include such limited functions as national defense, a judicial system, police and fire protection and not much more.
However, this wish and hope for low taxes does not mean that large corporations, rich individuals, or politicians (see yesterday’s post (XXXXXX) should not pay their fair share. The fact that businesses, individuals, and politicians can rig the system for their own self-enrichment, causing others to pay more to cover their shortfall, should not be allowed to occur.
Which brings us to Apple and Facebook. According to a BBC.com article that was summarized in the November 16, 2012 issue of The Week magazine, Apple paid a corporate tax rate of only 1.9% on its earnings outside of the United States in its last fiscal year according to regulatory filings. On foreign profits of $36.9 billion, Apple paid only $713 million in taxes.
Facebook’s tax treatment is even worse. According to a Businessweek.com article that was summarized in the March 1, 2013 issue of The Week, Facebook’s first annual public earnings report showed that it had $1.1 billion in pre-tax profits but paid nothing in Federal and state income tax. Even worse, the company is expected to receive a $429 million tax refund.
Thus, while the vast majority of Americans saw their taxes go up 2% at the start of the year as a result of the fiscal cliff deal, these corporate giants were paying almost nothing in taxes. This is not surprising since we have previously reported how other companies, notably General Electric:
http://loathemygovernment.blogspot.com/2011/06/relationship-between-president-obama.html
constantly pay little or nothing in taxes, often using the out of control tax code to get hefty tax refunds.
Again, in a perfect world, no one and no company should have to pay any taxes. We do not live in a perfect world but in an imperfect world, the U.S. tax code, and the politicians responsible for it, should not allow such wide differences in taxation.
Of course, we all know the reason why this type of thing happens. I would bet that Facebook, Apple, General Electric and plenty other companies and unions are heavy contributors to incumbent politicians’ reelection campaigns. Donations for tax breaks, the corruption cycle continues.
2) The massive, and massively flawed legislation called Dodd-Frank that was supposed to reform the financial industry in this country, seems to be not working, at least relative to the concept of making the nation’s economy not fall victim again to the “too big to fail” syndrome.
According to an article from Bloomberg.com, that was summarized in the March 1, 2013 issue of The Week magazine, the four biggest domestic banks, JP Morgan, Bank of America, Citigroup, and Wells Fargo, have combined assets of $14.7 billion, which is about the equivalent of 93% of the U.S. Gross National Product in 2012.
Thus, if the legislation was supposed to relieve the nation of the worry that a large bank failure would not substantially impact the economy, it has failed miserably. When the entire nation’s total economic output is just a little bigger than just four banks’ assets, too big to fail is also bigger than ever, thanks to the political class inability to fix a broken banking system.
3) An article in the monthly AARP magazine showed why Medicare and Medicaid waste over $100 billion a year due to criminal fraud and inefficiencies. The article described the exploits of a Georgia woman who could not get enough painkiller pills from her doctor for her needs.
As a result, she went around and eventually found 58 medical people who prescribed 3,655 Oxycodone pain pills for her in a single year. Obviously, this comes out to about a 1,700 day supply of regular pain killer usage. And worst of all, Medicare, and the American taxpayer paid for all of it.
Her case came to the forefront when the General Accounting Office reported on 170,000 identified cases where people went doctor shopping (defined as visiting at least five or more doctors to get their hands on one of 14 prescription drugs). This has focused law maker attention on those that operate the Medicare and Medicaid programs that they are screwing up when it comes to protecting taxpayer assets in this type of fraud.
Let’s do some simple math. It is tough to find a standard answer on what a single pill costs. It apparently depends on how potent the pill is, where, you live, who is prescribing it or illegally pushing, etc. A conservative/lo estimate would be $10 per pill.
If the AARP Georgia example is average, than the 170,000 identified cases of fraud (there may be more that have not been identified) would cost the American taxpayer about $6.2 billion a year. This wasted money would be enough to put an armed police professional in over 80% of the schools in this country to protect against another Newtown school shooting or would pay for half of the infrastructure funding that Obama wants in his new budget. The insanity of waste.
4) Our out of touch politician of the month goes to Florida Congresswoman and Chairwoman of the Democratic National Committee Debbie Wasserman Schultz. She recently made the most ridiculous claim that her poor Congressional staffers are unable to afford “good meals” because of the sequester.
This statement is so asinine on so many levels. First of all, most of Wasserman Schultz’s staffers earn between $44,000 and $160,000 a year, placing them well above the average American income level, they are not starving or cannot afford good meals. Second, I do not believe that the sequester resulted in her staff taking any kind of pay cut, which even if they got the average sequester cut of 2%, they would still be much more able than most Americans to get a good meal.
According to news reports, her Congressional office spent over $95,000 on mail and printing services in 2012. One of her part-time staffer alone earns $60,000 a year. If her staff actually got a pay cut, maybe she should have thought about downsizing or making her staff more efficient in order to keep her staff‘s salaries whole. We recently reported on the fact that Senator Rand Paul trimmed his Senate office expenses by $600,000, why couldn’t she have given him a call for the sake of her staff?
Why didn’t she? Because she does not care what happens to Americans and their 2% tax increase in January, only worrying about her little slice of life.
Let’s review: Facebook and Apple make a lot of money but pay little or nothing in taxes, a Congresswoman is more worried about her well paid staff than suffering Americans, Medicare and Medicaid get stiffed for billions of dollars a year in fraudulent claims, and the nation’s banks are bigger stronger and more likely to destroy the economy than before the Washington political class set out to make this situation go away.
Yep, sounds like a typical month’s worth of destruction from the politicians in Washington. We will finish off this month’s roundup of political class insanity and idiocy tomorrow when we review a fresh list of frivolous and stupid Federal government spending that has been recently compiled. If you are Elvis fans or fans of snowmobile racing, you do not want to miss it.
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