A Tax Heaven on Earth

	August 13, 2012
THIS WEEK
Eight years ago this week, we started publishing Too Much as an online weekly. For that first issue, we had a few dozen readers. We now have just under 8,000 folks who get Too Much every Monday in their email inbox and several thousand more who read Too Much content weekly at our Web archive or Inequality.Org. Too Much started up at a time when concerns about top-heavy concentrations of income and wealth rarely gained much media traction. How amazingly different our current situation. Insights about inequality now appear all over. Over the years we've worked at evolving Too Much to meet the challenges this welcome new interest in inequality creates. Our goal? To highlight news and views of value that can help all of us comprehend our unequal world — and maybe even change it. And if we can have a few smiles along the way, all the better. This week's Too Much debuts our latest tweaks to the basic Too Much format. Hope you like them. And if you do, please take a moment to “share the wealth” and forward this issue on to friends and family. As always, our deepest thanks!
GREED AT A GLANCE
Could someone as wealthy as Mitt Romney actually pay zilch in federal income tax, as Senate majority leader Harry Reid has been openly intimating? Yes, the New York Times concluded last week, after analyzing new IRS data on America’s top 400 incomes. In 2009, six of these had zero tax liability. The untaxed rich typically owe their tax-free status to legally suspect tax shelters, and Romney’s business record, tax experts Edward Kleinbard and Peter Canellos have just detailed, reveals an executive comfortable operating at the legal “edge.” As audit chair of the Marriott hotel empire, Romney okayed a maneuver that created a “gigantic tax loss out of thin air.” And under Romney, adds Bloomberg, Bain Capital funneled $1 billion to tax havens in Luxemburg to avoid Italian taxes on a buyout deal that landed Romney an over $50 million personal windfall . . . These have become giddy days for New York’s top luxury realtors. One of their own, super broker Dolly Lenz, is hosting her own new CNBC show on the “Secret Lives of the Super Rich,” and the going rates on Manhattan’s choicest apartments are soaring. In June, Las Vegas casino king Steve Wynn paid $70 million for a 10,882-square-foot duplex overlooking Central Park. Now another apartment owner in the same building is asking $50 million for a place less than half the size of Wynn's that sold for only $21 million just five years ago, right before the Wall Street meltdown . . . Let’s hear it for the Middle Ages, at least on one score. Societies in medieval Europe found “blatantly selfish economic behavior,” says Stanford historian Linda Stokes, “simply unacceptable.” Stokes last week summed up her research into years of old court depositions and other medieval legal and financial papers. What would the entrepreneurs of those times think of our contemporary CEOs? Observes the Stanford researcher: “A medieval businessman would surely be impressed by the successes of his modern descendants, but he would also despise them as men without honor or virtue.”	Quote of the Week “The [Paul] Ryan budget is a remarkable document — one that, for most of the past half-century, would have been outside the bounds of mainstream discussion due to its extreme nature. In essence, this budget is Robin Hood in reverse — on steroids.” Robert Greenstein, Center on Budget and Policy Priorities, Ryan Roundup, August 11, 2012
PETULANT PLUTOCRAT OF THE WEEK
Better ingredients, the Papa John’s ads chirp, better pizza. But Papa John’s founder and CEO John Schnatter’s $300 million personal fortune rests more on skimpy employee benefits than better ingredients, and that may be why Schnatter has just come out swinging against the Obama health care reform. Obamacare, the CEO of the world’s third-largest pizza empire is loudly proclaiming, will cost his customers another 11 to 14 cents per pie. But that’s only because Papa John's, under the Affordable Care Act, will have to start offering employees health insurance or pay a penalty. Under the legislation, mom-and-pop pizza parlors with fewer than 25 employees can get federal subsidies to help them offer health coverage. This support for his small business competitors may not thrill Schnatter much either.
PROGRESS AND PROMISE
The world’s richest man, Mexico's Carlos Slim, does business all around the world. Now the locals who’ve borne the brunt of that business are going international, too. Last week, in a protest against the “1 percent of the 1 percent,“ the U.S. Occupy movement and Mexico’s Yo Soy 132 kicked off a new Two Countries, One Voice campaign with a symbolic occupation at the Saks Fifth Avenue flagship luxury store in Manhattan. Slim owns a major chunk of Saks. He also runs over 70 percent of Mexico's telecom sector, and his monopolistic pricing policies, the Paris-based OECD reported earlier this year, overcharged consumers an average $13.4 billion a year from 2005 to 2009.	Take Action on Inequality Want to help build a new economy in your community? Start up a “Resilience Circle."
inequality by the numbers
	Stat of the Week Not many corporate execs have gone to prison over recent years, and even fewer execs who contribute to political campaigns end up serving jail time, says a recent study of Securities and Exchange Commission and Department pf Justice prosecutions from 1999 to 2010. Accused execs who contribute politically, the research shows, turn out to be 75 percent less likely to receive jail time and a ban on future service as a corporate officer.
IN FOCUS
For Billionaires, a Heaven on Earth Beckons The United States already sports an exceedingly rich people-friendly tax structure. But America's rich have far more friendly tax models in mind. Like Singapore. Why do the mega rich in the United States feel so put upon? Their incomes are rising, after all, and the taxes they pay have never been lower since the 1920s. In fact, even if lawmakers in Congress passed 100 percent of President Obama’s tax plan, America’s rich would still be paying taxes at less than half the top rate that America’s richest faced back in the 1950s. America’s wealthiest, given this ever so friendly political lay of the land, ought to be kicking back and living care-free. But that’s not happening. This election cycle appears to have America’s super rich in a feverish frenzy. They’re pouring money into the 2012 elections at all-time record rates. What’s behind this deluge of campaign cash? A few frenzied super-rich political donors have apparently gulped the Kool-Aid of America’s delusional right wing. President Obama, these crazed deep pockets almost seem to believe, has tumbrils waiting to cart them off to the guillotines once he wins a second term. But most of our super rich remain eminently reality-based. They know full well that the rich in other major developed nations face political challenges far more unnerving than anything that confronts deep pockets in the United States. In France, for instance, the lawmakers elected this past spring will be taking action this September to raise the tax rate on income over 1 million euros, the equivalent of $1.24 million, from 44 to 75 percent. The tax plan President Obama has announced, by contrast, will only hike the top-bracket U.S. rate from 35 to 39.6 percent — and no one in Congress has anything remotely close to a majority for going beyond what the President is proposing. So why do America’s super rich feel compelled to plow so many billions into politics? They already live in the most rich people-friendly developed nation in the world. What else could they possibly want? Well, they could want Singapore. To be more precise: Many of America’s richest see no reason why they shouldn't be able to live in a nation that treats the “successful” and their fortunes with as much respectful deference that locales like Singapore so openly display. And just how much deference does Singapore extend to its resident rich? Last week, in a vividly detailed new paper on Singapore's tax system, three analysts from the Deloitte global financial consulting network described how extraordinarily rich people-friendly a modern economy can be. In Singapore, the Deloitte analysts relate, residents pay no more than 20 percent of any income dollar over $250,000 in taxes. And many income dollars over $250,000 face no tax carve-out at all — since Singapore levies no tax on capital gains, the profits from buying and selling stocks and other assets.   Singapore also doesn’t bother taxing any income that its richest residents grab from abroad, even if these residents have that income remitted into Singapore. Residents instead only face taxes on their “Singapore-source income.” The rich who reside in Singapore don’t even have “to report their foreign bank accounts or other foreign financial assets” to Singapore’s version of the IRS. Nor do Singapore's wealthy have to worry about their grand fortunes shrinking once they pass on to the hereafter. Singapore hasn’t had an estate tax on the books since early in 2008. Some Americans seem to find this total tax package that Singapore offers absolutely irresistible. In 2009, the U.S. embassy in Singapore reports, 58 Americans renounced their citizenship and set up residence in Singapore. In 2010, that total apparently hit close to 100. Singapore certainly has its charms, but most tax break-hungry Americans of means don't seem particularly eager to take up residence for at least 183 days a year. Their alternate endgame: bring Singapore stateside. In places like Singapore, these Americans see a vision of what the United States could become. A vision too far-fetched? Not at all. GOP White House hopeful Mitt Romney has already pronounced his support for dropping the federal tax rate on top-bracket income down to 28 percent, a point nearly halfway from the current 35 percent top rate in the United States to Singapore's 20 percent. And Romney's newly announced running mate, House Budget Committee chairman Paul Ryan, has already proposed eliminating taxes on capital gains. America’s rich have come a long way over the past half-century. Why couldn’t they go further, to full-fledged Singapore-style status? The more important question: Will we let them?	New Wisdom on Wealth Stephen Bezruchka, If there were a health Olympics, the U.S. wouldn't even medal, Seattle Times, August 8, 2012. A physician details how poorly the United States ranks on every yardstick of good health — and tags income inequality as the prime culprit. Matt Taibbi, Obama, Not Reid, Should Be Taking on Mitt Romney’s Tax Record, Rolling Stone, August 9, 2012. Our institutionalized preferential treatment for the rich, at tax time and beyond. Joe Nocera, Down With Shareholder Value, New York Times, August 10, 2012. A survey of recent assaults on the notion that shareholders make up the only corporate constituency that matters.
new and notable
Joseph Stiglitz, The Price of Inequality: How Today's Divided Society Endangers Our Future, W. W. Norton, 2012, 448 pp. This new look at the damage we do to ourselves when we tolerate huge disparities in income and wealth has been winning plaudits ever since its publication earlier this summer, including this just-published rave in the nation's most important book review weekly. Author Stiglitz, a Nobel laureate, has the professional heft to gain mainstream media attention for insights that once seldom surfaced. For a taste of what Stiglitz has to offer, check this book excerpt that Vanity Fair published late this past spring.