Federal Budget and Taxes

A 'Double Irish' Here, a 'Dutch Sandwich' There

St. Patrick's Day may be behind us, but plenty of U.S. corporations are still helping themselves to a "Double Irish." Or a "Dutch Sandwich," for that matter.

No, we're not talking about drinks or delicacies from these European countries. We're actually talking about complex accounting gimmicks that U.S.-based corporations use to shift foreign profits into accounts in Ireland, the Netherlands and Bermuda to avoid U.S. corporate taxes. Companies use other loopholes to shift income earned here to subsidiaries abroad. These practices cost the federal treasury as much as $90 billion a year.

Like We Said, Policymakers Are Focusing on the Wrong Deficit

New York Times economist David Leonhardt makes two simple points in today’s paper that we made in our release last week underscoring the need for more action to create jobs.

First, output in the United States has rebounded thanks to the Recovery Act, surpassing its level before the recession. The Act, according to our estimates, saved 400,000 jobs in Pennsylvania alone.

In Case You Missed It: Third and State Blog This Week

This week. we blogged about the upcoming two-year anniversary of the Recovery Act, President Obama's budget plan, a few hundred Valentine's Day messages for Governor Corbett, sales tax loopholes that only Amazon.com could love, and much more!

In case you missed it:

  • On the state budget, Michael Wood detailed Amazon's foot-stomping response to efforts by states to close a sales tax loophole that gives the online retailer an unfair competitive edge over other retailers. (Spoiler alert: The brick-and-mortar stores are none too happy about it!) Mike also shined some light on Pennsylvania's "conservative" debt levels and explained that Pennsylvania's debt service payments have long been low — between 3% and 4% of the state budget.
  • On health care, Chris Lilienthal shared some of the Valentines that Governor Corbett received this week from Pennsylvanians asking him to have a heart and save adultBasic.
  • On the federal budget, Chris highlighted some analysis from the Center on Budget and Policy Priorities on President Obama's budget proposal for the 2012 Fiscal Year. Mark Price, meanwhile, shared a video clip of Columbia University Professor Jeffrey Sachs discussing the federal budget and noting that both parties have the wrong priorities by cutting services vital to working- and middle-class families.
  • Finally, on the economy, Mark Price takes note of the upcoming two-year anniversary of the passage of the American Recovery and Reinvestment Act. Mark also blogged that policymakers are focused on the wrong deficit — Main Street America is a lot more concerned about a deficit in jobs and wages than they are about the federal fiscal deficit.

More blog posts next week. Keep us bookmarked and join the conversation!

Jeffrey Sachs on the Federal Budget

Jeffrey SachsJeffrey D. Sachs, an economist and director of the Earth Institute at Columbia University, discusses the Democratic and Republican federal budget proposals.  He argues both proposals focus on the wrong priorities by cutting services vital to working- and middle-class families as well as cutting programs aimed at fighting climate change.

Watch the video here. (Sorry, we can't embed it on the blog.)

Hat tip to Penn Action's Robin Stelly for sharing this video.

President Obama Unveils Federal Budget Plan - Updated

President Obama unveiled his federal budget plan for the 2012 Fiscal Year this morning. In its initial analysis, the Center on Budget and Policy Priorities notes that the plan would shrink the federal deficit "very significantly as a share of the economy over the course of this decade."

Pa. Is Not Alone! The U.S. Has a Swiss Cheese Corporate Tax System Too

I'm shocked! The U.S. corporate tax system has enormous numbers of loopholes, according to The New York Times.

One hundred and fifteen of the biggest 500 companies paid a total corporate tax rate — federal, state, and local — of less than 20%  over the last five years, even though the federal corporate tax rate alone is 35% for most companies. There are also wide variations in the tax rates that companies pay within the same industry.

What Obama Should Say to the U.S. Chamber

President Obama addresses the U.S. Chamber of Commerce today as part of his post-election effort to improve relations with U.S. business.

What part of U.S. business does the Chamber represent? Mostly big business and corporate CEOs — people who make many millions, often without risking any of their own money. That’s the only way to explain that the extension of the Bush tax cuts for the very rich was the top Chamber priority last year — even though this won’t benefit the vast majority of businesses.

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