30 August 2017   Leave a comment

Americans are focused on the floods in Texas and Louisiana which have been devastating to the people there.  But there have also been severe floods in India, Bangladesh, and Nepal and over 1,200 people have died in those floods.  Flooding in South Asia is not uncommon as the monsoon season usually lasts from June to September, but this year the floods have been especially severe.  The floods have destroyed thousands of hectares of agricultural land and clean water is very scarce.  The city of Mumbai, home to 20 million people, has been profoundly affected by the floods.

Flooding in Mumbai, India

Several firms made arrangements to provide food and rest areas for employees stuck in offices, while officials of temples and religious bodies offered help to those stranded on streets.

Widening income and wealth inequality has been a feature of globalization as it has unfolded since the 1990s.  The inequality is not simply a feature of market processes–it also reflects political decisions that favor capital at the expense of labor.  One of the key instruments in addressing inequality is the tax mechanism–higher taxes on higher incomes can have a redistributive effect, as the taxation rates for the 1950s and 1960s in the US prove.  Doing that period, incomes and wealth were more equitably distributed in the US.  Progressive taxation, however, has been eroded since the 1980s and the US is currently engaged in another round of tax changes which threaten to worsen income and wealth inequality even further.

 

A key argument for those who wish to lower taxes, specifically corporate taxes, is that lower taxes will lead to greater corporate investment and therefore more jobs.  The argument makes intuitive sense, but it is not empirically justified.  The Institute for Policy Studies has done research on the investment behavior of companies that only pay 20% or less of their corporate profits in taxes.  The findings undermine the argument that lower taxes lead to lower jobs.  The findings are stunning:

“To investigate this claim, this report is the first to analyze the job creation records of the 92 publicly held U.S. corporations that reported a U.S. profit every year from 2008 through 2015 and paid less than 20 percent of these earnings in federal income tax. Did these reduced tax rates actually lead to greater employment within the 92 firms? The data we have compiled give a definitive — and sobering — answer.

Key findings: 

Tax breaks did not spur job creation

  • America’s 92 most consistently profitable tax-dodging firms registered median jobgrowth of negative 1 percent between 2008 and 2016. The job growth rate over those same years among U.S. private sector firms as a whole: 6 percent.
  • More than half of the 92 tax-avoiders, 48 firms in all, eliminated jobs between 2008 and 2016, downsizing by a combined total of 483,000 positions.

Tax-dodging corporations paid their CEOs more than other big firms

  • Average CEO pay among the 92 firms rose 18 percent, to $13.4 million in real terms, between 2008 and 2016, compared to a 13 percent increase among S&P 500 CEOs. U.S. private sector worker pay increased by only 4 percent during this period.
  • CEOs at the 48 job-slashing companies within our 92-firm sample pocketed even larger paychecks. In 2016 they made $14.9 million on average, 14 percent more than the $13.1 million for typical S&P 500 CEOs.

Job-cutting firms spent tax savings on buybacks, which inflated CEO pay

  • Many of the firms in our sample funneled tax savings into stock buybacks, a financial maneuver that inflates the value of executive stock-based pay. On average, the top 10 job-cutters in our sample each spent $45 billion over the last nine years repurchasing their own stock, six times as much as the S&P 500 corporate average.”

We should keep this data in mind as the US Congress begins its debate on tax reform.

screen_shot_2017 03 17_at_10.19.43_am

 

The Yale University Program on Climate Change Communication conducted a poll of Americans in May 2017 on their beliefs and attitudes on climate change.  The entire report can be accessed here.  The summary of the report contains some of the conclusions which are somewhat jarring.  According to the summary, “Most Americans think global warming is a relatively distant threat” but they also believe that it is a serious “distant” threat:

“Few Americans are optimistic that humans will reduce global warming. Nearly half (48%) say humans could reduce global warming, but it’s unclear at this point whether we will do what is necessary, and nearly one in four (24%) say we won’t because people are unwilling to change their behavior. Only 7% say humans can and will successfully reduce global warming.”

Apparently the possible demise of the species is not enough to persuade many to change their ways.

climate_change_american_mind_may_2017-2-0

Posted August 30, 2017 by vferraro1971 in World Politics

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