The following two reports shows whats ail the US. The first is an example from the Washington side of the fence. Representative Eric Cantor, lead negotiator for the Republicans in the House has investments in an ETF -Exchange Traded Fund which will go up significantly if the Budget negotiations with the Obama Administration falter or fail in the run up to the August 2 deadline – sound like Representative Cantor has an extra incentive to see that the negotiations do fail.
From the business side of misbehaving, Cisco CEO John Chambers is leading the charge to getting a $1 trillion dollar tax holiday for repatriating profits from the tax havens that have been set up around the world by major corporates like Cisco to avoid paying taxes. Here is a summary of the detail from Bloomberg:
Now Cisco, the largest maker of networking equipment, wants to save even more — by asking Congress to waive most federal taxes due when multinationals bring such offshore earnings home. Chief Executive Officer John T. Chambers has led the charge for the tax holiday, which would be the second since 2004. He says it would encourage companies to “repatriate” as much as $1 trillion held abroad, spur domestic investment and create jobs.
Cisco’s techniques cut the effective tax rate on its reported international income to about 5 percent since 2008 by moving profits from roughly $20 billion in annual global sales through the Netherlands, Switzerland and Bermuda, according to its records in four countries. The maneuvers, permitted by tax law, show how companies that use such strategies most aggressively would get the biggest benefit from the holiday, said Edward D. Kleinbard, a law professor at the University of Southern California in Los Angeles.
“Why should we reward firms for successfully gaming the tax system when we in turn are called on to make up the missing tax revenues?” said Kleinbard, a former corporate tax attorney at Cleary Gottlieb Steen & Hamilton LLP. “Much of these earnings overseas are reaped from an enormous shell game: Firms move their taxable income from the U.S. and other major economies — where their customers and key employees are in reality located — to tax havens.”
Companies including Google Inc. (GOOG), Apple Inc. (AAPL) and Pfizer Inc. (PFE) are also pushing the proposed tax holiday, which would allow profits to return to the U.S. at a discounted 5.25 percent rate… [down from] the corporate rate of 35 percent
Now readers know why the notion of “shared sacrifice” gets scorned. It is blatantly obvious when John Q. Public gets to pick up the tab for the Wall Street Bailout, the continuing ineffective zero-interest rate, and QE2 free money for the banks and financial institutions. These first-to-be rescued-from-their-own-folly have absolutely failed to open up lending on even nominal foreclosure foregivness or small business loans but instead have devoted large chunks of their “public” capital for risky M+A, private equity and derivative plays. Now Big Businesses like Cisco, who have also profited from easy money and the Race to the Bottom in wages and local taxes are doing so again on a massive $trillion scale – saying we “might” spend locally if you agree to making the US deficit bigger by rescinding our taxes.
Here again is a moral failure that will guarantee the US National Decline.