702 Christine Lagarde of IMF: 85 richest people own as much wealth as poorest 3.5 billion

Christine Lagarde of IMF: 85 richest people own as much wealth as
poorest 3.5 billion

Newsletter published on 12 November 2014

(1) Christine Lagarde of IMF: 85 richest people own as much wealth as
poorest 3.5 billion
(2) Super-Rich Have Grabbed Half the World's Assets
(3) Big 4 Accounting firms play a key role in Tax Havens
(4) Multinationals route profits through Luxembourg to reduce their taxes
(5) US Election: Low turnout as Voters wake up to Rigged System
(6) The two parties are instruments of the same Financial Oligarchy
(7) G20 leaders in the mood to act on tax avoidance after Luxembourg leaks

(1) Christine Lagarde of IMF: 85 richest people own as much wealth as
poorest 3.5 billion

https://www.imf.org/external/np/speeches/2014/052714.htm

Economic Inclusion and Financial Integrity—an Address to the Conference
on Inclusive Capitalism

By Christine Lagarde
Managing Director, International Monetary Fund
London, May 27, 2014

As prepared for delivery

Good morning. What a great privilege to be here among such illustrious
guests to discuss such an important topic.

Let me thank Lady Lynn de Rothschild and the Inclusive Capitalism
Initiative for convening today’s event. I would also like to recognize
the great civic leaders here today—His Royal Highness, the Prince of
Wales; President Clinton, and Fiona Woolf, Lord Mayor of the City of
London. [...]

The 85 richest people in the world, who could fit into a single London
double-decker, control as much wealth as the poorest half of the global
population– that is 3.5 billion people. [...]

(2) Super-Rich Have Grabbed Half the World's Assets

http://www.alternet.org/economy/shocking-new-report-superrich-have-grabbed-half-worlds-assets

Shocking New Report:  Super-Rich Have Grabbed Half the World's Assets

Lynn Parramore

October 21, 2014

According to a new report, the richest one percent have got their mitts
on almost half the world's assets. Think that’s the end of the story?
Think again. This is only the beginning.

The “Global Annual Wealth Report [3],” freshly released by investment
giant Credit Suisse, analyzes the shocking trend of growing wealth
inequality around the world. What the researchers find is that global
wealth has increased every year since 2008, and that personal wealth
seems to be rising at the fastest rate ever recorded, much of it driven
by strong equity markets. But the benefits of this growth have largely
been channeled to those who are already affluent. While the restaurant
workers in America struggled to achieve wages of $10 an hour for their
labor, those invested in equities saw their wealth soar without lifting
a finger. So it goes around the world.

The bottom half of the world’s people now own less than 1 percent of
total wealth, and they’re struggling to hold onto even that minuscule
portion. On the other hand, the wealthiest 10 percent have accumulated a
staggering 87 percent of global assets. The top percentile has 48.2
percent of the world wealth. For now.

One of the scary things about the wealth of the supperich is what French
economist Thomas Piketty pointed out in his best-selling book, Capital
in the 21st Century. Once they’ve got a big chunk of wealth, their share
will get bigger even if they sit by and do absolutely nothing. Piketty
sums up this economic reality in a simple and horrifying formula: r > g.

Basically, this means that when rate of return on wealth is greater than
the overall rate of growth of the economy, as it has nearly always been
throughout history, the rich will grow inevitably richer and the poor
poorer unless there is some kind of intervention, like higher taxes on
wealth, for example. If r is less than g, the assets of the
super-wealthy will erode, but if r is greater than g, you eventually get
the explosion of gigantic inherited fortunes and dynasties.

This is happening now: If you look at the Forbes 400 [4] list of the
wealthiest people in America, you see a lot more inherited fortunes in
the upper ranks than you did a couple of decades ago, when the policies
that held inequality at bay began to get dismantled. In today’s top 10,
there are more scions of the Walton family than entrepreneurs like Bill
Gates or Mark Zuckerberg. These people have essentially done nothing of
value for society, and yet their undue influence shapes our political
landscape with the wave of a wad of cash.

There have been moments in history when things were not so lopsided.
During the post-war period, inequality was contained because governments
made sure their rich didn’t accumulate at such alarming rates by doing
things like taxing their estates at a high rate. At the same time, they
created policies to lift the incomes of the less well-off and allow them
to have some basic security. But that’s an exception in history. Most of
the time, this kind of intervention did not happen, and so the rich kept
gobbling more and accumulating more power to keep it that way until one
of two things happened — a revolution or some kind of catastrophe or
disruptive event, like a war, shook things up.

As the Credit Suisse report states:

“[Wealth inequality] has been the case throughout most of human history,
with wealth ownership often equating with land holdings, and wealth more
often acquired via inheritance or conquest rather than talent or hard
work. However, a combination of factors caused wealth inequality to
trend downwards in high income countries during much of the 20th
century, suggesting that a new era had emerged. That downward trend now
appears to have stalled, and possibly gone into reverse.”

That’s right. We’re on a turbo-charged ride back to the days of Downton
Abbey. Piketty warns that we’re in the early stages of reverting right
back to periods of massive inequality, like 19th-century Britain or
18th-century France, where great dynastic fortunes ruled and everybody
else fought for scraps.

What the statistics and formulas don’t show is the kind of human
suffering that results from this kind of extreme inequality. While the
global elite zip around the world in private jets and watch their stock
portfolios expand on computer screens from within their gated mansions,
the bottom half stays awake at night trying to think of how to pay for
medicine for a sick child. The things that give life dignity and
meaning, like a quality education, a decent job, and the security of
knowing you have a roof over your head and a doctor to care for you when
you are ill grow further and further out of reach. Anxiety never leaves
because one unforeseen mishap can push you down into poverty, and if
you’re already there, you spend much of your time searching, often
fruitlessly, for a way out.

But there’s a little bit of anxiety percolating at the top, too. On the
June cover [5] of the conservative magazine American Spectator, a
cartoon shows an incensed mob looking on as a monocled fatcat is led to
a bloody guillotine — a scene evoking the Reign of Terror during the
French Revolution. The caption reads, “The New Class Warfare: Thomas
Piketty’s intellectual cover for confiscation.” In the story that
accompanies the image, James Pierson warns of revolution and a growing
class of suffering people who want to punish the rich and take away
their toys.

That would be one way to address things. Another would be the
recognition that inequality is extremely destabilizing and dangerous,
and that non-violent interventions are possible, as we saw in America
with the New Deal. Things like robust tax reform, unions, regulation,
changes in corporate governance and CEO pay, affordable education, jobs
programs, expansion of Social Security and universal healthcare.

Or we could just do things the old-fashioned way and wait for a disaster
even bigger than the meltdown of 2007-'08. In that case, fasten your
seatbelts. This ride could get very rough.

(3) Big 4 Accounting firms play a key role in Tax Havens
http://www.icij.org/project/luxembourg-leaks/big-4-audit-firms-play-big-role-offshore-murk

Big 4 Audit Firms Play Big Role in Offshore Murk

By Michael Hudson, Sasha Chavkin and Bart Mos

November 5, 2014, 4:00 pm

KEY FINDINGS

-  Pepsi, IKEA, AIG, Coach, Deutsche Bank, Abbott Laboratories and
nearly 340 other companies have secured secret deals from Luxembourg
that allowed many of them to slash their global tax bills.

-  PricewaterhouseCoopers has helped multinational companies obtain at
least 548 tax rulings in Luxembourg from 2002 to 2010. These legal
secret deals feature complex financial structures designed to create
drastic tax reductions. The rulings provide written assurance that
companies’ tax-saving plans will be viewed favorably by Luxembourg
authorities.

-  Companies have channeled hundreds of billions of dollars through
Luxembourg and saved billions of dollars in taxes. Some firms have
enjoyed effective tax rates of less than 1 percent on the profits
they’ve shuffled into Luxembourg.

-  Many of the tax deals exploited international tax mismatches that
allowed companies to avoid taxes both in Luxembourg and elsewhere
through the use of so-called hybrid loans.

-  In many cases Luxembourg subsidiaries handling hundreds of millions
of dollars in business maintain little presence and conduct little
economic activity in Luxembourg. One popular address – 5, rue Guillaume
Kroll – is home to more than 1,600 companies.

(4) Multinationals route profits through Luxembourg to reduce their taxes

http://www.icij.org/project/luxembourg-leaks/big-4-audit-firms-play-big-role-offshore-murk

Luxembourg Leaks: Global Companies' Secrets Exposed

Capping a six-month investigation, the International Consortium of
Investigative Journalists (ICIJ) and its media partners are publishing a
secret cache of leaked tax documents that show how multinational
corporations throughout the globe routed profits through tiny and
wealthy Luxembourg to reduce their taxes.

Pepsi, IKEA, FedEx and 340 other international companies have secured
secret deals from the landlocked European duchy, that has been called a
“magical fairyland” for brand-name corporations seeking to drastically
reduce tax bills.

(5) US Election: Low turnout as Voters wake up to Rigged System

From: Paul de Burgh-Day <pdeburgh@lorinna.net>
Date: Sun, 9 Nov 2014 21:40:19 +1100
Subject: Mike Whitney - US Elections: Obama Leads Democrats to Midterm
Massacre

US Elections: Obama Leads Democrats to Midterm Massacre

The Republican Victory: Grab a Pitchfork, President Flim-Flam Leads
Democrats to Mid-term Massacre

By Mike Whitney
Global Research, November 07, 2014

http://www.globalresearch.ca/the-republican-victory-grab-a-pitchfork-president-flim-flam-leads-democrats-to-midterm-massacre/5412554

“The Republican victory does not represent a shift by the American
population to the right, but demonstrates the bankrupt and reactionary
character of the Democratic Party and the mass disillusionment with the
Obama administration. In the absence of any progressive alternative to
the two right-wing, corporate-controlled parties, the majority of
potential voters stayed home. Voter turnout hit another record low, with
only 38 percent going to the polls….Voter participation by young people
fell particularly sharply. Barely one-third of eligible voters went to
the polls in California, the most populous state.” Patrick Martin,
Republicans win control of Senate in US congressional elections, World
Socialist Web Site

“You don’t stick a knife in a man’s back nine inches, and then pull it
out six inches, and say you’re making progress.” Malcolm X

The White House has denied claims that the midterm elections were a
referendum on Barack Obama, but the polling data shows that they were.
According to a CBS News exit poll:

“Fifty-four percent of those surveyed said their opinion of the
president influenced their vote… 34 percent said they wanted to make a
statement in opposition to Mr. Obama, while 20 percent said they voted
in support of him.”

Those differences were more stark among Republican voters “61 percent
(of whom) said they cast ballots to take a stand against the current
administration. (Only) Thirty-five percent of those who voted for GOP
candidates said Mr. Obama didn’t play a role in their decisions at the
polling places.” (2014 midterm elections look like a referendum on
Obama, CBS News)

There’s no doubt that antipathy towards Obama played a significant role
in Tuesday night’s bloodbath. Even so, White House Press Secretary Josh
Earnest insists that, “Most voters are deciding who to vote for based on
the name that’s on the ballot, not the name that’s not….It’s up to those
individual candidates, those Democratic candidates, to make decisions
for themselves about how best the president and his support can be used
to their benefit in the elections.”

In other words, the Democratic candidates that went down in flames on
Tuesday, can only blame themselves. While that might be a good way to
deflect responsibility, it certainly doesn’t square with the facts. Just
get a load of these exit poll results from Forbes:

“45% of voters said the economy was the most important issue facing the
country. It was the top issue of four listed on the exit poll ballot.
Voters were generally pessimistic about it. Only 1% checked the box that
said the economy’s condition was “excellent.” 70% said it was not so
good or poor. 78% were worried about its direction in the next year. In
another question, voters split pretty evenly: around a third of voters
said it was getting better, getting worse, and staying about the same.

More voters expected the life for the next generation of Americans to be
worse rather than better, 48 to 22%.” (Election Results From A To Z: An
Exit Poll Report, Forbes)

What a damning survey. What a damning indictment of Obama. The vast
majority of the people think the economy still stinks and that living
standards for their kids are going to get a whole lot worse. And you
wonder why the Dems got their heads handed to them on Tuesday? It’s
because they failed on the number one issue, that’s why.

But the implosion of the Democratic party pales in comparison to the
bigger issue, that is, that more and more people are dropping off the
radar and out of the system. THAT is significant. Take a look at this
from NPR’s All Things Considered on Wednesday:

Robert Siegel: “…as of today, according to numbers from the Associated
Press, a bit over 83 million people voted. As a share of the
voting-eligible population, that is 36.6 percent … if the national
turnout rate doesn’t reach 38.1 percent, it would be the lowest turnout
since the midterm elections of 1942. And as Michael McDonald points out,
that was in the middle of the Second World War.” (Midterm Elections May
Have Had Record Low Turnout NPR All Things Considered)

Now you might think that the bigshots in Washington don’t care if you
vote or not, but you’re wrong. They do care. You see, they put together
this shiny-new system called “democracy” that conceals their looting
operations behind a masque of “public approval”. That approval comes in
the form of balloting which they see as a necessary component for
keeping the serf-sheeple in line and for shifting ever-larger amounts of
the nation’s wealth to their criminal friends on Wall Street. Only now,
it looks like the curtain has slipped a bit, and more people are opting
out of this Potemkin-charade of “representative government”. Check this
out from the World Socialist Web Site:

“Voter turnout was at record lows, with two-thirds of those eligible to
vote staying away from the polls. This mass abstention was particularly
pronounced among the poorest and most oppressed sections of the working
class—those most disillusioned by the empty promises of Obama’s 2008 and
2012 presidential campaigns.

In Michigan, for example, voter turnout in Detroit was only 31 percent,
well below the 40 percent level predicted by city officials. This
shortfall accounts for the entire margin of defeat for the Democratic
candidate for governor, Mark Schauer, running against Republican
incumbent Rick Snyder…

Perhaps the most revealing finding in the exit polls was that two-thirds
of those who cast ballots Tuesday viewed the US economic system as
deeply unfair and rigged in favor of the wealthy. There was evidence in
the exit polls that millions are losing faith in the capitalist system
altogether, and not merely expressing discontent with the conditions of
economic slump that have prevailed since the financial crash of 2008.”
(Republicans, Obama prepare post-election escalation of war, social
attacks, Patrick Martin, World Socialist Web Site

People are throwing in the towel, they’ve had it up to here with this
crummy system that only delivers for the 1 percent. Everyone knows that
the country is ruled by an oligarchy of racketeers who don’t give a rip
about anything except pumping up the bottom line and stiff-arming
working people. Why participate in a system like that?

And don’t give me that hogwash about the “differences between the two
parties”.

What a laugh. Did you notice how Obama snuggled up to Mitch McConnell
just hours after the Dems took their biggest shellacking in history?

It’s all a show. These guys are all in bed together. They don’t care
about you and me. It’s a joke.

Just look at the cynical game the Dems are playing to convince their
constituency that they actually have “heartfelt convictions” and that
they’re true liberals. They’re always blabbering about same sex marriage
and “a woman’s right to choose”. Why do you figure that is?

It’s because their corporate Sugar daddies tell them to steer-clear of
any issue that might cost them some of their precious money, like higher
wages, better benefits, job security, health care, pensions, unions etc;
all the things the Dems say they care about, but never lift a finger to
support.

Remember how President Dipstick flew over Wisconsin blowing kisses to
the people below while Scott Walker was busy dismantling collective
bargaining rights for public workers?

That’s the Dems attitude towards working people in a nutshell. That’s
why they’re all about gay rights and abortion. It’s because they threw
working people under the bus 30 fu**ing years ago. Abortion is the last
thing they can hang their hat on. It’s pathetic. Here’s how Joseph
Kishore sums it up over at the WSWS:

“The Democratic strategy of appealing to affluent layers of the middle
class on the basis of identity politics while working with the
Republicans to step up attacks on workers’ jobs, wages and living
standards produced an electoral disaster. In a contradictory way,
reflecting a system monopolized by two right-wing parties of big
business, the election showed that appeals on the basis of race, gender
and sexuality move only a small fraction of the population, while the
broad masses of people are driven by more fundamental class
issues—issues on which the Democrats have nothing to offer…

Underlying these processes is a profound crisis—not only of the
Democratic Party, but of the entire political system. Both parties
represent the interests of a tiny layer of the corporate and financial
elite in alliance with the military-intelligence apparatus. Beyond the
confines of the top 5 or 10 percent of the population, the state
confronts a working class that is angry, dissatisfied and increasingly
hostile.”
(The Democratic Party implosion, Joseph Kishore, World Socialist Web Site)

The system is in crisis, and the reason should be obvious to anyone
willing to pull his head out of the sand long enough to see what’s
really going on. It’s because capitalism doesn’t deliver the goods. It’s
that simple. Everything is stacked in favor of the moneybags
bloodsuckers on top. They don’t even try to hide it anymore. Have you
noticed how Maserati sales are threw the roof?

It’s true. America’s a great place if you got dough. And if you don’t,
well, then you might want to get yourself a nice, comfy cardboard box
and a dry-spot by the river.

Is it any wonder why people under 30 have checked out entirely? They’re
not buying this “capitalism is wonderful” horsecrap. They feel the sting
of this system every damn day. Do you really think that a college grad
with an MBA in engineering who’s living in his parent’s crawlspace,
who’s wracked up a heaping $65,000 in student loans, and who has over
200 job rejections stacked a mile-high on his desk, gets up every
morning thinking, “God I’m glad I live in America. Isn’t it swell to
live in a country where everyone has a chance to get ahead?”

Right. These people have already quit the system and they’re not coming
back. Among young voters (aged 18-29) only 13 percent cast ballots on
Tuesday. There’s your ringing endorsement of capitalism in one dazzling
data-point: 13 freaking percent. That’s a system that has out-lived its
shelf-life if you ask me.

One last thing: We should give a hat tip to some of the people who
figured out what Obama was all about from the get go, like the editors
of Counterpunch, Alexander Cockburn and Jeffrey St. Clair. Counterpunch
has been skewering President Flim Flam for more 8 years now, even when
the liberal “thought police” blasted anyone who as much as uttered a
cross word about him. (I wonder how many of those die-hard Ombamabots
have the stones to admit now that they were wrong? Not many, I’ll bet.)

Anyway, take a look at this Cockburn article I dug up from the CP
archives. It pretty well sums up the editorial position of the magazine…
And it was written back in November, 2003:

“In these last days I’ve been scraping around, trying to muster a single
positive reason to encourage a vote for… Obama-Biden, as opposed to the
McCain-Palin ticket?…

In substantive terms Obama’s run has been the negation of almost every
decent progressive principle, a negation achieved with scarcely a bleat
of protest from the progressives seeking to hold him to account. The
Michael Moores stay silent. Abroad, Obama stands for imperial
renaissance. He has groveled before the Israel lobby and pandered to the
sourest reflexes of the cold war era. At home he has crooked the knee to
bankers and Wall Street, to the oil companies, the coal companies, the
nuclear lobby, the big agricultural combines. He is even more popular
with Pentagon contractors than McCain, and has been the most popular of
the candidates with K Street lobbyists. He has been fearless in
offending progressives, constant in appeasing the powerful.”…

“Obama invokes change. Yet never has the dead hand of the past had a
“reform” candidate so firmly by the windpipe.” (Change You Can See,
Alexander Cockburn, CounterPunch)

Cockburn knew that Obama was a fake and that the Democratic leadership
had no intention of changing anything. The plan was to crank the Bush
agenda up to full-throttle; expand the wars, increase the surveillance,
eviscerate civil liberties, and shift more of the nation’s wealth to
their feral-tycoon bosses on Wall Street. That was the plan and that’s
what they did.

Tuesday’s electoral meltdown was just blowback from the many rank and
file Dems who were either too mad to vote the party ticket or too
distraught to even drag themselves to the polling booths. And therein
lies the silver lining to this mess, which is that people are
disillusioned, frightened and angry. They hate Wall Street, the media,
the do-nothing Congress, and the sell-out-loser Democrats. They want
change and they’re willing to move further to the right or left to get it.

That should be fertile ground for even the most fainthearted
revolutionary. There’s no reason why the public’s frustration and can’t
be channeled into more productive activity, like a general strike, a
mass exodus from the two-party duopoly, or a thundering march on the
Capital.

Why waste all that rage on whining and handwringing? The system is
broken. Deal with it.

Organize. Grab a pitchfork. Do something!

(6) The two parties are instruments of the same Financial Oligarchy

http://www.wsws.org/en/articles/2014/11/06/elec-n06.html

Republicans, Obama prepare post-election escalation of war, social attacks

By Patrick Martin
6 November 2014

In the wake of Tuesday’s electoral drubbing of the Democratic Party, the
victorious Republicans and the Obama White House have begun an elaborate
and highly orchestrated political charade. Amid talk of compromise and
finding “common ground,” what is being organized in Washington is a
gang-up of two right-wing, corporate-controlled parties against the
working class.

Incoming Senate Majority Leader Mitch McConnell and President Obama made
media appearances only an hour apart Wednesday. Each pledged to
collaborate with the other.

The American people “have chosen divided government” for the next two
years, McConnell said. “We all have the same goal” of creating jobs and
improving the living standards of the American people, Obama
reciprocated, pledging to “get stuff done” with the Republicans, who
will control both houses of Congress.

McConnell warned Obama not to issue an executive order exempting
millions of undocumented workers from deportation, calling it “waving a
red flag in front of a bull.” At his press conference, Obama reiterated
a previous pledge—already postponed multiple times—to take executive
action along those lines. But behind the scenes, talks will begin on an
immigration measure along the lines demanded by corporate America to
guarantee a secure supply of low-wage, brutally exploited labor.

At his press conference in Louisville, Kentucky, McConnell reassured
Wall Street that there would be no repetition of the 2013 government
shutdown that roiled the financial markets. “There will be no government
shutdowns and no default on the national debt,” he said.

Obama held out the prospect of an agreement on a huge tax break for
corporations that have $2 trillion in profits stashed in overseas
accounts to avoid income taxes, in effect rewarding them for tax
evasion. McConnell and House Speaker John Boehner have already expressed
support for such a deal.

The president revealed that his first post-election meeting with the
congressional leadership from both parties, set for Friday at the White
House, will include an extensive briefing by General Lloyd Austin,
commander of US military forces in the Middle East, on the status of the
war in Syria and Iraq against the Sunni fundamentalist group Islamic State.

He said he would seek congressional passage of an Authorization for the
Use of Military Force similar to the resolutions pushed through by the
Bush administration before the invasions of Afghanistan and Iraq,
indicating that he expected support for the measure from the incoming
Republican majorities in both houses.

The maneuvers between the two big-business parties were unfolding as
overnight ballot-counting confirmed the dimensions of the Republican
sweep—and demonstrated the mass abstention from voting on the part of
the great majority of working people.

The Republicans took control of the US Senate, taking as of now 52 seats
out of 100, a gain of at least seven seats, with two more seats, in
Alaska and Louisiana, likely to fall into their hands. Of the 36 Senate
seats at stake Tuesday, the two parties had targeted ten held by
Democrats and three by Republicans as potentially vulnerable. Of these
13, Republicans won ten, Democrats only one, and Republicans lead in the
two still undecided states.

Republican Dan Sullivan led Democratic Senator Mark Begich in Alaska,
although there were still many remote areas not yet reporting. Begich
would be the fourth Democratic senator defeated for reelection. Mary
Landrieu of Louisiana would be the fifth. She is expected to lose a
runoff December 6 after winning 42 percent of the vote in an
eight-candidate primary Tuesday, while the two top Republicans took 52
percent between them.

In the House of Representatives, the Republicans added between 13 and 19
seats to their majority, depending on the outcome of a half dozen
too-close-to-call races in New York, Arizona and California. The
Democratic debacle had two components: a huge decline in turnout in
heavily Democratic states like New York, Illinois and California; and a
continuing decline in southern states and Appalachia.

The only remaining Democratic-held seats in the six states of the Deep
South (South Carolina, Georgia, Alabama, Mississippi, Louisiana and
Arkansas) are in black-majority districts. Not a single Democrat holds a
congressional seat in the Appalachian coal-mining region (southwest
Pennsylvania, southeastern Ohio, West Virginia, southwest Virginia,
eastern Kentucky and Tennessee).

The rump Democratic Party caucus in the House, the smallest in 86 years,
is concentrated in the Northeast and the Pacific Coast, with a few urban
areas and industrial centers in the Midwest. If one starts in Richmond,
Virginia and proceeds west, one can travel 3,000 miles to Oakland,
California before encountering a congressional district held by a Democrat.

The Cook Political Report summed up the congressional vote in these
terms: “Plain and simple, the story in House races was an epic turnout
collapse and motivational deficit.”

The Democratic performance was so abysmal that in New York City,
Republican Congressman Michael Grimm won reelection despite being under
indictment on 20 felony counts relating to a restaurant business he owns
(and despite his well-publicized threat of violence against a journalist).

In races for state governors, Republicans won a top-heavy majority of
the 36 seats on the ballot Tuesday, including the largest and most
politically important: Florida, Illinois, Michigan and Wisconsin. While
a Democrat defeated the incumbent Republican governor of Pennsylvania,
Republican candidates won heavily Democratic states such as
Massachusetts and Maryland. After Tuesday, 31 of the 50 states have
Republican governors, and Republicans hold 65 state legislative chambers
compared to 23 for Democrats, with the remainder tied or undecided.

Despite the sweeping character of its electoral triumph, however, the
Republican Party has no mandate from voters for its right-wing program
of tax cuts for business, destruction of social programs, and escalating
militarism.

Voter turnout was at record lows, with two-thirds of those eligible to
vote staying away from the polls. This mass abstention was particularly
pronounced among the poorest and most oppressed sections of the working
class—those most disillusioned by the empty promises of Obama’s 2008 and
2012 presidential campaigns.

In Michigan, for example, voter turnout in Detroit was only 31 percent,
well below the 40 percent level predicted by city officials. This
shortfall accounts for the entire margin of defeat for the Democratic
candidate for governor, Mark Schauer, running against Republican
incumbent Rick Snyder.

Similarly, in Wisconsin, voter turnout was at record levels for a
midterm election throughout the state, due to the sharp polarization
caused by Republican Governor Scott Walker’s attacks on public
employees. The exception was Milwaukee, the state’s largest city.

In Georgia, turnout among African-American voters was lower than in
2010, the last midterm election, demonstrating that right-wing
Democratic candidate Michelle Nunn had sparked little support in her bid
for an open Senate seat.

Exit polls showed the while many voters wished to express hostility to
the Obama administration, congressional Republicans were even more
unpopular: Some 30 percent of voters were satisfied with Obama, while
only 25 percent were satisfied with the Republicans. Within the
framework of the two-party system, however, the only alternative to
Obama was the Republicans.

Perhaps the most revealing finding in the exit polls was that two-thirds
of those who cast ballots Tuesday viewed the US economic system as
deeply unfair and rigged in favor of the wealthy. There was evidence in
the exit polls that millions are losing faith in the capitalist system
altogether, and not merely expressing discontent with the conditions of
economic slump that have prevailed since the financial crash of 2008.
While the proportion of those who viewed the economy as “not so good” or
“poor” fell from nine out of ten in 2010 to seven out of ten in 2014,
more than half now believe that the next generation will live worse than
their parents.

A waitress in Alaska interviewed in an exit poll was quoted in the New
York Times as saying: “I feel like I’m in that class of people that’s
kind of getting left behind in this whirlwind… I’m in that economic
class of people that works really, really hard and will probably never
get too far ahead, barely makes it, and kind of gets punished for it.”

Needless to say, neither the Democrats nor the Republicans, controlled
by corporate interests and bound hand-and-foot to the capitalist system,
can address such class-based discontent.

The 2014 election marks the fourth time in the last five elections that
the party in power, Democratic or Republican, was thrown out of office
by voters. In 2006, the Democrats took control of the House and Senate,
in 2008 they captured the White House. In 2010, Republicans recaptured
the House and now, in 2014, they have recaptured the Senate.

These shifts from one party to the other have resolved none of the
issues facing working people, nor can they, because the two parties are
instruments of the same financial oligarchy.

(7) G20 leaders in the mood to act on tax avoidance after Luxembourg leaks

http://www.smh.com.au/national/g20-leaders-in-the-mood-to-act-on-tax-avoidance-after-luxembourg-leaks-20141107-11icy3.html

Date: November 08 2014
Tom Allard

Ahead of next weekend's G20 summit, the release of leaked documents
showing Luxembourg's facilitation of industrial scale tax avoidance by
multinational corporations could not have been better timed.

A cache of documents obtained by the International Consortium of
Investigative Journalists, and released on Thursday, found hundreds of
companies - including Australian firms such as AMP, Macquarie Group and
Lend Lease - had funnelled hundreds of billions of dollars into
Luxembourg, slashing their tax bills in the process.

In some cases, the firms were paying effective tax rates of as little as
1 per cent.

While immense, the "Lux leaks" documents are only a portion of the tax
avoidance taking place in Luxembourg, representing only those deals
arranged by global accounting firm PwC.

And while Luxembourg is arguably the world's biggest tax haven, it
represents only a sliver of the global tax avoidance game.

By their very nature, calculating the scale of secret tax arrangements
is near impossible, but some guesstimates posit that wealth equivalent
to almost 10 per cent of global GDP -   or about $US8 trillion - is
squirrelled away in tax havens.

Others say the figure is closer to $US20 trillion.

Whatever the exact extent of tax avoidance, the challenge of combating
rampant tax minimisation in the globalised, digitised economy of the
21st century is immense.

But as governments struggle to balance their budgets and deal with an
increasing number of citizens enraged by the inequity of the global tax
regime, leaders are ready to act.

Curbing tax avoidance is one of the key agenda items when world leaders
from the group of 20 large economies gather in Brisbane.

Piggybacking on work begun by the Organisation for Economic Cooperation
and Development in 2009, the G20 economies have agreed on common
reporting standards for the automatic exchange of "tax information"
between member countries.

There are also proposals to agree to disclose the true beneficial
ownership of bank accounts and trusts, although China is reportedly
resisting the move.

Either way, says Mike Callaghan, a former senior Treasury official now
with the Lowy Institute, the measures - while worthy - largely impact on
bank secrecy and money laundering.

"That's dealing mostly with individuals, not companies," Callaghan says.

The biggest problem with tax avoidance lies with multinational
corporates shifting profits, debt and income through a variety of
techniques, many of them done under a veil of secrecy or via hugely
complex but legal arrangements devised by highly paid tax lawyers.

Some 60 per cent of international transactions occur within
multinational corporations.

The problem has been magnified by the emergence of digital companies and
e-commerce, with firms such as Amazon, Microsoft. Google and Apple able
to easily book profits in low taxing jurisdictions.

The OECD "Base Erosion and Profit Shifting" project is examining how to
address the problem, amply illustrated by what's going on in Luxembourg.

Callaghan argues that real advances will be made if G20 nations pledge
to adopt an OECD recommendation and force multinationals to report on
their sales, income, debts, profits  and other financial information on
a country-by-country basis, thus illuminating discrepancies between
where profits are generated and taxed.

This would ensure that the G20 finance ministers commitment that
"profits should be taxed in the place where the value is created and the
economic activities occur" is more than just rhetoric.

There is in-principle support for this OECD initiative, but a path to
concrete action would be a ground-breaking move if endorsed in the G20
leaders' summit Brisbane on November 15-16.

Many tax justice advocates argue the country-by-country financials of
multinationals should not just be shared by governments, but made
publicly available to enhance transparency.

Consumer agitation and boycotts are seen by activists as essential
weapons in forcing multinationals to change their behaviour.

In its report to the G20 finance ministers meeting in Cairns in
September, the OECD declared that progress on enhancing transparency to
combat tax avoidance has been "massive".

According to Mark Zirnsak from the Australian arm of the Tax Justice
Network, momentum for global reform is gathering pace, with Australian
Treasurer Joe Hockey providing good leadership on combating the
"thievery" of tax cheats.

But Graeme Cooper, professor of taxation law at the University of Sydney
is more sceptical. He says self-interest of countries often trumps
global co-operation.

He argues that the US, for example, is not so concerned about tax
avoidance by digital giants such as Google as it helps these American
companies prosper and underpins a vibrant information technology sector
that is a growth engine of the US economy.

For tax havens, the rewards can be lucrative too.

Luxembourg, the tiny duchy nestled between France, Germany and Belgium,
is a case in point.

It has a population of less than 550,000 but has $US3.7 trillion ($4.2
trillion) in assets under management, second behind the US. It's clearly
done well out of the arrangements. Its GDP per capita is more than
$US110,000, almost twice that of the US, and the highest in the world.