Tax Cuts and the California Education Crisis

by Dollars and Sense

From Peter Phillips, founder of Project Censored:

The Higher Education Fiscal Crisis Protects the Wealthy

Police are arresting and attacking student protesters on University of California (UC) campuses again. "Why did he beat me I wasn't doing anything," screamed a young Cal Berkeley women student over KPFA radio on Friday evening November 20. Students are protesting the 32% increase in tuition imposed by the UC regents in a time of severe state deficits. The Board of Regents claims that they have no choice. Students will now have to pay over $10,000 in tuition annually for a public university education that was free only a few decades ago.

The corporate media spins the tuition protests as if we are all suffering during the recession. For example, the San Diego Union Tribune November 20 writes, "These students need a course in Reality 101. And the reality is that there is virtually no segment of American society that is not straining with the economic recession. With UC facing a $535 million budget gap due to state cuts, the regents have to confront reality and make tough choices. So should students."

Yet, the reality is something quite different. Our current budget crisis in California and the rest of the country has been artificially created by cutting taxes on the wealthiest people and corporations. The corporate elites in the US, the top 1% who own close to half the wealth, are the beneficiaries of massive tax cuts over the past few decades. While at the same time working people are paying more through increased sales and use taxes and higher public college tuition.

The wealthy hide their money abroad. Rachel Keeler with Dollars & Sense reports that over the years, trillions of dollars in both corporate profits and personal wealth have migrated offshore in search of rock-bottom tax rates and the comfort of no questions asked. Offshore banks now harbor an estimated $11.5 trillion in individual wealth alone, and were a significant contributing factor to the international economic downturn in 2008.

According to the California Budget Project, tax cuts enacted in California, since 1993, cost the state $11.3 billion dollars annually. Had the state continued taxing corporations and the wealthy at rates equal to those fifteen years ago there would not be a budget crisis in California. Even though a budget deficit was evident last year, California income tax laws were changed in February of 2009 to provide corporations with even greater tax savings--equal to over $2 billion per year. California is similar to the rest of the country where the wealthy and corporate elites enjoy economic protection through increased costs to working people.

Higher education has been cut in twenty-eight states in the 2009-10 school year and further, even more drastic cuts, are likely in the years ahead. California State University (CSU) system is planning to reduce enrollments by 40,000 students in the fall of 2010. The CSU Trustees have imposed steep tuition hikes and forced faculty and staff to take non-paid furlough days equal to 10% of salaries.

The students who are protesting tuition increases know they are being ripped off. They know that we are bailing out the rich with hundreds of billions dollars for Wall Street and massive budget cuts for the rest of us. The corporate media doesn't explain to over-taxed working families how they are paying more while the rich sock it away.

The current economic crisis is a shock and awe process designed to undermine low-cost higher education, force labor concessions from working people and protect the wealthy. We need higher taxes on the corporations and the top 1%, combined with free public college education and tax breaks for working families. And, we must have a media that tells us the truth about inequality and wealth. A true economic stimulus increases spending from the bottom up not the top down.

Peter Phillips is a professor of sociology at Sonoma State University, President of Media Freedom Foundation, and recent past director of Project Censored.

Daily News at: http://mediafreedom.pnn.com/5174-independent-news-sources
Validated News & Research at: http://www.mediafreedominternational.org/
Daily Censored Blog at: http://dailycensored.com/
Project Censored: http://www.projectcensored.org/

Labels: California, protests, Student protests, tax evasion, Tuition

 

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11/24/2009 10:14:00 AM 2 comments

 

Swiss to Block UBS From Providing Data to U.S.

by Dollars and Sense

From yesterday's New York Times, an article about the U.B.S. tax case. For those of us who are dying to have a peek at the names of the 52,000 rich Americans who are evading taxes by putting their money in the Swiss bank, it looks as if we may have to wait.

The funniest bit of this article is toward the end, where it says that "The Swiss agreed in March to abide by Article 26 of the Organization for Economic Cooperation and Development's tax convention, which requires national tax authorities to exchange information on request if there is probable cause to suspect tax evasion." But in the previous paragraph it had said that "Switzerland distinguishes between tax fraud and tax evasion, and does not consider tax evasion to be a crime." So they are solemnly pledging "to exchange information on request if there is probable cause to suspect tax evasion," but they don't regard tax evasion as a crime. Hmm... —cs

For more on tax havens, see our May/June cover article.

Swiss Vow to Block UBS From Providing Data to U.S.

By DAVID JOLLY
Published: July 8, 2009

PARIS — The Swiss government said Wednesday that it was prepared to seize U.B.S. client data rather than allow the bank to hand it over to the United States to settle a tax case.

U.B.S. has refused a demand from U.S. authorities that it turn over the names of 52,000 American clients, arguing that to do so would be illegal under Swiss banking secrecy laws and would open it to prosecution at home. The U.S. Justice Department in February sued U.B.S., saying it suspected the bank of helping wealthy Americans hide billions of dollars in secret offshore accounts.

"Switzerland makes it perfectly clear that Swiss law prohibits U.B.S. from complying with a possible order by the court in Miami to hand over the client information," the Swiss Department of Justice and Police said Wednesday in a statement on its Web site, a day after it made a filing to the same effect in the U.S. District Court in Miami. Therefore, "all the necessary measures should be taken to prevent U.B.S. from handing over the information on the 52,000 account holders demanded in the U.S. civil proceeding," it added.

The Swiss government will issue an order explicitly prohibiting U.B.S. from handing over client information "if circumstances require," it said.

Serge Steiner, a U.B.S. spokesman in Zurich, said it has always been U.B.S.'s position that divulging the client data would be a breach of Swiss law, and "the issue should be discussed by the two friendly governments.'' The bank, he added, is "always open to an appropriate solution.''

U.B.S., the largest Swiss bank, is under great pressure to reach an agreement. The bank has already paid $780 million and turned over the names of more than 250 clients to avoid prosecution on allegations that it defrauded the Internal Revenue Service. Its soured investments, many on American subprime mortgages, have cost it $53 billion in write-downs, sending it to taxpayers for a bailout. U.B.S. officials were not immediately available for comment Wednesday.

"On the one side you have the U.S. government wanting to get back some missing taxes and on the other you have a bank that is admitting some responsibility," said Nicolas Michellod, an analyst in Zurich with Celent, a financial research firm. "Eventually, I'm sure we'll see U.B.S. paying a fine."

U.B.S. last month raised about $3.5 billion in new capital, and Mr. Michellod suggested the bank might have been provisioning for just such an eventuality.

Doris Leuthard, the Swiss economy minister, said Tuesday in Washington that U.B.S. had made mistakes and would have to "pay a price" to reach a deal.

The dispute, which has strained relations between the United States and Switzerland, takes place amid wider efforts by countries including France, Germany and the United States to increase transparency in tax havens like the Channel and Jersey Islands, Switzerland and Luxembourg.

Switzerland distinguishes between tax fraud and tax evasion, and does not consider tax evasion to be a crime.

The Swiss agreed in March to abide by Article 26 of the Organization for Economic Cooperation and Development's tax convention, which requires national tax authorities to exchange information on request if there is probable cause to suspect tax evasion. But the government has also said that it "has no intention of relinquishing bank secrecy."

In Paris, the O.E.C.D. said Wednesday that one of those countries, Luxembourg, had now "substantially implemented the internationally agreed standard" of transparency in the exchange of tax information. While Luxembourg's work is not finished, Angel Gurría, the organization's secretary general said, "The process is working and I look forward to other countries following the example that Luxembourg has set."

Read the original article.

Labels: OECD, Switzerland, tax evasion, tax fraud, tax havens, UBS

 

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7/09/2009 10:22:00 AM 0 comments