Tag Archives: treasury

Trump Isn’t Enforcing His Plan to Avoid Violating the Emoluments Clause

by EldenSargood Posted on May 24, 2017

Mother Jones

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In January, Donald Trump’s lawyer said that the Trump Organization would donate any profits earned at Trump hotels from a foreign government to the US Treasury. The move was supposedly an attempt to stay on the right side of the Constitution’s Emoluments Clause, which prohibits US government officials from taking gifts or benefiting from foreign governments. Ethics experts noted that the pledge, issued by attorney Sheri Dillon, did not truly address this violation of the Constitution. Trump needed to divest his ownership of the hotels, they contended. And now new documents released by congressional Democrats show that Trump is not taking even his insufficient effort seriously.

Because Trump still owns his hotel properties and companies that operate hotels, anyone—a person or business here or overseas, or a foreign government—can directly line the pockets of the US president simply by reserving rooms or renting out conference or banquet facilities at a Trump hotel. Since the inauguration, several foreign governments have rented space at the Trump hotel in Washington, DC, and foreign diplomats have reported being approached by Trump hotel staff soliciting business.

To address the emoluments issue, profits from these sort of transactions involving foreign governments are supposed to go to the US Treasury. But it’s hard to determine what counts as profit. And under the plan developed by Dillon, the calculation of profit would be made by the Trump Organization itself, without independent oversight. And there would be no auditing to ensure that all money from foreign governments was covered.

How does the Trump Organization determine which foreign funds ought to be donated? Not too assiduously, it appears. The House Oversight Committee several weeks ago asked the Trump Organization for information on this process. In response, the company sent the committee a nine-page pamphlet that instructs staff at its properties on how to handle this matter. The pamphlet indicates that the Trump Organization is not enthusiastic about gathering this information and doesn’t want its guests bothered by any efforts to comply with the Emoluments Clause.

The pamphlet notes that the hotels should not calculate the profit from foreign patronage but rather estimate it. After all, it says, calculating the actual profit would take a lot of effort: “To attempt to individually track and distinctly attribute certain business-related costs as specifically identifiable to a particular customer group is not practical, nor would it even be possible without an inordinate amount of time, resources and specialists.”

The pamphlet presents a formula by which managers can estimate how much money should head to the US Treasury. In one example, a hotel that earned $10 million in revenue but had $8.5 million in expenses would be considered to have a profit of 15 percent. If it took in $500,000 from foreign governments, it should donate 15 percent of that revenue—that is, $75,000—to the US Treasury. (This basic formula does not take into account the complexities of actual transactions. For instance, what if a foreign government bought $1 million in services from a Trump hotel that was only breaking even? This would certainly benefit Trump, but none of these funds would end up being donated.)

When it comes to identifying foreign revenues, the pamphlet tells Trump hotel staff not to try too hard, for that could annoy the customers: “To fully and completely identify all patronage at our Properties by customer type is impractical in the service industry and putting forth a policy that requires all guests to identify themselves would impede upon personal privacy and diminish the guest experience of our brand.” So, the pamphlet points out, the Trump Organization will not try to identify customers who do not inform the hotel that they are representing a foreign government.

The pamphlet, which you can read in full below, was released by Democrats on the House Oversight Committee along with a letter sent to the Trump Organization on Wednesday morning. The letter, signed by Rep. Elijah Cummings, the senior Democrat on the committee, complained that the company had failed to fully explain how it would avoid violating the Emoluments Clause.

In the letter, Cummings scolded the Trump Organization for its seemingly lackadaisical approach. “This pamphlet raises grave concerns about the President’s refusal to comply with the Constitution merely because he believes it is ‘impractical’ and could ‘diminish the guest experience of our brand,'” he wrote. “Complying with the United States Constitution is not an option exercise but a requirement for serving as our nation’s President.”

The Trump Organization did not respond to a request for comment.

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Trump Org Pamphlet on Foreign Profits (PDF)

Trump Org Pamphlet on Foreign Profits (Text)

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Trump Isn’t Enforcing His Plan to Avoid Violating the Emoluments Clause

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The Dead Pool – 19 May 2017

by JanieFairthorne Posted on May 19, 2017

Mother Jones

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Today we learned that Jim Donovan, a 25-year Goldman Sachs banking and investment management executive, is pulling out as Trump’s nominee to serve as Deputy Treasury Secretary. Why? “Family concerns.” That may be true, but it’s also likely that he’s rich and doesn’t want to divest everything he owns just to be a deputy in a dysfunctional administration where he could get fired at any moment if the president gets annoyed with him.

In other news, I’ve removed Sebastian Gorka from the dead pool since he still seems to be around. I’ll put him back if and when he takes a position elsewhere in the administration that’s allegedly more important than being on the president’s staff.

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The Dead Pool – 19 May 2017

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No, China Didn’t Suddenly Stop Manipulating Their Currency When Trump Was Elected

by CarmineFenbury Posted on May 14, 2017

Mother Jones

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Here’s a snippet from the Economist’s interview with President Trump and Treasury Secretary Steven Mnuchin. The subject is whether China is manipulating its currency in a way that hurts the United States:

Trump: They’re actually not a currency manipulator. You know, since I’ve been talking about currency manipulation with respect to them and other countries, they stopped.

Mnuchin: Right, as soon as the president got elected they went the other way.

It’s tiresome to hear Trump say this, and doubly tiresome to hear Mnuchin chime in like a toady about it. Yes sir, Mr. President, they stopped as soon as they realized a real man was about to occupy the White House!

Here’s all you need to know about Chinese currency manipulation:

All the way through 2013, China’s foreign reserves increased nearly every quarter. This was because they were buying lots and lots of dollars as a way of keeping the value of the yuan low, which made Chinese exports cheaper and American imports more expensive. In mid-2014 they stopped. Since then, they’ve mostly sold their dollar holdings, to the tune of a trillion dollars over the past couple of years. During this entire time the yuan has been falling on its own, and the Chinese intervention has had the effect of propping it up to prevent it from falling even faster. This makes Chinese exports more expensive and American imports cheaper, which is exactly what we want.

As for November 2016, nothing happened. I don’t know if Trump knows this, since he seems to live in some kind of alternate reality, but Mnuchin does. So does everyone else.

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No, China Didn’t Suddenly Stop Manipulating Their Currency When Trump Was Elected

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Trump’s Tax Cut Plan Will… Pay… For… Itself!

by TabathaMilam Posted on April 21, 2017

Mother Jones

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Back during Steve Mnuchin’s confirmation hearings for Treasury Secretary, he said he was surprised that IRS staffing had gone down. This just reduces the number of audits they can perform, and therefore the amount of tax revenue they collect from high earners. Just think about it. If you increased hiring, it would pay for itself!

It was très adorbs. But Mnuchin is a quick learner, and he never brought that subject up again. Instead, he’s now talking about a much more acceptable kind of plan that pays for itself. The subject, of course, is tax cuts:

Treasury Secretary Steven Mnuchin said the economic growth that would result from the proposed tax cuts would be so extreme — close to $2 trillion over 10 years — that it would come close to recouping all of the lost revenue from the dramatic rate reductions. Some other new revenue would come from eliminating certain tax breaks, although he would not specify which ones.

“The plan will pay for itself with growth,” Mnuchin said at an event hosted by the Institute of International Finance.

The Congressional Budget Office will have a very different take on this, and their take is the only one that matters. So why does Mnuchin even bother with this tired old charade? Maybe so that Donald Trump can yell and scream about how the CBO is rigged when they say that his tax plan is a deficit buster? Maybe to give congressional Republicans an excuse to fire Keith Hall and install a new CBO director who will give them whatever numbers they want?

Who knows? Maybe it’s just reflex. While we wait to find out, however, here’s a chart showing income tax receipts following the five most recent big changes to tax rates. You can decide for yourself if tax cuts pay for themselves or if tax increases tank the economy.

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Trump’s Tax Cut Plan Will… Pay… For… Itself!

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Accused of Tax Dodging, Apple Says It’s the World’s Largest Taxpayer

by MapleHogan4 Posted on September 2, 2016

Mother Jones

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In a landmark ruling handed down on Tuesday, the European Commission ordered Apple to pay $14.5 billion in back taxes to Ireland. The commission found that Ireland’s tax arrangement with Apple, set up in 1991, was a sweetheart deal that violated the European Union’s antitrust statutes and amounted to illegal state aid.

The ruling, while significant, is just a speeding ticket for the tech giant. Apple’s stock is valued at $570 billion, and it holds more than $230 billion in cash, more than 90 percent of which is kept offshore, beyond the reach of the IRS. The EU ruling implies that the company has been holding as much as $115 billion in profits tax-free in Ireland. That’s more than half of the profits Apple has stashed in its offshore subsidiaries, according to its latest financial filings.

Apple has a long and colorful history of tax minimization, having been deemed both a “pioneer” and a “poster child” of stashing corporate profits beyond the reach of tax collectors. In 2003, Apple paid an effective tax rate of just 1 percent on its profits from selling iPhones and iPads outside of the United States. By 2014, that effective tax rate was just 0.005 percent—or $50 in tax for every $1 million in profit.

Despite Ireland’s 12.5 percent corporate tax rate, Apple’s arrangement with the country allowed it to split its international profits between its Irish branch and a head office that existed only on paper. The company paid the already-low Irish rate on the profits it attributed to Ireland and allocated the rest to this phantom, stateless company, which is untaxable. According to CNN Money, Apple made 16 billion euros (roughly $22 billion) in international profits in 2011, attributing less than 50 million (just below $70 million) to its Irish branch. The rest was funneled through the tax-immune, employee-free “head office”. Via this arrangement, Apple has been able to shift up to two-thirds of its global profits to Irish-registered companies, paying an effective tax rate of one percent or less.

Nevertheless, Apple has roundly condemned the European Commission ruling, with CEO Tim Cook penning an open letter decrying it. Cook said that the “vast majority” of Apple’s profits are taxed in the United States, and claimed that Apple is the largest taxpayer in the United States, Ireland, and the world.

Verifying those claims isn’t easy. A 2014 report on corporate taxation by Citizens for Tax Justice omitted Apple due to the company’s “implausible geographic breakdowns of pretax profits.” In other words, it is very likely that profits Apple claimed in Ireland were actually earned in the United States, making it difficult to confirm Apple’s tax assertions. In particular, CTJ raised an eyebrow at Apple’s US tax rate. Apple claimed to have paid a 36.5 percent effective tax rate on its American profits from 2008 to 2012, even though the highest corporate tax rate is 35 percent. Using Apple’s 2015 filings, CTJ found that the company claimed its most recent tax rate was 46.7 percent. (Apple did not respond for a request comment.)

An Irish Times list of the country’s top taxpayers in 2016 gave the number one spot to the pharmaceutical group Medtronic, though Apple placed in the top ten. And as to Cook’s claim that the “vast majority” of Apple’s profits are taxed in the United States, Matthew Gardner, the executive director of the Institute on Taxation and Economic Policy, says that statement contradicts information in Apple’s own annual report.

Ireland may not be the only beneficiary of the European Commission ruling, which allows for other countries to partake of the penalty, including cash-strapped EU countries like Greece, as well as the United States. According Gardner, the decision provides a jumping-off point for the United States to recoup back taxes from Apple, which he estimates has avoided close to $70 billion in US taxes.

Yet the official US reaction to the ruling has been largely negative. The Treasury Department expressed disappointment, saying that the assessment was “unfair” and “contrary to well-established legal principles.” Last week, the department warned the European Commission against pursuing American companies for tax avoidance, on the grounds that clawback penalties could harm American efforts to collect taxes from domestic companies with international operations. Even though Apple’s $14.5 billion tax bill represents more than a third of Ireland’s total tax revenue and more than the entirety of Ireland’s annual health spending, Irish Finance Minister Michael Noonan has promised to appeal the ruling.

Google, Facebook, and Microsoft also hoard profits in Ireland, benefiting from its so-called “double Irish” tax structure, an arrangement which Ireland has promised to phase out by 2018. European competition regulators are currently investigating tax deals awarded to McDonald’s and Amazon by Luxembourg, as well as Anheuser-Busch InBev’s arrangement in Belgium. Tax deals given to Fiat/Chrysler (incorporated in Luxembourg) and Starbucks (incorporated in the Netherlands) were found illegal by the European Commission in October.

Even if the EU ruling stands, tax havens will not go away overnight. Fortune 500 companies have an estimated $2.4 trillion in offshore holdings, avoiding up $695 billion in US taxes. While President Obama has criticized corporate inversions, the process by which corporations move their headquarters offshore, Congress has been slow to act. The Treasury Department’s reaction indicates that that is unlikely to change.

Still, European regulators aren’t waiting around for American support. EU bodies are actively investigating possible anti-competitive behavior and tax avoidance by Google, Facebook, Amazon, and Netflix, with penalties expected to be announced sometime in the fall. Google is facing tax probes in Spain, Italy, and France, all of which claim the company should have declared more profits and paid more taxes. As James Wentworth, the vice president for Europe at the US-based Computer & Communications Industry Association, a tech lobbying group, tells the Wall Street Journal, “It’s an avalanche coming.”

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Accused of Tax Dodging, Apple Says It’s the World’s Largest Taxpayer

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GE Capital Shrinks to Avoid the Cost of Being "Systemically Important"

by KristopAbarca Posted on June 29, 2016

Mother Jones

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GE has been working on this for a while, and today they got their wish:

The U.S. Financial Stability Oversight Council said Wednesday that it voted this week to remove its label on GE Capital as “systemically important financial institution,” which carries more stringent oversight. Treasury Secretary Jacob Lew, who chairs the council, said the change shows that designation is a “two-way process”—a rebuttal to critics who have said its process for branding “systemic” firms is opaque and doesn’t give firms a clear road map on how to reduce risk.

This is good news:

GE Chief Executive Jeff Immelt said changed market conditions and new regulations had caused GE Capital’s returns to fall below its cost of capital….Since deciding to wind down the finance arm, GE Capital has signed agreements for the sale of about $180 billion of businesses and has closed about $156 billion of those transactions.

In other words, new regulations made it more expensive to do business as a huge financial services firm, so they decided to shrink. This is exactly the way it should be. Higher capital requirements and other rules give financial firms a choice: either accept the more stringent rules as a way of making themselves safer, or else shrink enough that they don’t pose a systemic danger in the first place.

Most banks are paying the higher costs, and that’s fine. As long as the additional capital requirements are sufficient, they’re now safer and less likely to collapse during a financial crisis. GE Capital chose the other route, and that’s fine too. So far, this is all working out pretty well.

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GE Capital Shrinks to Avoid the Cost of Being "Systemically Important"

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Watch Elizabeth Warren Go After Paul Ryan for Blaming Unemployment on the Unemployed

by EddieBarnard Posted on April 8, 2014

Mother Jones

Last month, Paul Ryan generated a minor media storm for a racially tinged comment lamenting the supposedly weak “culture of work” among “inner city” men. “We have got this tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working or learning the value and the culture of work,” Ryan told conservative radio host Bill Bennett. “There is a real culture problem here that has to be dealt with.” Ryan later said that he had been “inarticulate” and forswore any racial meaning in his comments. He was, he promised, referring to our entire culture; not “the culture of one community.”

Now, you either buy that or you don’t. If you don’t think there is something racially loaded about decrying the lack of work ethic among inner city men, then I’m probably not going to be able to convince you that there is. (But there probably is.)

Either way, Ryan’s defense could be interpreted as amounting largely to, I was not saying black people are lazy. I was saying poor people are lazy. This is a myth about poverty. It is not true. (Really.)

Enter Elizabeth Warren. “Paul Ryan looks around, sees three unemployed workers for every job opening in America, and blames the people who can’t find a job,” the senior Senator from Massachusetts said in a speech at the Minnesota Democratic-Farmer-Labor’s Humphrey-Mondale Dinner on March 29th.

Paul Ryan says don’t blame Wall Street: the guys who made billions of dollars cheating American families. Don’t blame decades of deregulation that took the cops off the beat while the big banks looted the American economy. Don’t blame the Republican Secretary of the Treasury, and the Republican president who set in motion a no-strings-attached bailout for the biggest banks – Nope. Paul Ryan says keep the monies flowing to the powerful corporations, keep their huge tax breaks, keep the special deals for the too-big-to-fail banks and put the blame on hardworking, play-by-the-rules Americans who lost their jobs. That may be Paul Ryan’s vision of how America works, but that is not our vision of this great country.

Warren is an increasingly popular figure and is set to play a large role in the Democratic fight to maintain control of the Senate in November.

Here’s the whole speech:

(via The Huffington Post)

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Watch Elizabeth Warren Go After Paul Ryan for Blaming Unemployment on the Unemployed

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