Budget wars, activism, uprising, dissent and general rabble-rousing.
The Grammy-nominated recording artist Moby has joined forces with MoveOn.org to put together a video about the nationwide budget fast in which activists present their reasons for fasting in brief sentences adhered to empty plates.
Thus far, 30,000 people have announced their intentions to participate in the rolling fast to protest what they call the immoral budget cuts. The movement’s official website HungerFast.org recaps how Congressman Tony Hall fasted for 22 days back in 1993 in response to budget cuts that would have devastated poor people at home and abroad. Now, Hall is fasting again in solidarity with the vulnerable who will once again be negatively impacted by austerity.
Among the cuts are a $500 million slashing of WIC, the federal health and nutrition programs for women, infants, and children. The program was estimated to serve 9.3 million people this year, according to Reuters. Over a billion dollars will be cut from HIV/AIDS, hepatitis, STD and TB prevention in addition to a $600 million reduction in the funds for community health centers. Transportation and housing and urban development also suffered a 20 percent cut, and another $194 million was cut from foreign food assistance, including food aid donations and a global meals program.
All of which is a lengthy way to say in the era of “shared sacrifice,” the poor are the ones who will suffer. The House Appropriations Committee reports that cuts to the Agriculture Department totaling $2.6 billion will be extremely detrimental to impoverished families who rely on the USDA to provide food stamps and school lunches.
In the midst of talk about the need for tough choices, certain programs managed to avoid Congress’s scalpel. Washington has allocated $205 million for Israel’s Iron Dome missile defense system, a program that has been criticized for its high cost and questionable effectiveness.
While some Pentagon programs were cut, there will be a $5 billion increase in several defense accounts that will bring more business to defense contractors like Raytheon, BAE Systems, Electric Boat, and General Dynamics. The budget also includes $157.8 billion for “overseas contingency operations to advance US military missions abroad,” so the Forever Wars will remain well-funded.
As I’ve written throughout the week, the support for this kind of peaceful resistance is growing, and prominent individuals are joining or expressing solidarity with the movement. Several DC leaders, including Mayor Vincent Gray, were recently arrested during a budget cut protest, twenty-eight members of Congress have joined the fast, and last week Congressman Jim McGovern stated his support for the cause.
Fasting participants are posting moving testimonies on HungerFast.org’s front page. Here is Sharon Thornberry, Community Food Systems Manager at the Oregon Food Bank, explaining that she was hesitant to participate in the hunger strike—not out of apathy—but out of wariness of returning to hunger.
Thornberry’s first husband was a Vietnam vet who suffered from PTSD. Their family was extremely short on money and soon they were in serious trouble.
We were far from family and friends, living in a remote location without a car. I had been poor a lot of my life, but I had never been hungry. I still cannot find words three decades later to describe how I felt when there was nothing to feed my children. I had been rationing food for days, only eating a little each day myself, and then the day came when there was nothing. My children were two and five.
Thornberry eventually dressed her children in their best clean clothes (“to prove I was a good mother”) and walked to a neighbor, a nurse, who Thornberry hoped would help them. Thankfully, the neighbor fed them and informed the family about a program called food stamps. With WIC and school lunch programs, Thornberry and her family were able to survive, and now she sees those very same programs are under assault.
It is inconceivable to me that Congress can so casually and in many ways maliciously write off these programs as wasteful and out of control. Why is it that the most vulnerable in our population are seemingly blamed and punished for circumstances far beyond their control?
Several DC leaders, including Mayor Vincent Gray, were arrested during a budget cut protest outside the Capitol on Monday. Dressed in business attire, Gray and his Council members sat down in the street outside a Senate office building. The police soon arrived, cuffed their hands with plastic loops, and loaded them into police wagons to cheers from the crowd, according to the AP. Gray and six Council members were among forty-one people arrested in total.
The group was released from jail seven hours later. “We needed to make a statement,” Gray said. He is the second DC mayor to go to jail while advocating for statehood. The district is not considered an autonomous state, and is instead directly overseen by the federal government. Many in DC view this system of governance as taxation without representation, since citizens are expected to pay taxes even though they don’t have representation in the Senate or House. Yet, despite this reality, DC was used as a bargaining chip during the budget negotiations, says Gray.
The city will likely be unable to spend its own tax dollars on abortions for low-income women. It may also be banned from spending city money on needle exchange programs believed vital to curbing the spread of HIV in the district, where the disease is considered an epidemic. Also back: a school voucher program favored by Republicans.…
“If this isn’t taxation without representation, I don’t know what is,” said the mayor before he was arrested.…
"It would be nothing short of disastrous," said Cyndee Clay, executive director of HIPS, an organization that works with sex workers and drug users and is currently exchanging about 8,000 needles a month. "I don't understand why they're doing this to us."
Meanwhile, hundreds of students in Texas’s Keller Independent School District walked five miles to the district’s administration building in protest over $38 million in proposed cuts.
Students at Timber Creek High School in Fort Worth also participated in civil disobedience by gathering in front of their school Monday morning for a peaceful sit-in. Timber Creek’s principal explained the motives behind the protest.
"Getting a ticket or getting suspended for three days is a small price to pay for keeping somebody like Coach Sammons at our school," junior Jordan Hennen said.
Kyle Sammons is one of 17 teachers at Timber Creek who have been told they will be laid off after the school year ends.
Administrators are threatening each student who participated by skipping class with anything from a parent-teacher meeting to a suspension.
In New Hampshire, a rally will be held today to protest the drastic cuts proposed in the state’s budget, in addition to the repeal of collective bargaining, the proposed Right to Work legislation and pension changes protesters say will be harmful for the state. The planned demonstration follows the NH House of Representatives approval of a $10.2 billion budget that includes cuts to substance abuse programs, services for mental health and the elderly, education, programs for the poor and vulnerable and changes to bargaining rights for public workers.
Hampton resident Gary Patton describes the right to collectively bargain as a basic American right. "It's not something that should be awarded or given," says Patton. "It's something that is much a right as freedom of speech. When that is threatened I become very concerned."
While twenty-eight members of Congress fast to oppose the federal budget cuts, local lawmakers in New York have also joined the anti-austerity fever sweeping the country. Today, representatives plan to gather in order to protest the spending cuts approved in Friday night’s eleventh-hour budget deal. Some of the programs at risk of losing funding include community development grants for low- and moderate-income families, the Workforce Investment Act (which provides job training) and Head Start, the program that offers free childcare.
When New York lawmakers rushed to finalize the state budget on time, they ultimately slashed New York City school aid by hundreds of millions ($271 million to be exact), though Mayor Bloomberg’s administration says the cuts may end up being much deeper.
In order to prepare for the inevitable backlash from teachers’ unions and furious parents, security was tightened at the Capitol, complete with an increased presence of “taser-toting state troopers.”
On Saturday, thousands of city resident came out to support workers’ rights in Time Square. The rally, organized by the New York City Central Labor Council, was in response to Governor Cuomo’s radical budget cuts. The state’s austerity plan could result in as many as 75,000 public-sector jobs being cut.
In Phoenix, protesters gathered to oppose Arizona’s cuts to education and healthcare. The Arizona Children’s Action Alliance and the Arizona Parent Teacher Association believe the state budget is being balanced at the expense of society’s most vulnerable. In order to balance Arizona’s budget, 138,000 people will be denied state medical coverage, and three state universities will double their tuitions, pricing many students out of an education. When compared with other states, Arizona’s funding for education was already subpar, but following this year’s $150 million cut, the state is sure to secure a bottom rung.
Teachers, students, and education advocates also rallied to protest Nevada’s education cuts. Governor Brian Sandoval proposed cuts to K-12 education that are described as “by far the largest in modern history” by the economics research firm Applied Analysis. Sandoval has proposed a whopping 20 percent cuts to education, which might include closing entire campuses, restricting access for Nevada’s undereducated citizenry and laying off staff. What immediately erupted following the announced budget was one of the largest demonstrations in Carson City’s history.
As the Las Vegas Sun points out, two-thirds of the sixty-three legislators have earned four-year degrees. Additionally, Nevada’s 13.6 percent unemployment rate is well above the national average of 8.8 percent. Lawmakers sabotage citizens with education cuts while failing to invest adequately in jobs programs. Underfunding and a lack of opportunity literally give the underprivileged nowhere to go, while the ruling elite, who enjoy careers that are the fruit of university educations, catalyze the majority’s destruction. Of course, if things get out of hand, there’s always the option of tasering the miffed masses.
Earlier in the week, I reported on a new movement of citizens who are fasting in order to protest the Congressional budget cuts. The group includes New York Times foodie Mark Bittman, prominent progressive evangelical leader Jim Wallis, David Beckmann, the president of Bread for the World, and members of MoveOn.org and the SEIU.
Now, Congressional representatives have joined the ranks of anti-austerity activists, including US Representative Jan Schakowsky, who has announced she too will be fasting to protesting the draconian budget cuts. Schakowsky will be taking the place of Representative Barbara Lee, who had been fasting since Thursday (drinking “water only,” according to an aide,) and Keith Ellison announced he would also go without food in protest.
Other representatives participating include Emanuel Cleaver (D-MO), Rosa DeLauro (D-OH), Marcy Kaptur (D-OH) and Jim McGovern (D-MA). In total, twenty-eight members of Congress (all Democrats) will be going without food. Each representative has agreed to fast for at least a day, and thus far the “fasting schedule” appears to be set up like a relay where each person fills the slot of the fasting representative who came before.
Of course, these representatives don’t imagine their, in some cases, day-long hunger strikes come anywhere close to accurately replicating the strife felt by America’s working poor. Rather, members of Congress want to draw attention to the cruelty of the proposed cuts, which Schakowsky describes as “draconian, reckless and meanspirited.”
The entire fasting movement has now grown to 30,000 participants, according to Wallis, ranging from Christian groups like World Vision and Opportunity International to secular groups such as Women Thrive Worldwide and the ONE campaign. For Wallis, who is currently in his eleventh day of the fast, the outpouring of support from both sides of the political spectrum, and now Congressional representatives, has been enormously heartening. He shares some inspiring messages of solidarity.
[A] doctor friend, calling with concerns about my health, said, “Well, I walked into church today and our youth group announced a 30-hour fast for the poor and a moral budget, and said they were inspired by your fast.” Also, a Jewish activist joining our water fast told me he was re-reading the biblical story of Esther, who called the people to a public fast to change the king’s mind. He spoke about the emotions he felt when he imagined his 2-year-old daughter having the hunger pangs he was now experiencing. Low-income workers from my hometown of Detroit, Michigan came to one of our Congressional events to thank us for fasting, and to say they were joining us.
Nationwide, local figures have also joined the fast, including Bronx leader Heidi Hynes, who says to describe the impact cuts have on people in her community would be impossible, and adds that the community center she runs will likely have to terminate half its services over the next year. “It would be unconscionable under any circumstances to abdicate our civic responsibility to maintain a social safety net for those most in need,” says Hynes.
In St. Louis, an area food bank’s staff is also fasting. The forty-six staff members will adopt a similar relay strategy to take turns going without food until April 24. The group is joining a national campaign launched by Feeding America, a nonprofit organization that consists of 200 food banks and food rescue organizations.
Vicki Escarra, president and CEO of Feeding America, says the organization provides for more than 37 million people who come to its food pantries, soup kitchens and emergency shelters every year, and the group struggles to keep up with the 46 percent increase in food assistance it’s seen since 2006. “We have enormous help from our corporate partners and individual donors, but charity alone cannot provide enough food to ensure that everyone who needs help gets three square meals a day—federal nutrition programs must be safeguarded from cuts,” says Escarra.
To Bill Shore, the executive director and founder of Share Our Strength, a group also participating in the fast, this movement is about using the microcosm act of a hunger strike to draw attention to the pandemic of poverty which harms the most vulnerable members of our society.
“Fasting is a personal decision, but the real power of a fast is that it brings urgency to an issue that is often overlooked,” said Shore. “Whether individuals choose to fast or to spread the word to friends and colleagues or contact elected officials, we can stand together to say we can do better for America’s children.”
Following a remarkable display of civil disobedience, seventeen protesters were arrested Thursday outside Democratic Governor Chris Gregoire’s office. In the footage below, you can see the troopers physically carry one of the activists out of the gallery.
About 400 citizens were in the building, and the overall protest was reportedly orderly and civil, but these arrests highlight the growing desperation in the anti-cut movements, and in the population at large.
As Glenda Faatoafe, a home care provider protesting healthcare cuts puts it, austerity measures are truly a matter of life and death. “They are killing our clients,” says Faatoafe, “I have a client that has to be turned every hour. He’s going to die. Do you want that on your conscience? Apparently, [lawmakers] do.”
House lawmakers will vote this week on Washington’s version of austerity, a $4.4 billion slashing frenzy for the 2011–13 budget cycle.
These are not the first, nor are they likely to be the last, protesters willing to go to jail in order to oppose the dramatic cuts disseminating from nationwide Capitols. Thirty-three demonstrators were arrested outside Gov. Andrew Cuomo’s office last month, and were charged with “disorderly conduct” for refusing to move away from the stairway in front of Cuomo’s office.
In the now legendary and overwhelmingly peaceful Wisconsin protests, authorities did still arrest nine demonstrators, some of whom the police claim were trying to charge into the state Assembly.
Internationally, this kind of brave display of civil disobedience is more prevalent. The risk of imprisonment wasn’t enough to stop over 10,000 people in Hong Kong from taking to the streets to oppose their government’s cruel treatment of the poor. In that protest, 113 activists went to jail, and in the UK, 200 people of the more than 250,000 people occupying London’s streets were arrested.
For these people—this poor majority—going to jail is literally their last line of recourse. As Chris Hedges stated outside the White House while protesting the Afghanistan war, this course of action is “all we have left at this point…. The normal mechanisms by which democratic participation are rendered possible in this country have been closed shut, and if we don’t do this, we die. This is what’s left of hope in this country.” In that nonviolent protest, Chris Hedges, Daniel Ellsberg and more than a hundred antiwar activists were arrested.
It’s clear that the working poor are no longer willing to pay for the mistakes of the privileged elite. The Washington State Labor Council released the following statement about Friday’s event: "Washington's working families are tired of being blamed and punished for the damage done by Wall Street banks and corporations.” The group is asking citizens to demand their lawmakers "put people first."
With the shutdown of the US government nearing, budget protests continue across the country. Four hundred people came to rally in Olympia to oppose state service cuts and to demand an end to state tax exemptions for things like plastic surgery, non-organic fertilizers and shoppers from out of state. To do anything else, the protesters say, would be to side with corporations instead of the people.
And speaking of unscrupulous corporate practices, US Uncut sent me a new flyer the group has been circulating to drive home the problem of tax dodging, particularly the evading practices of major corporations like GE, Bank of America, Verizon and Citigroup. US Uncut says this uncollected tax revenue could have gone toward things like job creation, early childhood programs, training for teachers and after-school programs.
Thousands of people converged on Texas’s Capitol yesterday to protest statewide cuts. In Texas, the hot-button issue of the moment is funding for public schools. Since the House budget failed to raise taxes, schools are now nearly $8 billion short of what state law requires (Medicaid is also underfunded by more than $4 billion). Some of the protesters included Catholic bishops from across the state who delivered the message that even though the state is short in revenue, “protecting human life is the most sacred responsibility lawmakers have.”
A group of Vassar and SUNY students travelled to the State Capitol in Albany yesterday to protest Gov. Andrew Cuomo’s proposed budget cuts to education and healthcare. The plan calls for a $1.2 billion reduction in state aid to local school districts and a $2.8 billion cut in Medicaid.
The protesters filled the Capitol and loudly chanted “Tax the rich, not the poor!” Though Vassar is not directly affected by the budget cuts, the students came out in solidarity for students who will suffer under the brunt of austerity. For example, SUNY lost $289 million from its operating budget, in addition to a prior loss of $1.4 billion in state aid accumulated over the past four years.
“When we were there we really realized that as Vassar kids we were not being affected by the budget cuts, but at the same time we came out of solidarity for other students” said Nicholas Korody ’13, one of the trip’s main organizers. “While the cuts don’t directly affect our lives, they affect society, and we belong to that society.”
Governor Scott’s decision to cut $170 million from the Agency for Persons with Disabilities brought out hundreds of protesters in St. Petersburg yesterday. Scott has also proposed $2 billion in tax breaks for—surprise—corporations and property owners.
Meanwhile, a majority of Americans prefer cutting defense spending to reduce the deficit rather than stealing retirees’ funds or axing health programs. Another poll conducted by 60 Minutes and Vanity Fair shows that 61 percent of Americans want taxes for the wealthy increased as a first step to addressing the deficit. The next most popular strategy is cutting defense spending.
Major networks like CNN are adhering to the tradition of false equivalency where the “fringe players” (those opposing all cuts to the poor and those demanding a complete shutdown of the government in lieu of more cuts) are presented as having equal power in Washington. That simply isn’t true. While Congress is implementing deep, radical cuts to the budget—Democrats have already agreed to $10 billion in “reductions” in addition to having “identified” about $13 billion more—no one is seriously talking about cutting defense or taxing the wealthy, despite the fact that a majority of Americans see that as a priority.
It isn’t just the actions of tax-dodging corporations like Bank of America and Verizon that have infuriated activists. Blackwater, the private mercenary firm that recently changed its name to Xe Services, is also being accused of owing millions in back taxes.
Camden County Manager Randell Woodruff alleges the company owes around $2.9 million, including penalties and interest. Yet, the United States government permits multibillion-dollar companies to play by a different set of rules, while average Americans are asked to sacrifice their pensions and social services.
While Erik Prince gallivants around the planet, his pockets stuffed with untaxed revenue, educators and union members marched in the streets of Philadelphia yesterday to protest the state education budget that contains a 54 percent cut to public higher education spending.
Students like Azeem Hill approach the issue of education cuts, which oftentimes lead to tuition hikes, less myopically than some political leaders. “Youth violence is one of the reactions to educational deprivation,” Hill said. “The more we send to jail, the more crime we can expect down the line.”
In Florida, citizens joined a national day of union-led rallies honoring the anniversary of Martin Luther King Jr.’s assassination by protesting Governor Rick Scott’s appearance at an economic forum. Florida’s rally was one part of more than 1,000 groups holding nationwide protests as part of the “We Are One” demonstrations. WR1 emphasizes that King was assassinated in Memphis, Tennessee, in 1968 while standing in solidarity with sanitation workers who were demanding their dream: the right to collectively bargain for a “voice at work and a better life.”
The WR1 chapter in Michigan attracted more than 500 supporters in downtown Muskegon. Participants carried signs that read “Stand Up For Workers Rights” and “Unions also are We the People.” Meanwhile, more than 700 anti-union bills, many of them similar to laws in Wisconsin and Ohio, have been introduced in nearly every state in the country. Quite literally, labor is under attack, according to this protester in Detroit, where hundreds of union members rallied downtown yesterday.
"The pay cuts, the tax on pensions, it's just too much," said Horace Stallings, a grounds worker at Wayne State University and an AFSCME member who marched along with other members down Woodward.
"We can't take it. It's anti-labor to the core."
In New York City, more than 1,000 people, mostly local union members, rallied against budget cuts at City Hall. As Pat Gibbons from Communications Workers of America Local 1101 put it, “We want our fair share because we do the work.”
For the past week, I’ve been documenting the plethora of nonviolent protests breaking out across the country in opposition to the government’s proposed radical budget cuts. In another typically excellent article, Chris Hedges recently declared that the resistance he’s been calling for has finally begun. The powerful elite got too greedy and took too much from average Americans, who are now fighting back.
Hedges announced he will be joining protesters in Union Square for a planned tax weekend protest in front of Bank of America.
“The political process no longer works,” Kevin Zeese, the director of Prosperity Agenda and one of the organizers of the April 15 event, told me. “The economy is controlled by a handful of economic elites. The necessities of most Americans are no longer being met. The only way to change this is to shift the power to a culture of resistance. This will be the first in a series of events we will organize to help give people control of their economic and political life.”
Hedges implores the one in six workers in this country who does not have a job and the “6 million people who have lost their homes to repossessions” to join the protest. And this isn’t the only event of its kind in the works. Resistance cells have been springing up across the country—some planned, some seemingly spontaneous acts of desperation from citizens at their breaking points.
Albany is braced for a “Wisconsin-style” takeover of the Capitol building. The “People Power” rally includes union members representing state university professors, public school teachers and human services group, who say the state budget will cripple classroom programs, health services and low-income New Yorkers.
Video footage from the budget cut protests in New Hampshire, which organizers claim was the largest gathering of people on State House grounds in twenty-five years, can be viewed here and below.
A similar gathering, though this time protesters actually occupied the Capitol, occurred in Mississippi.
Meanwhile, students in Illinois are organizing to oppose the House of Representative’s recent actions cutting federally funded Pell Grants by 15 percent in 2011. The “Pell Yes!” campaign is designed to heighten awareness of the issue and “help students take a stand.”
In the following video, a UK Uncut organizer gives activists advice on how to form a day of civil disobedience.
In all of these cases of resistance, the participants heed the advice from Hedges, who writes that citizens don’t need leaders, directives from above, or formal organizations.
We don’t need to waste our time appealing to the Democratic Party or writing letters to the editor. We don’t need more diatribes on the Internet. We need to physically get into the public square and create a mass movement.
That physical action of leaving the computer at home and occupying the bank, street or Capitol is beginning to happen.
Proposed budget cuts have spurred widespread national resistance in the form of protests, and in some cases, hunger strikes. Yesterday, several leaders of progressive organizations, including executives of MoveOn.org, SEIU, the Center for Community Change and ColorOfChange.org, announced that they too will be joining the group of 6,000 participants in a fast to oppose austerity.
In Olympia, rallies and protests scheduled for this weekend are expected to attract thousands of anti-cut union members, students and community organizers. The attendees argue lawmakers should focus on closing corporate tax loopholes, not cutting social services. Among the state’s proposed austerity measures: $15 million in cuts to nursing homes, axing the State Arts Commission, and slashing higher education funds.
Penn State’s Abington campus joined up with Temple University students in a rally to oppose Gov. Tom Corbett’s radical funding cuts for state-supported universities. Corbett has proposed cutting university funding in half, which according to Temple University means yanking $90 million from its budget. Put another way, if this downfall was made up solely by a tuition hike, each in-state student would pay an extra $5,000.
In New Hampshire, thousands of protesters chanted outside the State House on Thursday in opposition to their state’s budget that cuts deeply into social programs and strips unions of their collective bargaining rights. The House reduced spending by a whopping $742 million, while the GOP cut the tobacco tax and changed the taxation of small business profits, a move that could actually strip $100 million from the state over the next two years.
Texans held a daylong vigil outside the state Capitol yesterday in response to the proposed massive budget cuts to healthcare and education that are being called “historic.” The House budget includes a 10 percent reduction in funding for doctors and hospitals that treat children covered by Medicaid, but providers say the budget cuts actually amount to a 30 percent loss since the state will lose billions in federal matching funds.
For a party so ostensibly concerned with death panels and the sanctity of life, the GOP-dominated house shows a shocking lack of concern for the children whose lives depend on Medicaid funding.
“Each day, we see another piece of her die,” [Teresa] Little said, standing by her granddaughter, who sat in a wheelchair. “I was literally sickened when I heard about the proposed health care cuts. We won’t have any health care options left. On behalf of the millions of Texas children on Medicaid, I implore you to please leave our Medicaid alone.”
“Medicaid has meant a lot to our family and taken care of our son,” said Michael Ayala, who traveled from Corpus Christi with his wife. “If they start cutting these programs, it will put a huge hole in our pocket.”
The president and CEO of Texas Hospital Association, Dan Stultz, says the budget cuts will permanently maim rural hospitals, and in order for facilities to remain open, they’ll likely have to stop services that are not as profitable, including ambulances and prenatal care. Stultz stresses that lawmakers are cutting prenatal care for tens of thousands of poor women under this bill.
Author Nicholas Shaxson (Treasure Islands) does not disguise how he feels about the corporate tax haven system. “It is a hugely regressive force,” he says, adding that it takes money and income away from “ordinary people and [gives] it to the wealthiest members of society.”
By some estimates, the United States loses $100 billion every year to foreign tax havens, though Shaxson emphasizes that most people still don’t really grasp the enormity of the problem. When they hear the term “tax havens,” many people envision a handful of billionaires sunning themselves on a remote beach somewhere, martinis in hands. The real problem is actually much larger and closer to home.
There now exists an entire parallel network of business conducted by huge corporations that actually mirrors the behavior of international crime organizations. Over half the world trade is now routed through tax havens. “You have this zone where you have big corporations and criminals rubbing shoulders with each other,” says Shaxson. This system has a double effect, he explains. First, it creates incentives to break the law at a corporate level, but it is also “going to provide huge political cover for the criminals themselves when you get the corporations protecting the tax havens and protecting secrecy.”
And this isn’t just happening on sandy beaches, he explains. “The biggest tax havens are big, rich countries, particularly the United States, the United Kingdom, Switzerland—of course, the Cayman Islands is very big too—but also countries like Ireland and Luxembourg, Luxembourg is absolutely huge. Very few people talk about it when they’re thinking about tax havenry.”
General Electric, which paid no federal income taxes in 2010, even though it raked in $14.2 billion in profits (and another $3.2 billion in tax benefits), is a huge fan of aggressively moving profits offshore to Luxembourg, and also Bermuda and Singapore.
Many people might not realize that the United States itself is a tax haven. Tax havens are basically playgrounds in which the rich and well connected can do whatever they want, and those playgrounds can exist anywhere. “There are all sorts of things that the United States offers; particularly, there are tax exemptions, tax loopholes, that attract a lot of money to the United States,” says Shaxson. “Someone from Latin America can put their money in the US and earn income there tax-free.” The amount of dirty money attracted into the United States has been estimated at $3 trillion.
Several US territories are now engaged in a race to the bottom to see who can provide the most tax loopholes and lowest tax rates to rich people and corporations in order to drum up business and revenue for badly indebted states. Most promise a cloak of secrecy, which is really what big corporations love. They want to know they have the right to operate however they please without meddlesome regulators breathing down their necks. Wyoming, Nevada and Delaware are the leaders in this area, according to Shaxson.
For example, Nevada and Wyoming have no corporate income tax (Delaware charges no income tax on corporations not operating within the state). Zero. If you’re a corporation in Nevada or Wyoming, and an out-of-state corporation looking to do business in Delaware, you get to enjoy all the state-provided services (police protection, public roads to transport your merchandise and employees, etc.) but you don’t have to contribute a penny to the society housing your business.
Tax havens also played a major role in the economic crisis, Shaxson explains. The root of the subprime scandal was Wall Street’s ability to skirt regulations, and corporations were able to do this by partly operating overseas in London (the UK is itself a huge haven) that allowed them to grow offshore at a rapid pace. Meanwhile, the race to chip away at regulations wasn’t only occurring between havens (US and UK) but also between states. The competition resulted in a complete gutting of the regulatory system, and the collapse soon followed.
All the while, corporations bullied and threatened politicians and the public into supporting their dangerous behavior. “You have so often heard ‘Don’t tax us too much. Don’t regulate us too much or we’re going to go off to Switzerland,’” says Shaxson. “This is this kind of competitive threat, and politicians very often give in to these kinds of threats…. This is a competitive race to the bottom with financial deregulation has been a major, major factor in the financial crisis that erupted around 2007, and it’s affected countries all around the world.”
Some of the countries the tax haven scams have damaged are already the most vulnerable societies. In Treasure Islands, Shaxson explains that for every dollar of aid the world spends in developing countries, ten dollars leaves again by the back door.
He’s referencing research done by Global Financial Integrity, a nonprofit research and advocacy organization located in Washington, DC. GFI found that in 2008 the illicit financial flow leaving developing countries reached $1.2 trillion. The donations in foreign aid from all wealthy countries, combined, are $100 billion. This means that the illegal flow of capital from impoverished countries (in which tax havens are a huge factor,) outnumbers the aid coming into these areas by ten to one.
To Shaxson, the tax haven system is about so much more than the specific figures of how much revenue is being lost, though I would argue during a time when poor people are being asked to sacrifice their already meager means, it is also a crucial point. Politicians, including President Obama, have offered only empty rhetoric so far on the issue of tax havens, and while they dally, the two-tier system of taxation, in which poor people pay while lavishly wealthy corporations run off with billions in untaxed profits, continues.
“It is about the degradation of financial regulation,” he says. “It is about the ability of elite, and particularly financial elite, to escape their financial responsibilities to society, and to continue to play this game of heaping the risks on the shoulders of taxpayers, and taking all the rewards for themselves.”