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Republican Senators Demand Another Tax Break For The Wealthy

Republican Senators Demand Another Tax Break For The Wealthy

More than 20 Republican senators are demanding yet another massive tax break for wealthy Americans.

In a letter addressed to Treasury Secretary Steven Mnuchin, the lawmakers begged the administration to tie capital gains to inflation. The senators, led by Ted Cruz (R-TX), claimed the move would benefit the economy, but a 2018 analysis by the Center on Budget and Policy Priorities found it would mostly benefit the wealthy.

Such a policy would cost the government about $100 billion to $200 billion in revenue over ten years, placing it on the backs of American taxpayers. Additionally, 86 percent of the benefits would flow only to the top 1 percent of households, according to the analysis.

Apparently the wealthy haven’t cut enough breaks lately under the Trump administration.

The conservatives’ demands follow a budget compromise between Trump and Democrats to raise the debt ceiling, the deadline of which was sped up by the GOP’s 2017 tax scam.

That tax scam, passed solely by Republican lawmakers, cost American taxpayers a whopping $1.5 trillion and mostly benefited wealthy corporations.

Due to the high price tag, the administration has been eager to make deep cuts to important safety net programs. The White House has proposed cutting more than 3 million poor Americans off of food stamps to save the government money. The administration has also taken aim at education, hoping to slash billions from the Education Department. In 2018, the administration denied federal workers their 2.1 percent raise due to “serious economic conditions affecting the general welfare.”

Additionally, the tax cuts did not help grow the economy how Republican lawmakers claimed they would. A March report from the White House Council of Economic Advisers (CEA) found that the economy will not sustain even a 3 percent growth for the foreseeable future.

It seems the GOP hasn’t learned its lesson and will do anything to make sure money flows only to the rich and powerful.

Published with permission of The American Independent.

EU Launches Probes Into Apple, Starbucks Tax Break Deals

EU Launches Probes Into Apple, Starbucks Tax Break Deals

Brussels (AFP) – The European Union launched a probe Wednesday to determine whether the special tax deals offered to Apple and Starbucks by authorities in Ireland, Luxembourg and the Netherlands amount to illegal state aid.

“In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes,” EU Competition Commissioner Joaquin Almunia said.

Apple and Starbucks — as well as a number of other multi-national companies including Amazon and Google — have come under intense pressure from politicians and campaigners over their tax affairs.

The tax policies ruling the financial arm of Italian automaker Fiat, based in Luxembourg, is also included in the probe.

The multinationals are accused of enjoying sweetheart tax deals that allow them to move billions in earnings from higher-taxed countries to lower taxed ones.

Almunia said the investigation would focus on transfer pricing payments, an accounting technique where units of a multinational pay ‘royalties’ to another unit of their business.

The mechanism — made possible by carefully crafted tax laws in Ireland, Netherland and Luxembourg — allow operations in higher-taxed countries to post losses, with profits moved elsewhere.

The European Union strictly has no jurisdiction over national tax policies, a cherished prerogative of member states, and must limit its investigation to rules governing free competition.

Almunia said the arrangements under scrutiny could amount to illegal state aid that discriminated against other member states.

“Under the EU’s state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way,” Almunia said.

California iPad maker Apple has shifted billions in international earnings through Ireland using such loopholes, but the government said it had not breached EU rules.

“Ireland is confident that there is no state aid rule breach in this case and we will defend all aspects vigorously,” a government spokesman said.

Facing an international firestorm, Ireland last year moved to close the loophole, but still firmly defends its 12.5 percent corporate tax rate.

Last year Apple chief Tim Cook faced a grilling by US lawmakers on “sham” subsidiaries used to shift profits offshore, though he denied the company uses “gimmicks” to cut taxes.

Starbucks, which is headquartered in tax-friendly Netherlands, said it would take a closer look at the EU probe, which it is only indirectly a target of.

But in face of the public backlash over its tax practices, Starbucks in April said it was re-locating its European headquarters from the Netherlands to Britain.

Last year it agreed to pay £20 million in British corporation tax, adding it had “listened” to its customers.

In 2012 Starbucks acknowledged it had not paid corporation tax in Britain on sales worth $670 million between 2009 and 2012.

“We comply with all relevant tax rules, laws, and OECD guidelines and we’re studying the Commission’s announcement related to the state aid investigation in the Netherlands,” a Starbucks spokesman said.

In a letter to parliament, the Netherlands government said it would “of course” cooperate with the EU probe.

“I am convinced that the investigation will conclude that this is not state aid and that agreements with Starbucks respect OECD rules on tax deductions,” said Eric Wiebes, State Secretary of Finance.

©afp.com / Glenn Chapman