Category Archives: David Cay Johnston

How the Kleptocrats’ $12 Trillion Heist Helps Keep Most of the World Impoverished

David Cay Johnston | May 02 2016 | The Daily Beast

48743721.cached

An investigative economist has crunched 45 years of official statistics to discover just how much kleptocrats have plundered from 150 mostly poor nations

For the first time we have a reliable estimate of how much money thieving dictators and others have looted from 150 mostly poor nations and hidden offshore: $12.1 trillion.

That huge figure equals a nickel on each dollar of global wealth and yet it excludes the wealthiest regions of the planet: America, Canada, Europe, Japan, Australia, and New Zealand.

That so much money is missing from these poorer nations explains why vast numbers of people live in abject poverty even in countries where economic activity per capita is above the world average. In Equatorial Guinea, for example, the national economy’s output per person comes to 60 cents for each dollar Americans enjoy, measured using what economists call purchasing power equivalents, yet living standards remain abysmal.

The $12.1 trillion estimate—which amounts to two-thirds of America’s annual GDP being taken out of the economies of much poorer nations—is for flight wealth built up since 1970.

Continue reading How the Kleptocrats’ $12 Trillion Heist Helps Keep Most of the World Impoverished

Higher taxes do not kill jobs

by David Cay Johnston | June 20, 2014 | AlJazeera America 

County-level BLS data tell the true story about job growth

Screen Shot 2016-03-13 at 10.58.04 AM

America added 2.3 million jobs last year as the economy continued its too-slow recovery from the Great Recession. But it is where those jobs were concentrated that should garner attention. New county-level data from the Bureau of Labor Statistics (BLS) reveal where jobs are increasing and decreasing. According to the numbers, job growth was concentrated in places that raised taxes, such as California, and in already high-tax areas, notably New York City.

Indeed, the empirical evidence indicates that increased or already high taxes appear not to put a damper on jobs, posing new challenges for those who argue that tax cuts are the primary and perhaps sole elixir for our economic woes and that tax increases always and everywhere spell doom for job seekers.

First, consider California, where voters in 2012 elected to increase both sales and income taxes beginning in 2013. Last year California ranked third in job growth at 2.9 percent, much better than the national average of 1.8 percent.

Continue reading Higher taxes do not kill jobs

Americans have lost out on $6.6 trillion

by David Cay Johnston | July 09, 2014 | AlJazeeraAmerica

The inability to maintain 2000-level prosperity has cost us all

Screen Shot 2016-03-13 at 10.23.14 AM

Why are so many Americans feeling squeezed economically even as the economy expands at an accelerating pace?

Last month set a new record for sustained job creation: 52 straight months of added jobs, with a robust 288,000 more jobs in June and more than 9 million jobs created since February 2010. The unemployment rate is down to 6.1 percent, and the number of long-term unemployed has been slashed, from about 5 million people to about 3 million.

The stock market is soaring, reaching a record high on July 3. The Dow Jones industrial average passed 17,000 — amazing compared with its Great Recession low of 6,627 in March 2009, just weeks after President Barack Obama took office.

So what’s missing? Why did Obama acknowledge in a television interview last week that the “underlying trend for middle class families, that they don’t feel, no matter how hard they work, they’re able to get ahead in the same way that their parents were able to get ahead.”

Continue reading Americans have lost out on $6.6 trillion

Flat wages show the US doesn’t have a labor market

by David Cay Johnston, published August 4, 2015 at ALJAZEERAAMERICA

Government action is required to correct imbalance in employer power

Screen Shot 2016-03-07 at 2.56.08 PM

Another warning sign of our fragile economy popped up Friday in the latest quarterly employment-cost-index report, which measures the total cost of labor to employers. The index rose by one-fifth of 1 percent — the smallest increase since the data series was launched in 1982.

Without real growth in wages the economy cannot grow because the capacity of people to buy goods and services — what economists call aggregate demand — will remain flat.

This is a problem that we can fix, and there are three obvious ways to address it. But it requires the involvement of government, which makes the rules governing the market. If there is one thing that centuries of experience have taught, it is this: Whatever the rules, businesses adapt.

Flat wages

The median wage — half make more, half less — has been stuck since 1998 at a bit more than $500 a week. In 2013 average pay declined from the previous year in 59 of the 60 salary levels the government tracks.  Only jobs paying $50 million or more had higher average pay.

Continue reading Flat wages show the US doesn’t have a labor market

The Trans-Pacific Partnership Threatens Our Liberty

by David Cay Johnston, published February 04, 2016 at Common Dreams

Under the agreement, corporations could challenge federal, state and local laws without court oversight

tpp_johnston
“Corporations,” writes Johnston, “have no place ruling over people or their governments.” (Photo: Saul Loeb / AFP / Getty Images)

Economic theory holds that removing trade barriers among nations should increase global wealth. But the proposed 12-nation Trans-Pacific Partnership that Congress must soon give a straight up-or-down vote threatens our liberties as Americans and is likely to add almost nothing to U.S. economic growth.

I have been a longtime critic of the agreement, especially since WikiLeaks obtained a draft of its intellectual property provisions, showed a clear bias in favor of corporations.

Since Washington made the text public in October I have come to see some very real benefits in the agreement — but not nearly enough to warrant making it the law of the land. What I see now is a pact that would make government subservient to corporations, posing a real threat to freedom and self-governance.

Does little on tariffs

There are two chief reasons to reject the TPP. First, the partnership does little for the U.S. on tariffs. In fact, the TPP was only minimally about U.S. tariffs on imports, which overall are insignificant at 1.5 percent, amounting to only a fraction of a penny of each dollar of federal tax revenue. However, the same is not true for exports: Some U.S.-made goods are subject to tariffs of up to 70 percent. Tariffs on U.S. goods imposed by the 11 other countries fall to zero, encouraging more exports of machinery, automotive parts and other manufactured products. But these issues could be resolved in bilateral negotiations without expanding corporate powers.

Screen Shot 2016-02-05 at 12.35.19 PMSecond, the agreement would allow foreign corporations and governments to challenge federal, state and local laws in every other partnership country. The arbitration panels will likely to be composed of trade lawyers agreed to by each side. Despite some precedents in existing treaties, this raises fundamental questions of sovereignty, especially since corporate agent­s, not judges in courts of law, would make decisions binding on the body politic. That no case brought against the United States under the North American Free Trade Agreement (NAFTA), for example, has resulted in damages should not blind us to the fact that huge damages could be awarded under the TPP.

Continue reading The Trans-Pacific Partnership Threatens Our Liberty

Paying taxes your employer keeps

images.duckduckgo
David Cay Johnston video report

by David Cay Johnston, published July 19, 2011 at Reuters

Painful as it feels to have a lot of hard-earned income taken from your paycheck for taxes, a new Illinois law does something Americans may find surprising. It lets some employers pocket taxes for 10 years.

You read that right — in Illinois the state income taxes withheld from your paycheck may be kept by your employer under a law that took effect in May. Continental Corporation (CONG.DE), the big German tire maker; Motorola Mobility (MMI.N), the cell phone maker; and Navistar (NAV.N), the maker of diesel trucks for industry and the military, are in on the deal. State officials say a fourth company is negotiating a similar arrangement.

Chrysler and Mitsubishi arranged deals with the state in the depths of the Great Recession in 2009; Ford got one in 2007, since revised to let it keep half of its Illinois workers’ state income taxes.

Instead of paying for police, teachers, roads and other state and local services that grease the wheels of commerce, Illinois workers at these companies will subsidize their employers with the state income taxes they pay.

Continue reading Paying taxes your employer keeps

Taxed By The Boss

images.duckduckgoby David Cay Johnston, published April 12, 2012 in Reuters

Across the United States more than 2,700 companies are collecting state income taxes from hundreds of thousands of workers – and are keeping the money with the states’ approval, says an eye-opening report published on Thursday.

The report  ( PAYING TAXES TO THE BOSS: How A Growing Number of States Subsidize Companies with the Withholding Taxes of their Workers ) from Good Jobs First, a nonprofit taxpayer watchdog organization funded by Ford, Surdna and other major foundations, identifies 16 states that let companies divert some or all of the state income taxes deducted from workers’ paychecks. None of the states requires notifying the workers, whose withholdings are treated as taxes they paid.

General Electric, Goldman Sachs, Procter & Gamble, Chrysler, Ford, General Motors and AMC Theatres enjoy deals to keep state taxes deducted from their workers’ paychecks, the report shows. Foreign companies also enjoy such arrangements, including Electrolux, Nissan, Toyota and a host of Canadian, Japanese and European banks, Good Jobs First says.

Continue reading Taxed By The Boss

Spanish company tops list of US corporate welfare hogs

by David Cay Johnston, published at Al Jazeera on March 17, 2015

New report represents first effort to measure flow of taxpayer money flowing into company coffers

How much welfare Uncle Sam provides companies has long been one of the great mysteries of taxpayer spending. Like a secret underground river, boodles have flowed out of the Treasury and into corporate bank accounts without notice.

Now we finally have a first look at the size of that river and where the cash goes.

The federal government has quietly doled out $68 billion through 137 government giveaway programs since 2000, according to a new database built by a nonprofit research organization, Good Jobs First. It identified more than 164,000 gifts of taxpayer money to companies. You can look up company names, subsidy programs and other freebies at the Subsidy Tracker 3.0 website.

A report the organization released today, “Uncle Sam’s Favorite Corporations,” shows that big businesses raked in two-thirds of the welfare.

The most surprising and tantalizing finding is the identity of the biggest known recipient of federal welfare. That dubious honor belongs to Iberdrola, a Spanish energy company with a reputation for awful service and admissions of incompetence. It collected $2.1 billion of welfare on a $5.4 billion investment in U.S. wind farms from coast to coast.

In fact, 10 of the 50 biggest recipients of federal welfare are foreign-owned firms. Try to imagine Congress debating a bill giving welfare payments to poor Canadians, Mexicans and Europeans and you’ll see the absurdity of U.S. taxpayers providing welfare to the owners of foreign corporations.

New tool

Phil Mattera, Good Jobs’ research director, created a software tool that matches subsidiaries to parent companies, enabling him to identify the 1,800 parent companies that received welfare. Its database does not cover many known subsidies, such as Agriculture Department payments to corporate farms, and instead focuses on stealth subsidies on which little or no data have been available without digging through mountains of paperwork.

Continue reading Spanish company tops list of US corporate welfare hogs