Closing the spending gap shown us by the Ghost of Tax Day Future with tax increases would eventually require all taxes on average to increase by more than 50%. Such a tax increase is not simply a larger check made out to “U.S. Treasury.” Economic research suggests that larger governments are associated, all else equal, with slower economic growth because of the tax and regulatory burdens associated with a larger state. Using the estimate of Eric Engen of the Federal Reserve Board and Jonathan Skinner of Dartmouth College, meeting our entitlement spending wave through tax increases would ultimately depress our annual rate of economic growth by about a full percentage point.
That such tax increases would build up over many years does not dull the observation that tax increases of this magnitude would carry serious consequences for our future living standards. Their sheer size would restrain incentives for innovation and flexibility, and the entrepreneurship and productivity growth that have characterized relatively strong U.S. economic performance. Indeed, the “tax increase” shadow could ultimately crowd out about as much of the rate of growth as the productivity growth boom of the past decade has contributed.
Category: Politics
Judge Presses Companies that Cut Off Legal Fees
Federal judges are beginning to question why companies are cutting off legal fees to their executives when they become caught up in criminal investigations.
The judge in the tax-shelter trial of former tax professionals at KPMG last week ordered a hearing to determine whether prosecutors had improperly put pressure on the accounting firm to stop paying the defendants’ legal bills. Last month, a federal judge in New Hampshire granted five former executives of Enterasys Networks a three-month reprieve in their trial after he questioned whether there was undue influence to cut off their legal payments. (The company has since restored them.)
The questions have emerged as other companies, including Symbol Technologies and HealthSouth, have stopped paying former executives’ bills for lawyers.
The AMT Shell Game: Why Bush’s Tax “Cuts” Aren’t
Over at Slate, Daniel Gross is explaining, once more, the role the Alternative Minimum Tax continues to play in the Bush administration’s deceptive tax policies.
The AMT is a bizarre parallel-universe of taxation with its own set of complex rules that differ from the normal IRS system. It was passed decades ago as an effort to prevent gazillionaires from using elaborate tax shelters to reduce their tax bills to zero. For many years it was easily ignored by the vast majority of Americans, and as recently as a few years ago the only non-super-rich people who worried about it were tech-industry types who’d hit the stock-option jackpot but played their cards wrong.
But the AMT was designed with its very own time-bomb: It was never indexed for inflation, and so each year the rising tide of inflation — even the slow, relatively benign inflation the U.S. has experienced in the last decade — lifts more and more middle-class Americans into its maw. The obvious answer is to fix it, either by repeal or by indexing it for inflation so it continues to apply only to the gazillionaires who were its original target. Shouldn’t be so hard, right?
AT&T Seeks to Hide Spy Docs
AT&T is seeking the return of technical documents presented in a lawsuit that allegedly detail how the telecom giant helped the government set up a massive internet wiretap operation in its San Francisco facilities.
In papers filed late Monday, AT&T argued that confidential technical documents provided by an ex-AT&T technician to the Electronic Frontier Foundation shouldn’t be used as evidence in the case and should be returned.
The documents, which the EFF filed under a temporary seal last Wednesday, purportedly detail how AT&T diverts internet traffic to the National Security Agency via a secret room in San Francisco and allege that such rooms exist in other AT&T switching centers.
Whitepaper on Telco Promises
Here’s a very well-written report of the Bell’s trail of Rate Relief and Broken Promises. It is funded by Broadband Everywhere, a consortium that’s openly funded by small cablecos and the NCTA, who are fighting back against the Bell-flavored franchise reform law moving through Congress. It relies heavily on the work of Bruce Kushnick, but it also cites many relevant local press stories from, e.g., Enid OK (where a promise of 500 jobs led to rate relief and a net loss of jobs), Austin TX (where a new Texas law that assumed “competition” would lead to lower prices and granted rate relief actually led to rate caps), etc., etc., etc.
Really good stuff on a bad story that demands more attention! Mainstream reporters, attention please!
AT&T Forwards ALL Internet Traffic to the NSA
Via Dave Farber; Ryan Singel:
AT&T provided National Security Agency eavesdroppers with full access to its customers’ phone calls, and shunted its customers’ internet traffic to data-mining equipment installed in a secret room in its San Francisco switching center, according to a former AT&T worker cooperating in the Electronic Frontier Foundation’s lawsuit against the company.
Mark Klein, a retired AT&T communications technician, submitted an affidavit in support of the EFF’s lawsuit this week. That class action lawsuit, filed in federal court in San Francisco last January, alleges that AT&T violated federal and state laws by surreptitiously allowing the government to monitor phone and internet communications of AT&T customers without warrants.
When the Little Guy Helped the Wealthy Keep Their Tax Secret
The problem came to light during a Senate investigation of the 1929 stock-market crash: Some of America’s wealthiest citizens, including the banker J.P. Morgan and his partners, were legally paying nothing in federal income taxes.
The solution, endorsed by majorities of both parties in Congress: Make individuals’ income-tax information public, and shame the evaders into paying their fair share.
Under the Revenue Act of 1934, anyone who filed a federal tax return would also complete another — pink — form, with his or her name, address, income, deductions and total taxes paid. Everything on the pink slips was public information, available to reporters, nosy neighbors or former spouses alike.
Long Term Rates Creep Higher
Mark Whitehouse and Serena Ng:
After stubbornly resisting nearly two years of prodding by the Federal Reserve, long-term interest rates are on the rise, a trend that could eventually slow the nation’s expansion.
Yesterday, the yield on the 10-year U.S. Treasury note — the foundation for long-term interest rates — rose as high as 4.905%, matching a two-year peak set in May 2004. Some analysts believe the yield is on a run that will take it above 5%.
The upturn, spurred by deepening economic growth in the U.S. and abroad, is pushing up the cost of a widening range of consumer and business loans — including 30-year mortgages and corporate bonds — from extraordinarily low levels.
Paradox of the Worse Network – AT&T: “15Mbps Internet Connections Irrelevant”
At this week’s Media, Entertainment and Telecommunications conference, AT&T COO Randall Stephenson told his listeners that increased bandwidth was no longer of great importance to consumers.
“In the foreseeable future, having a 15 Mbps Internet capability is irrelevant because the backbone doesn’t transport at those speeds,” he told the conference attendees. Stephenson said that AT&T’s field tests have shown “no discernable difference” between AT&T’s 1.5 Mbps service and Comcast’s 6 Mbps because the problem is not in the last mile but in the backbone.
AT&T, formerly SBC is the dominant internet provider in Wisconsin…… Stephenson completely misses the point that bidirectional fast networks to the home will open up many, many small business opportunities.
Internet Injects Sweeping Change into Politics
The transformation of American politics by the Internet is accelerating with the approach of the 2006 Congressional and 2008 White House elections, prompting the rewriting of rules on advertising, fund-raising, mobilizing supporters and even the spreading of negative information.
Democrats and Republicans are sharply increasing their use of e-mail, interactive Web sites, candidate and party blogs, and text-messaging to raise money, organize get-out-the-vote efforts and assemble crowds for a rallies. The Internet, they said, appears to be far more efficient, and less costly, than the traditional tools of politics, notably door knocking and telephone banks.
Analysts say the campaign television advertisement, already diminishing in influence with the proliferation of cable stations, faces new challenges as campaigns experiment with technology that allows direct messaging to more specific audiences, and through unconventional means.
Those include Podcasts featuring a daily downloaded message from a candidate and so-called viral attack videos, designed to trigger peer-to-peer distribution by e-mail chains, without being associated with any candidate or campaign. Campaigns are now studying popular Internet social networks, like Friendster and Facebook, as ways to reaching groups of potential supporters with similar political views or cultural interests.
No Doubt.