A woman walks past a man sleeping on a street in New York in November 2009.
By James Eng, msnbc.com
A
report released Wednesday says the number of homeless people in America
fell slightly between 2009 and 2011 despite a teetering economy, but
homeless advocates say the numbers don’t tell the full story.
The report, “State of Homeless in America 2012,” was issued by the National Alliance to End Homelessness,
a nationwide federation of public, private and nonprofit organizations.
It examined homelessness between 2009 and 2011, a period when the U.S.
economy was dragging itself out of its worst recession since World War
II.
Despite the dire economy, homelessness decreased 1 percent, or by
about 7,000 people, during the period – a development the report’s
authors said was most likely due to a significant investment of federal
money to prevent homelessness and quickly rehouse people who did become
homeless.
The report says an estimated 643,067 people experienced
homelessness in the U.S. on a given night in 2011 – down from 636,017 in
2009.
This translates into a rate of 21 homeless people per 10,000 people.
The
largest decrease was among homeless war veterans. Their numbers went
from 75,609 in 2009 to 67,495 in 2011, a reduction of 11 percent.
Why did the number of homeless drop even while the economy was in the doldrums?
The report cites the Homelessness Prevention and Rapid Re-Housing Program,
or HPRP, a federal program established with $1.5 billion in funding
from the stimulus package passed by Congress in 2009 at the urging of
President Barack Obama. In 2010, its first year of operation, the
program helped nearly 700,000 at-risk and homeless people, the report
said.
Despite the slight dip in homelessness, there is much reason
for concern and indicators suggest that homelessness may affect more
Americans in the coming years. Among the findings is a 13 percent
increase in “doubled up” households from 2009 to 2011 and a 22 percent
increase in families below the poverty line paying 50 percent or more
of their monthly income on housing.
The effects of the poor
economy on homelessness are expected to escalate over the next few
years, the report says. The money provided by HPRP has run out in many
communities and the program is slated to sunset entirely this fall. And
the fight in Congress over debt and deficit cuts means fewer dollars
will be available to help the homeless.
“In the year since the
data in this report was collected (January 2011), there have already
been reports that the number of homeless people is increasing,”
the authors said. “So while holding the line on homelessness between
2009 and 2011 was a major accomplishment of federal investment and local
innovation, the failure to sustain this early recipe for success
threatens to undermine progress now and in the future.”
Homelessness Research Institute
The data show that nearly half (24) the states and the
District of Columbia had increases in homelessness. State changes range
from a 33 percent decrease in Rhode Island to a 102 percent increase in
Wyoming.
Truth in numbers? Neil
Donovan, executive director of the National Coalition for the Homeless, a
Washington-based nonprofit advocacy group, says the decline in the raw
numbers of homeless is likely based on poor data from the federal
government.
“I think in fact the numbers of homeless individuals
and families have gone up. It’s similar to the job market -- when
numbers go up and down it doesn’t always tell you the full picture but
it tells you how many people are still willing to participate in
activities that result in them being counted as homeless,” he told
msnbc.com.
The coalition is among several advocacy groups that contend the U.S. Census Bureau routinely undercounts homeless people.
Donovan
cites homeless schoolchildren as another example of faulty government
counting. School systems nationwide are required to report the number of
students experiencing homelessness. Last year, they reported a total of
770,000. But by federal government standards only 110,000 of those
children would be considered homeless, due to factors such as the
discounting of students living in hotels or doubled up, Donovan said.
Donovan says it’s likely that the number of homeless is actually getting worse.
“We
have many more homeless families than we did before. When you’re an
individual and you’re homeless, your homelessness can be very, very
difficult. When you’re a family and you’re homeless, it can be
impossible,” Donovan said. “When a person’s homelessness is impossible,
it’s imperative for us to come to their rescue because responsibility is
no longer a part of the conversation.”
Sharon Thomas, spokeswoman
for Seattle’s Union Gospel Mission, agreed the numbers don't tell the
full story. She says the Seattle-King County area has added several
thousand new housing units for homeless people in the past few years.
Yet, the number of homeless hasn’t decreased in the same proportion.
“It looks like the numbers are going down, but there seems to be more people who are on the edge,” she said.
She notes the Union Gospel Mission is now serving an average of 1,500 meals a day – up from 1,200 not long ago.
“There
a lot of good people and organizations that care about homeless people
but there’s a lot of people out there who are hurting. We can always do
more.”
By: Patti Domm CNBC Executive News Editor
While U.S. drivers continue to cut back at the
pump, refiners are increasingly sending more gasoline and diesel fuel
overseas, making the U.S. a net exporter of refined products for the
first time in more than a half century.
Mark Lennihan / AP
“This
has been the trend all year,” said oil analyst John Kilduff of Again
Capital. “There’s been consistently poor demand (by consumers) all
year.”
The EIA Thursday reported that U.S. crude demand was down 2.2 percent in October, from a year ago.
Andrew
Lipow, president of Lipow Oil Associates, said the EIA October data
revealed other important trends. One is that there was another big drop
in consumer gasoline demand, even as prices at the pump came off the
summer highs. The other is that the U.S. increasingly exporting refined
products, led by distillates.
Unlike
gasoline, distillates demand is in fact rising domestically and the
refining industry is producing record amounts, he said. Distillates
include diesel fuel, jet fuel and home heating oil.
“Gasoline
demand is down 4.4 percent for October of this year versus last year,
and conversely they are showing distillate demand is up 4.5 percent,”
Lipow said. Distillate demand is rising in large part because of the use
of diesel fuels by the transportation industry.
Lipow
said the numbers show that the U.S. exported 1.07 million barrels a day
of distillates, which includes diesel fuel, double the 557,000 barrels
two years ago and up from last year’s 870,000 barrels.
Gasoline
exports have also grown to the point where they are getting close to
equaling the amount of imports. The number of exports totaled 562,000
barrels a day, compared to imports of 596,000.
For
all refined petroleum products, the U.S. in the first 10 months of 2011
exported 848 million barrels and imported 750 million. Lipow said he
believes this if the first time since World War II that the U.S. will be
a net exporter of refined petroleum products, but government data on
the EIA website only goes back to 1973.
Even
with its ability to export, the U.S. refining industry is not operating
at peak capacity. It is currently running at a rate of 84.7 percent,
but the picture for the industry could also change in coming months as
the east coast continues to see refineries shut down. Two big closures
are pending in the Mid-Atlantic for 2012.
“One
reason the U.S. is exporting more gasoline is that ethanol has
contributed more fuel supply so refineries have a surplus of gasoline
made strictly from crude oil,” Lipow said.
Some of the reduction in gasoline demand could be coming from conservation and more efficient engines.
Interestingly,
the U.S. in October exported nearly 10 percent, or 93,000 barrels a day
of its ethanol, which was being produced at a near-record level of
906,000 barrels a day. One country receiving some of those imports was
Brazil, a leading producer and consumer of ethanol.
Kilduff
said the drop in consumer gasoline consumption is a longer term trend
but the continued decline is worrisome and reflects a weak economy.
“Even (the weekly report) which should have captured the holiday driving
season was showing 8.6 million barrels (gasoline consumed), which is
low for this time of year,” he said.
Lipow
said he does not anticipate gasoline prices will keep dropping, but he
said the price at the pump may be more directly influenced by the price
of crude oil in the coming year.
“They’ve
(refiners) satisfied demand and exported the balance. It’s all going to
depend on the crude price because in 2012, you have declining demand
and adequate refined supply,” he said.
“Especially
in 2012 to watch, you can imagine that the exports of distillates is
going to be a political issue. We’re even exporting ethanol fuels,” he
said.
Gasoline
prices currently average $3.26 a gallon nationally, according to AAA. In
July, regular unleaded gasoline hit an average high of $4.114 and was
at $3.071 at this time last year.
Diesel
fuel hit a high of $4.845 this summer and is now averaging $3.824 —
well above the price at this time last year of $3.315 per gallon.
House
Speaker John Boehner criticizes the White House over its rejection of
the Keystone oil pipeline project that many Republicans argue would have
created thousands of jobs.
By msnbc.com staff and wires
Updated at 5:45 p.m. ET
President
Barack Obama on Wednesday rejected a Canadian company's plan to build a
U.S.-spanning, 1,700-mile (2,700 kilometer) pipeline to carry oil
across six U.S. states to Texas refineries, raising the stakes on a
bitter election year fight with Republicans.
Though the project promises thousands of temporary jobs for the
recovering U.S. economy, Obama said a February deadline set by Congress
would not allow for a proper review of potential harm from the $7
billion Keystone XL project.
"As the State Department made clear last month, the rushed and
arbitrary deadline insisted on by congressional Republicans prevented a
full assessment of the pipeline's impact, especially the health and
safety of the American people, as well as our environment," Obama, a
Democrat, said.
The plan proposed by Calgary-based TransCanada would carry oil from tar sands in western Canada to Texas.
Republicans assailed Obama's decision as a job-killer and said the fight was not over.
And the State Department said the decision was made "without
prejudice," meaning TransCanada can submit a new application once a
route through environmentally sensitive areas of Nebraska is
established.
Russ Girling, TransCanada's president and chief executive officer,
said the company plans to do exactly that. If approved, the pipeline
could begin operation as soon as 2014, Girling said.
Republicans were not assuaged.
Newt Gingrich, campaigning for the Republican presidential nomination
in South Carolina, called Obama's decision "stunningly stupid," adding:
"What Obama has done is kill jobs, weaken American security and drive
Canada into the arms of China out of just sheer stupidity."
Sen. John Hoeven, a Republican, has said of the Canadian crude oil: "It's going to go to China if we don't build it here."
But Alex Pourbaix, TransCanada Corp.'s president for energy and oil
pipelines, said last week the company soon will have a new route through
the state of Nebraska "that everyone agrees on."
For now, though, Mitt Romney, the Republican nomination front-runner,
called Obama's decision "as shocking as it is revealing," adding that
it "shows a president who once again has put politics ahead of sound
policy."
The Republican leader of the House, Speaker John Boehner, said Obama was breaking his promise to create jobs.
"This is not the end of this fight," said Boehner. He called the pipeline good for the U.S. economy and a major job creator.
The pipeline proposal has forced the White House to make a
politically risky choice between two important Democratic
constituencies. Many labor unions back the project because of the
prospects of new jobs in a fragile economy. Environmental groups fear
the pipeline could lead to an oil spill disaster.
Some liberal donors threatened to cut off funds to Obama's
re-election campaign to protest the project, which opponents say would
transport "dirty oil" that requires huge amounts of energy to extract.
Obama said his decision was not based on the pipeline's merits but on
what he called an arbitrary Feb. 21 deadline set by Republicans in
Congress. They set the deadline as part of a tax bill that Obama signed
into law in late December.
"I'm disappointed that Republicans in Congress forced this decision,
but it does not change my administration's commitment to American-made
energy that creates jobs and reduces our dependence on oil," Obama said.
Under his administration, domestic oil and natural gas production is up, while imports of foreign oil are down, Obama said.
"In the months ahead, we will continue to look for new ways to
partner with the oil and gas industry to increase our energy security,"
Obama said.
To underscore the point, Obama signaled that he would not oppose
development of an oil pipeline from Oklahoma to refineries along the
Gulf of Mexico. TransCanada already operates a pipeline from Canada to
Oklahoma.
Refineries in Houston and along the Texas Gulf Coast can handle heavy
crude such as that extracted from Canadian tar sands — the type of oil
that would flow through the Keystone XL pipeline.
Canadian Prime Minister Stephen Harper said he was profoundly disappointed that Obama turned down the pipeline.
Sen. Kent Conrad, a Democrat, said he doesn't believe the Keystone XL
is a dead project. He said the Obama administration did not have enough
time to review the project, given the Republican-imposed timeline.
"I don't believe this is the end of the story," Conrad told The
Associated Press. "My personal view is that it should be constructed.
It's clear Canada is going to develop this resource, and I believe it is
better for our country to have it go here rather than Asian markets."
Bill McKibben, an environmental activist who led opposition to the
pipeline, praised Obama's decision to stand up to what he called a
"naked political threat from Big Oil." Jack Gerard, the oil industry's
top lobbyist, had said last week that Obama faced "huge political
consequences" if he rejected the pipeline.
"It's not only the right thing, it's a very brave thing to do,"
McKibben said. "That's the Barack Obama I think people thought they were
electing back in 2008."
Three oil refineries on US East Coast face possible shutdown
By Trent Novak 22 November 2011
Three
major oil refineries in the Philadelphia area are slated to close by
the end of next summer unless a buyer steps in to purchase them. If
these refineries shut down, 2,000 oil workers will immediately find
themselves unemployed, and the nearby communities are expected to lose
about 20,000 more jobs due to economic aftershocks.
On September
6, Sunoco announced it planned to sell its refineries in Marcus Hook and
South Philadelphia. Later in the month, ConocoPhillips followed suit by
putting its Trainer refinery up for sale and having its workers set the
facility to idling. Together, the three refineries are estimated to
comprise roughly a third of the East Coast’s refining capacity.
In
recent weeks, labor unio n officials have organized a public rally in
Marcus Hook with the declared intention of demonstrating local support
for oil workers, even as a group of prominent Pennsylvania politicians
have requested a federal analysis on the possible consequences of the
refineries’ closure.
Hundreds of workers, union members, and
local residents turned out for the November 6 rally, marching several
blocks from a United Steelworkers (USW) meeting hall to Market Square
Memorial Park alongside the Delaware River. Members of the USW, United
Auto Workers and other unions participated. Afterward, politicians and
union officials gave brief speeches professing their support for
American workers and the Marcus Hook oil workers in particular.
Although
the rally was billed as an effort to mobilize workers and residents,
the implicit agenda was to market the community to potential buyers as a
willing and ready labor pool. An article in the Philadelphia Inquirer quotes
David Miller, president of a USW local, announcing that Marcus Hook and
the other refinery areas are more than willing to help any buyer who
takes over the sites. “Anyone who’s looking to make money, c’mon down
and we’ll all help,” he declared. “Buy all three and you can be the
biggest, baddest dog on the block.” The mayor of Marcus Hook, James D.
Schiliro, declared the purpose of the rally to be “coming together to
show the buyers that we can make it work and we can make them money.”
Senator
Bob Casey (Democrat) and Congressman Pat Meehan (Republican) were also
present. Both men are included on the list of lawmakers seeking a US
Energy Information Administration assessment on how the loss of the
refineries would affect energy prices throughout the region.
While
workers came out of concern over potential job losses, they were
provided with no means of fighting. Instead, the rally was a platform
for the two parties of big business and the nationalist orientation of
the labor unions. One USW local president insisted that “keeping jobs in
the US is an absolute priority,” while other speakers emphasized that
the refinery closings are not a “partisan” issue, but a matter of
“whoever we can work together with.”
The absurdity of a
nationalistic approach and one that uncritically accepts the corporate
control of the energy giants and banks becomes obvious the moment one
examines the economic factors behind Sunoco and ConocoPhillips’s
decision.
All three of the Philadelphia refineries are only
equipped to process a lighter, sweeter variety of crude oil instead of
the heavier, more sour kind used by most refining facilities. Lighter
crude is more expensive, has to be shipped from a handful of countries,
and makes up the vast majority of Sunoco’s crude oil purchases.
An
article by a Reuters market analyst notes that, in July, Sunoco was
getting most of its oil from Nigeria, Norway, and Azerbaijan, with
access to Libya’s light crude hampered by NATO’s military intervention.
Because its East Coast refineries have to import oil from overseas and
lack the technical capability to process heavier varieties, Sunoco’s
expenses on crude ranked among the highest of all energy companies. The
author concludes that “Philadelphia and Marcus Hook are the two worst
refineries to own in the United States” and predicts they will be
converted into storage terminals for transporting natural gas and other
materials from the Marcellus Shale. The cost involved in updating the
refineries to process heavier crude would be prohibitively expensive,
the author wrote, due to international market pressures facing North
American and European companies.
Since the economic crisis began,
the longstanding “peak” in crude oil prices has been replaced with a
marked decline in US demand for refined petroleum products. Refineries
across the nation are now confronted with the possibility that consumer
demand will remain at a long-term low.
This is especially true of
Sunoco, which has a refining and supply sector that has been
unprofitable for 9 out of the past 11 quarters.
Sunoco CEO Lynn
Elsenhans has accordingly pursued a determined policy of manufacturing
divestitures. Sunoco has already sold off two refineries in the Midwest,
closed another Pennsylvania refinery, and pulled out of metallurgical
coke, home heating oil, and chemicals manufacturing. Elsenhans has
stated that the company’s future lies in retail fuel, convenience store
sales, and fuel transportation.
The potential closure of these
three refineries and the economic devastation that will be visited on
the towns that depend on them is just a single facet of the movements of
international capital. There is no “all-American” alternative,
especially when it comes to oil, a natural resource that has led the
United States to pursue war throughout the Middle East and, most
recently, in Libya. From the standpoint of the nationally based unions,
“keeping jobs at home” means transforming the US into a platform for
cheap labor, as has already happened in the auto industry, not uniting
energy workers around the world to defend jobs for all.
Bruce,
who has worked in both the Marcus Hook and trainer refineries for most
of his life, said his situation is representative of most workers at the
refinery. In many cases, workers have been there for 24-25 years. He
also expressed his worries that education in the area would be gutted as
local schools lose their tax base.
Nick, a union member at the
Marcus Hook rally, remarked that even if the refineries are used to
transport natural gas or for some other alternative, all of the
estimates he has seen show that only about half of the labor force would
be retained.
Nick went on to say, “large companies take the
human element out of it” and “just leave without preparing the people or
helping them retrain.”
This is precisely the problem
with a social system based on the profit motive rather than genuine
human need. The ruling class has no room for a “human element” in the
present economic crisis because it has to scramble and fight for its own
interests. Sunoco incurred a $17 million loss in refining and supply
last quarter. From the perspective of the company and its executives,
the livelihoods of thousands of people are insignificant in comparison.
If
the right to good-paying and secure jobs, decent schools and
neighborhoods is to take priority, the working class must fight for the
nationalization of the oil monopolies under democratic control, as part
of the socialist reorganization of economic life in the US and
internationally.
Wikipedia's
English home page says, in part, "Right now, the U.S. Congress is
considering legislation that could fatally damage the free and open
Internet. For 24 hours, to raise awareness, we are blacking out
Wikipedia."
By Suzanne Choney
Updated at 5:05 a.m. ET:
Any student burning the midnight oil Tuesday may have been disappointed
as what has become a primary research tool, Wikipedia, blacked out its
Web pages as part of a global protest against anti-piracy legislation
making its way through Congress.
"Student warning! Do your homework early. Wikipedia protesting bad law on Wednesday!," warned Wikipedia founder Jimmy Wales on Twitter, and with that, one of the most heavily visited websites began a 24-hour "blackout."
Google
slapped a virtual black tape across the word "Google" on its home page,
as if it were muffled, although it continued to be available for
search. Social news site Reddit said it will be blacked out for 12
hours, starting at 8 a.m. ET. The metaphor by the protesting sites: To
shutter and silence the Internet the same way many in the tech world say
will happen if the Stop Online Piracy Act in the House and the Protect
IP Act in the Senate move forward.
Google's protest of proposed anti-piracy legislation includes blacking out its own name on its home search page.
You
could still access Wikipedia in Spanish, or French, or German or
Russian or many other languages; just not English. "This is going to be
wow," Wales said on Twitter. "I hope Wikipedia will melt phone systems in Washington on Wednesday. Tell everyone you know!"
However,
it emerged there was a way to access Wikipedia pages. They briefly show
normally before being replaced by a notice explaining the action.
Pressing the escape button prevents this from happening, although it
must be done for every individual page.
The
MPAA's Chris Dodd joins Morning Joe to discuss the highly-controversial
Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA).
The
two bills, supported mainly by the entertainment industry, are aimed at
stopping illegal downloading and streaming of movies and TV
shows. But many in the tech world — including giants Google and
Facebook — say the legislation would let federal authorities shut down
portions of the Internet without due process, and fundamentally alter
the Internet's ability to provide a platform for free speech.
(Msnbc.com
is a joint venture of Microsoft and Comcast/NBC Universal. Comcast/NBC
Universal is listed as a supporter of SOPA on the House Judiciary
Committee website. On Tuesday, Microsoft itself said it opposes SOPA as
it is "currently drafted.")
"This is an extraordinary action for
our community to take," Wikipedia's Wales said earlier in the week about
the blackout, adding: "...we simply cannot ignore the fact that SOPA
and PIPA endanger free speech, both in the United States and abroad, and
set a frightening precedent of Internet censorship for the world."
Wales said the English version of Wikipedia gets about 25 million visits a day, according to comScore.
The
site has become almost a staple of daily Web surfing, whether it's
directly sought out or cited on search engines like Google.
It's
not just desperate students looking to it for information on their way
to getting a degree; it' about 53 percent of all adult Internet users in
the U.S., said the Pew Internet & American Life Project last year.
"The
percentage of all American adults who use Wikipedia to look for
information has increased from 25 percent in February 2007 to 42 percent
in May 2010," Pew said.
It also noted that Wikipedia is "more
popular than sending instant messages ... or rating a product, service,
or person ... but is less popular than using social network sites" or
watching videos on sites like YouTube.
Tech website Boing Boing
also went black, saying in part: "Boing Boing is offline today, because
the US Senate is considering legislation that would certainly kill us
forever. The legislation is called the PROTECT IP Act (PIPA), and would
put us in legal jeopardy if we linked to a site anywhere online that had
any links to copyright infringement."
Boing Boing's home page as of Wednesday.
Several
other sites plan to go dark Wednesday to protest the legislation. Among
them: icanhazcheeseburger sites (those goofy ones you visit to see cats
on the Internet or serial killers) including Know Your Meme and The
Daily What).
A list of websites participating in the protest is available here.
The
Internet Archive, a non-profit site that works with the likes of the
Library of Congress and the Smithsonian to catalog and make documents,
audio and video available to the public, plans to be dark from 6 a.m. to
6 p.m. PT.
"Legislation such as this directly affects libraries
such as the Internet Archive, which collects, preserves, and offers
access to cultural materials," the Internet Archive said on its blog.
"These bills would encourage the development of blacklists to censor
sites with little recourse or due process. The Internet Archive is
already blacklisted in China — let’s prevent the United States from
establishing its own blacklist system." Related stories:
Manufacturing is now underway at Lincolnton Furniture in North Carolina.
By Sopan Deb Rock Center
The United States may be on the verge of bringing back manufacturing jobs from China.
Harold
Sirkin, along with Michael Zinser and Douglas Hohner (all experts from
the Boston Consulting Group – a leading management consulting firm),
says that outsourcing manufacturing to China is not as cheap as it used
to be and that the United States is poised to bring back jobs from
China. The three consultants first reached this conclusion in a recently published study titled “Made in America, Again: Why Manufacturing Will Return to the U.S.”
Many
companies, especially in the auto and furniture industries, moved
plants overseas once China opened its doors to free trade and foreign
investment in the last few decades. Labor was cheaper for American
companies – less than $1 per hour according to the BCG report. Today,
labor costs in China have risen dramatically, and shipping and fuel
costs have skyrocketed. As China’s economy has expanded, and China has
built new factories all across the country, the demand for workers has
risen. As a result, wages are up as new companies compete to hire the
best workers.
“The tilt is now getting lower,” Sirkin says. “We
think somewhere around 2015 it’ll look flat and may start to tilt in the
U.S. favor at that point in time.”
By 2015, it will only be about 10 percent cheaper to manufacture in China.
“We
have to recognize one thing,” Sirkin told NBC’s Harry Smith in an
interview to air on Rock Center with Brian Williams. “The average
Chinese worker is about a quarter as productive as the average U.S.
worker.”
Republican presidential candidate, former Massachusetts Gov. Mitt Romney campaigns at Andrews Field House at Wofford College in Spartanburg, S.C., Wednesday, Jan. 18, 2012.
Mitt Romney’s estimate that he pays a 15 percent effective tax rate has suddenly become the dominant theme in the Republican campaign. While Romney has rekindled the long-running argument over tax fairness and whether investment income ought to be taxed at a lower rate than salary and wage income, it isn’t surprising that his effective tax rate is what it is – since much of his income is from investments and the tax code has long provided a preferential lower rate for them.
Romney’s focus on his taxes has also revived a debate which Congress had in 2007 over whether the specific type of income he gets from his years at Bain Capital -- a kind of investment income called “carried interest” -- ought to be taxed at the lower capital gains rate of 15 percent, or the higher tax rate on earned income, which for the highest income taxpayers is 35 percent. If Romney, or anyone else, made $500,000 a year from a salary, he’d be taxed at a top marginal rate of 35 percent (scheduled to go up to 39.6 percent next year), but if he made that money in the form of capital gains and dividends he’d be taxed at 15 percent.
The case against taxing “carried interest” at the lower capital gains rate was made in a Senate Finance Committee hearing in 2007 by Joseph Bankman, a professor of law and business at Stanford Law School.
“We ought to have the same rate of tax apply across different occupations or investments,” Bankman told the committee. “The relative profitability of different professions, or investments, ought to be dictated by the market, not the tax law.” Recommended: Gingrich says he paid 31 percent in taxes last year
He contended that the tax code’s treatment of investment fund managers “distorts career choice” and “is also unfair: why should fund managers get a lower tax rate than executives or scientists?”
But investment industry advocates pointed to the long-standing policy of Congress -- dating back to the 1920s and continuing under both Democratic and Republican Congresses and presidents -- of taxing the gains made from sale of stocks or other assets at a lower rate than wage and salary income as a way to spur investment, help launch new companies, and create private-sector jobs.
Kate Mitchell, a venture capital investor from Foster City, Calif., told the committee that she and others who run investment funds invest both their wealth and time (“sweat equity”) finding businesses to start, run, or revive.
She said it was both smart and fair policy to “reward investors of sweat equity with the same long-term capital gain tax benefits that investors of financial equity receive. Both will only succeed if the business builds in value -- so both are subject to the same entrepreneurial risk … .”
In 2007, when the Democrats controlled the House, Rep. Sander Levin, D-Mich., proposed to treat “carried interest” as ordinary income and have it taxed at rates up to 35 percent. Levin’s proposal was passed by the House four times, but never acted on by the Senate. Levin said Wednesday he would reintroduce that bill.
In 2010, Senate Finance Committee chairman Max Baucus, D-Mont., introduced a bill to tax carried interest as ordinary income, but it did not pass the upper chamber.
There was a brief period after enactment of the 1986 Tax Reform Act when capital gains income and salary income for the highest income people were taxed at the same top income tax rate of 28 percent. But when Congress increased income tax rates in 1991, it kept the lower capital gains tax rate and then cut it to 20 percent in 1997 and to 15 percent in 2003.
Although the details of Romney’s income and the taxes he pays won’t be clear until April when he has promised to release his tax return for 2011, Democrats argue that Romney’s tax rate is unfairly low, and that a person who earns perhaps millions of dollars from carried interest ought to pay at a higher effective rate than 15 percent.
But if it is 15 percent, how does Romney’s tax rate compare with that of other Americans?
Romney’s 15 percent effective income tax rate is lower than that of most wealthy people, but higher than the effective income tax rate that most taxpayers pay.
According to the Internal Revenue Service, in 2009, the most recent year for which data is available, two-thirds of all income tax returns reported adjusted gross income of under $50,000. In other words, nearly 93 million of the 140 million income tax returns reported adjusted gross income of less than $50,000.
That means those taxpayers paid at the 10 percent statutory income tax rate or the 15 percent tax rate, or owed no tax at all.
For married couples filing jointly, if their taxable income is not over $17,000, the law says they must pay at a rate of 10 percent.
If their taxable income is over $17,000, but not over $69,000, they must pay $1,700 in income tax, plus 15 percent of the amount of income over $17,000. First Thoughts: Newt-mentum returns?
The 25 percent income tax rate does not apply until a married couple has taxable income over $69,000 -- and the vast majority of Americans don't.
(The higher rates, 28 percent, 33 percent and 35 percent, apply at even higher income levels.) But the effective tax rate, which the Congressional Budget Office defines as “the share of their income that people pay in (federal) taxes,” is lower than the statutory rate because exemptions, credits and deductions reduce tax liability.
The IRS Statistics of Income data for 2009 show that for all 140 million tax returns, income tax paid as a percentage of adjusted gross income, was 11.4 percent.
About 3.9 million tax returns reported adjusted gross incomes of $200,000 or more. Those tax filers, on average, paid at an effective tax rate of 22 percent.
Those with between $50,000 and $200,000 in adjusted gross income paid, on average, about 9 percent of their AGI in income taxes.
The tax filers with under $50,000 in adjusted gross income paid at an average effective tax rate of about 3 percent.
(This IRS data doesn’t include the state and local taxes that people pay.)
A person such as Romney who gets his income mostly or entirely from capital gains, dividends or “carried interest” does not face what the carpenter or barista faces: the Social Security and Medicare payroll tax, which is normally 7.65 percent. But in 2009 more than 27 million tax filers got the Earned Income Tax Credit which offset the payroll tax burden and was worth nearly $60 billion to those taxpayers -- on average, nearly $2,200 per tax return.
The IRS Statistics of Income data isn’t perfect because as the Congressional Budget Office noted in 2005, “people, particularly those at the bottom of the (income) distribution, move onto and off the tax rolls from year to year,” so that the data “poorly represent the entire population over time and cannot consistently provide information on low-income taxpayers.”
But the IRS data does cover all 140 million income tax filers and does allow comparisons to be made between different groups. Exactly where Romney falls in the tax distribution will be interesting to see in April when he releases his tax return for 2011.
The Democratic Party's decision to move President Obama's acceptance speech to the Bank of America Stadium in Charlotte has surprised some party activists -- and stirred criticism -- over the use of a venue named for a company that has been at the center of the financial crisis.
"God almighty, I can't believe it." said one top Democratic fundraiser when he learned of the decision to move the speech to Bank of America stadium, where the NFL Carolina Panthers play their football games. "This is an amateur’s mistake."
Convention officials vigorously defended the decision today, saying the use of the open-air 74,000 seat stadium would help excite supporters and enable far more people to see the speech, "That allows for greater participation by Americans from all walks of life," White House Press Secretary Jay Carney said.
But party officials privately confirmed that the move can help with fundraising despite what one called "an obvious optics" problem. And the use of a stadium -- whose naming rights belong to a bank that has been engulfed in controversies over foreclosures, bank fees and bailouts -- was denounced by some watchdog groups.
"It's a surprising and disappointing choice," said Mary Boyle, vice president of Common Cause. "Bank of America is the poster child for corporate greed and corporations out-of-control. The president would be better served by choosing a large public space with no corporate logo attached to it."
Robert Weissman, president of Public Citizen, a group that lobbies against corporate influence, added: "Speaking at a stadium named for one of the financial firms that plunged our country into deep recession, we can only hope that Barack Obama will counter the optics by laying out a meaningful plan to control the Wall Street giants." .
"The president turned the economy around making sure that everyone, from Wall Street to Main Street, plays by the same rules," Kristie Greco, spokeswoman for the Democratic convention, emailed in response. "His record and his policies are not impacted by the name on the stadium."
Greco pointed out that the Democrats' licensing agreement that will allow use of the stadium is with the Carolina Panthers, which actually owns the stadium, not Bank of America itself. In an arrangement similar to those with many other professional sports teams, Bank of America acquired naming rights to the Panthers stadium in 2004 as part of a reported $140 million agreement over 20 years. (A Bank of America spokeswoman did not respond to a request for comment.) But the choice will enable the Charlotte Host Committee -- which is charged with raising the $36 million needed to pay for the convention -- to offer access to the stadium's plush skyboxes as part of a package deal of perks it has put together to entice wealthy donors and fundraisers. Suzi Emmerling, a spokeswoman for the host committee, confirmed a Bloomberg report that those deals -- presented to Washington lobbyists last month -- include an escalating menu of packages starting with the $1 million "presidential" level. Those who buy in will receive a "premier uptown hotel room," a "platinum events package and "concierge services." Another $500,000 "Gold Rush" level includes hotel room, credentials and a "premiere events package." Democratic officials have emphasized for months that this year's convention won’t accept money from lobbyists and corporations. "This year, we are setting a new standard for how conventions are funded. No longer will it be sponsored with money from corporations, special interests, lobbyists and political action committees," the host committee states on its website. But those seemingly strict rules appear to have some loopholes. While the convention committee itself won't accept cash donations from corporations, it is taking "in kind" contributions from corporations, such as food, beverages, and equipment -- costs that can often add up into the millions. A separate convention "Hospitality" committee -- operating under the name New American City Foundation -- is also directly accepting corporate and lobbyists' money to pay for the parties and other events that are often attended en masse by delegates, members of Congress and reporters.
In addition, the host committee itself is still accepting big donations of up to $100,000 a piece. "Nobody gets to rent a skybox for a million dollars," said Emmerling.