[Articles of Interest] From the Annals of Global Socialism

Rich May Be Australian Budget Target Amid Recession (Update1)

By Gemma Daley

May 12 (Bloomberg) -- Australian Treasurer Wayne Swan will tonight unveil a Robin Hood-style budget, slashing tax breaks and welfare-payments to high-income earners as he tries to contain a record deficit amid the global recession.

Swan will take away subsidies for the rich while protecting payments to lower-income earners, the aged and the unemployed in the budget, framed amid an economic slump that has cut tax revenue by more than A$200 billion ($153 billion), economists say. He releases the budget at 7:30 p.m. in Canberra.

The Labor government (The Socialists) of Prime Minister Kevin Rudd will unveil a A$34 billion deficit in the year ending June 30, the first shortfall in seven years, as tax revenue from a commodities export boom dries up, according to the median of 16 economists surveyed by Bloomberg. Swan warned today there “will be tough decisions,” as he tries to limit debt in a budget the treasury department says won’t return to surplus until 2015-16.

“Swan will rob rich Peter to pay poor Paul,” said Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney. “The rivers of gold from the commodities boom flowing through the economy are well and truly over.”

The economists’ survey predicts Swan will also forecast budget deficits of A$58.5 billion in 2009-10 and A$60 billion in 2010-11. The economy will contract 0.3 percent in 2009-10, they forecast.

Treasury has said the government will have to borrow as much as A$200 billion through the bond market to fund deficits until 2015-16.

Tax Breaks

Swan has already signaled he will halve tax breaks for high-income earners contributing to pension funds and slash their government subsidy for private health insurance. At the same time, he’ll deliver extra help for families earning less than A$150,000 a year and increase payments to aged pensioners.

Still, income-tax cuts for people earning between A$80,000 and A$180,000 scheduled for the two years starting July 1 will go ahead. The cuts were part of A$23 billion in cuts announced in last year’s budget.

“Everybody in Australia has to do their bit and some people have the capacity to do a bit more,” Swan told reporters in Canberra today.

Swan’s imposts on high-income earners mirrors steps in the U.S. and the U.K.

Obama Budget

In the U.S., President Barack Obama has proposed raising income-tax rates to help narrow a record budget shortfall and pay for a planned overhaul of health care. Obama’s budget, which must be enacted by Congress before taking effect, would reinstate the top two Clinton-era tax rates of 36 percent and 39.6 percent, up from the 33 percent and 35 percent the richest Americans now pay.

That would affect about 2.6 million taxpayers, starting with singles with taxable income of $164,550 and married couples with taxable income of $200,300.

U.K. Chancellor of the Exchequer Alistair Darling this month raised taxes on the top income earners to help pay for the government efforts to stimulate the economy.

Australian is in its first recession since 1991 as the international slowdown crimps demand for exports from the world’s biggest shipper of coal and iron ore. Gross domestic product will shrink 1.25 percent in the year ending June 30 and unemployment will rise, the central bank said last week.

Cash Handouts

That means the government will receive lower tax payments from the labor market and from companies including miner BHP Billiton Ltd., which is firing 6,000 workers as the global recession curbs demand for minerals. The nation’s biggest airline, Qantas Airways Ltd., will also pay less tax as it forecasts a record loss in the six months ended June 30, which has prompted it to cut 5 percent of its staff.

Swan’s deficit woes have been compounded by government stimulus packages over the past eight months.

The government since September has pledged an extra A$130 billion on cash handouts to low and middle-income earners, infrastructure spending, funding for a national broadband network and bond-market assistance. In the same period, the Reserve Bank of Australia cut its benchmark interest rate to a 49-year low of 3 percent to revive growth.

“The fiscal boost to the economy from earlier policy announcements is already massive, yet the budget will deliver even more largesse,” Walters said. “The fiscal pulse is equivalent to around 7 percent of GDP.”

Pension Increase

Swan has said the budget may include a A$30 a week increase in the aged pension, which would cost A$5 billion a year.

He will introduce government-paid parental leave, costing A$260 million per year, for people earning below A$150,000. New mothers who leave the workforce would receive the average weekly wage of A$544 a week for 18 weeks, starting in January 2011.

The budget may also spend extra on ports, roads and rail, and increase benefits to the unemployed. Grants to first-home buyers, which were raised to as much as A$21,000 from A$7,000 in October, may be reduced.

With lower income and demand, the government has reined in public service spending to limit the deficit. It may also raise taxes on alcohol and tobacco.

Economists forecast the 2009-10 budget deficit will be 4.9 percent of GDP, the largest since 1970, when Treasury forecasts were first provided. The U.K budget deficit will be 12.4 percent of GDP this year and the U.S. deficit is forecast to be 12 percent, according to the Congressional Office’s analysis.

Election Looms

The Labor government, which won power in 2007, faces an election by the end of 2010. Prime Minister Rudd may call an early vote if the upper house Senate, which he doesn’t control, refuses to pass all the budget measures.

Any refusal by the upper house to pass budget measures would leave the case for an early election “wide open,” Australian National University analyst Lindy Edwards said yesterday. “There would be a strategic advantage to go early because the government has been frustrated by the Senate already.”

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net

Last Updated: May 11, 2009 19:38 EDT

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[Articles of Interest] British Socialist Pigs

Britain's 'least wanted' blacklist published

AFP/File – Lebanese militant Samir Kantar attends a ceremony in Tehran in January 2009. The government published …

Tue May 5, 3:39 pm ET

LONDON (AFP) – The government published a blacklist Tuesday of people recently banned from the country including a Hamas lawmaker and a Jewish extremist, as well as anti-gay protestors and a far-right US talk show host.

Home Secretary Jacqui Smith said she decided to publish the "name and shame" list -- which identifies 16 people banned since last October -- for the first time to clarify what behaviour Britain will not tolerate.

"I think it's important that people understand the sorts of values and sorts of standards that we have here, the fact that it's a privilege to come and the sort of things that mean you won't be welcome in this country," she said.

"If you can't live by the rules that we live by ... we should exclude you from this country and, what's more, now we will make public those people that we have excluded," she told the GMTV broadcaster.

Between October and April the Home Office excluded 22 people for "fostering extremism or hatred" included preachers Abdullah Qadri Al Ahdal and Amir Siddique, said a Home Office statement.

Hamas lawmaker Yunis Al-Astal, Jewish extremist Mike Guzovsky, former Ku Klux Klan leader Stephen Donald Black and neo-Nazi Erich Gliebe are also on the list, as is controversial radio host Michael Alan Weiner, also known as Michael Savage.

They also included Samir Kantar, who was released by Israel last July in a prisoner swap with Hezbollah.

Described as a monster in Israel where he was convicted for killing Danny Haran, his four-year-old daughter Einat and an Israeli policeman in a notorious attack nearly three decades ago, Kantar is considered a hero by many in Lebanon, where he was given a red carpet welcome on his release.

He carried out the cross-border raid that landed him in jail in 1979 when he was part of the Palestine Liberation Front. Since his release he has become the darling of Hezbollah and speaks at many of their events.

Others blacklisted include homophobic US pastor Fred Waldron Phelps, as well as Artur Ryno and Pavel Skachevsky, former leaders of a violent Russian skinhead gang which committed 20 racially motivated murders.

Smith said: "The government opposes extremism in all its forms and I am determined to stop those who want to spread extremism, hatred and violent messages in our communities from coming to our country.

"This is the driving force behind tighter rules on exclusions for unacceptable behaviour," she added.

Six of those excluded recently were not named because it would not be "in the public interest," said the Home Office.

In February Britain triggered a formal protest from the Netherlands after refusing entry to far-right Dutch lawmaker Geert Wilders, maker of a controversial film linking Islam to terrorist attacks.

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[Articles of Interest] Socialist Pigs (Animal Farm) in Congress

Senate Democrats Deny Specter Committee Seniority

By Paul Kane (Washington Post)
The Senate dealt a blow tonight to Sen. Arlen Specter's hold on seniority in several key committees, a week after the Pennsylvanian's party switch placed Democrats on the precipice of a 60-seat majority.

In a unanimous voice vote, the Senate approved a resolution that added Specter to the Democratic side of the dais on the five committees on which he serves, an expected move that gives Democrats larger margins on key panels such as Judiciary and Appropriations.

But Democrats placed Specter in one of the two most junior slots on each of the five committees for the remainder of this Congress, which goes through December 2010. Democrats have suggested that they will consider revisiting Specter's seniority claim at the committee level only after the midterm elections next year.

"This is all going to be negotiated next Congress," Jim Manley, spokesman for Senate Majority Leader Harry M. Reid (D-Nev.), said tonight.

Specter's office declined to comment.

Without any assurance of seniority, Specter loses a major weapon in his campaign to win reelection in 2010: the ability to claim that his nearly 30 years of Senate service places him in key positions to benefit his constituents.

Tonight's committee resolution, quickly read on the Senate floor by Reid himself, contradicts Specter's assertion last Tuesday when he publicly announced his move from the Republican side of the aisle. He told reporters that he retained his seniority both in the overall chamber and in the committees on which he serves. Specter said that becoming chairman of the Appropriations Committee was a personal goal of his, one that would be within reach if he were granted his seniority on the panel and placed as the third-most senior Democrat there.

Specter, if granted seniority, would also be next in line to chair the Judiciary Committee behind the current chairman, Sen. Patrick J. Leahy (D-Vt.).

Without that seniority, though, Specter, 79, would not even hold an appropriations subcommittee chairmanship in 2011, a critical foothold Specter has used in the past to disperse billions of dollars to Pennsylvania.

When Supreme Court nomination hearings are held later this summer, Specter will be the last senator to ask questions of the eventual nominee -- a dramatically lower profile than in 2005 and 2006, when he chaired the committee and ran the confirmations of Chief Justice John G. Roberts Jr. and Justice Samuel A. Alito Jr.

Democrats could decide after the 2010 midterms to reward Specter for his move by granting him seniority on committees, but recent precedent has not been kind to such situations. In 2002, for instance, Frank Lautenberg came out of retirement to bail out New Jersey Democrats, agreeing to run in place of the ethically disgraced incumbent, Robert G. Torricelli (D). Lautenberg won a seat that was once thought to be out of reach. But despite his 18 years of prior Senate service, Democrats relegated him to the most junior positions on committees.

Specter, after 43 years as an active Republican, will have to prove his Democratic loyalty over the next 20 months to his colleagues in order to win their support for his seniority. That effort has gotten off to a rocky start following an interview he gave with the New York Times Magazine, to be published this Sunday.

Specter joked about how Norm Coleman could possibly win his legal contest and reclaim his Minnesota Senate seat, assuring there would still be at least one Jewish Republican in the chamber. Specter backtracked from those comments in an interview with Congressional Quarterly today,

"In the swirl of moving from one caucus to another, I have to get used to my new teammates," he told CQ. "I'm ordinarily pretty correct in what I say. I've made a career of being precise. I conclusively misspoke."

By Post Editor |  May 5, 2009; 9:08 PM ET

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[Articles of Interest] Obama's trade war & crimes of theft

Play Video ABC News  – Obama Cracks Down on Tax Code

• Slideshow:President Barack Obama
• Play Video Video:Trading on Obama's Tax Plan CNBC

AP – President Barack Obama speaks about tax reform in the Grand Foyer of the White House in Washington, Monday, …

By STEPHEN OHLEMACHER, Associated Press Writer Stephen Ohlemacher, Associated Press Writer – 1 hr 8 mins ago

WASHINGTON – President Barack Obama promised sternly on Monday to crack down on companies "that ship jobs overseas" and duck U.S. taxes with offshore havens. It won't be easy. Democrats have been fighting — and losing — this battle since John F. Kennedy made a similar proposal in 1961. Obama's proposal to close tax loopholes was a reliable applause line during the presidential campaign, but it got a lukewarm response Monday from Capitol Hill.

Sen. Max Baucus of Montana, the Democratic chairman of the Senate Finance Committee, said the plan needed further study, even though similar ideas have been around for years.

The president's plan would limit the ability of U.S. companies to defer paying U.S. taxes on overseas profits. At the same time, Obama would step up efforts to go after evaders who abuse offshore tax shelters.

Obama said his plan would raise $210 billion over the next 10 years, though no tax increases would go into effect until 2011. That's an average of $21 billion a year, less than a 2 percent nick in a federal budget deficit that is projected to hit $1.2 trillion in 2010.

Lost revenue isn't the only problem, Obama says. He contends the current system gives companies an incentive to invest overseas rather than creating jobs in the U.S.

"It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, N.Y.," Obama said Monday.

The business community argues the deferral system helps them compete against foreign companies that pay taxes only in the countries where they generate profits.

The bottom line?

"Nobody should miss the fact that this is about revenue," said Raymond Wiacek, head of the tax practice at the law firm Jones Day. "These companies have the money, and the U.S. government needs the money."

Obama also proposed a package of disclosure and enforcement measures designed to make it harder for financial institutions to help wealthy individuals evade taxes in overseas accounts. Obama said the government is hiring nearly 800 new IRS agents to enforce the tax code.

"I want to see our companies remain the most competitive in the world," Obama said at a White House announcement. "But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens."

Obama's plan would impose billions of dollars in new taxes on many of the nation's largest corporations, including Google, General Electric, Hewlett-Packard, Intel and Johnson & Johnson, tax experts said. But it falls well short of the broad overhaul of the tax system that will probably have to wait until at least next year — after Congress deals with health care and energy.

In exchange for the increased taxes some companies would have to pay, Obama agreed to make permanent a research tax credit that would provide firms about $75 billion in breaks over the next 10 years. The credit currently is to expire at the end of the year.

Obama has widespread support in Congress to crack down on tax evaders who illegally hide assets in tax havens. But he faces stiff opposition — even within his own party — to increasing taxes on the legal transactions of U.S. multinational companies.

"To the extent the president continues on the road of cracking down on tax abuse, he can count on my support," said Sen. Chuck Grassley of Iowa, the top Republican on the Senate Finance Committee. "But if he's using tax shelters as a stalking horse to raise taxes on corporations at the cost of U.S. jobs, he'll lose me."

A coalition of business groups has already stepped up lobbying efforts to kill attempts to increase taxes on overseas profits, saying it would make American companies less competitive.

"We're talking about American jobs at American companies and their ability to compete overseas," said John J. Castellani, president of the Business Roundtable.

At issue is the way the U.S. taxes the overseas profits of American companies. Under current law, American corporations with subsidiaries in foreign countries can defer paying U.S. taxes on the profits of those subsidiaries until the money is transferred back to this country.

If companies leave the money overseas, where corporate tax rates in most countries are lower than in the U.S., they can avoid American taxes on those profits indefinitely. If the money is brought to the U.S., corporations can subtract foreign taxes already paid.

The U.S. has a top corporate income tax rate of 35 percent, which is among the highest in the developed world. However, most corporate income is taxed at much lower rates because of deductions and credits.

In 2004, large corporations paid an average effective tax rate of 25.2 percent on domestic income, according to a Government Accountability Office report last year. For foreign income, the effective U.S. tax rate was about 4 percent, the report said. That figure does not include taxes paid to foreign countries.

Obama's plan would:

_Prevent companies from writing off domestic expenses that help generate profits abroad — until those profits are returned to the U.S. and subjected to American taxes. For instance, administrative tasks performed in New York for a London office would not be tax deductible in the United States.

_Prohibit companies from receiving foreign tax credits on income that is not subject to U.S. taxes.

_End a provision that lets U.S. companies legally shift income from one foreign subsidiary to another, making the taxes they owe to the United States "disappear."

Former President Kennedy failed to end the tax deferral system in 1961, despite telling Congress the U.S. could no longer afford it. The system also survived overhaul efforts in the 1970s and 1980s.

Rep. Charles Rangel, chairman of the tax-writing House Ways and Means Committee, proposed a similar measure to limit the deductions of U.S. multinationals in 2007. But Rangel, a Democrat from New York, tied his proposal to lowering the overall corporate tax rate.

On Monday, he welcomed Obama's plan.

"For too long, our tax laws have rewarded companies that invest and keep their money overseas and turned a blind eye to the use of tax havens by the wealthy," Rangel said.

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