September, 25 2014, 02:30pm EDT
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Statement in Response to the Resignation of Attorney General Eric Holder
WASHINGTON
Statement by Michelle Surka, Program Associate at the U.S. Public Interest Research Group, on the resignation of Eric H. Holder Jr. from his position as Attorney General
"Attorney General Holder's tenure at the Department of Justice saw regular billion-dollar settlement agreements with corporations accused of wrongdoing. During this time, the Department also became a subject of controversy because most of these deals - unlike those negotiated at some other agencies like the EPA - allowed corporations to write off settlement payments as tax deductions, shifting much of the cost back onto ordinary taxpayers.
"Holder's Justice Department typically failed to specify that settlement deals could not be treated as ordinary business expenses, leaving the door open for the companies to take tax windfalls from payments that thereby became weaker deterrents against future misdeeds.
"Attorney General Holder is leaving the Justice Department with tens of billions of dollars' worth of corporate settlements under his belt, but unfortunately he does not leave behind much of a legacy of transparency regarding those settlements. Beyond the large dollar amounts announced in the Department's press releases, it has often been difficult to determine the actual value of these settlements.
"Earlier in Holder's tenure, the Justice Department almost never specified whether settlement payments that resolved allegations of wrongdoing could be treated by companies as ordinary tax deductible business expenses. In 2012, however, the Department of Justice's agreement with BP was a watershed because it both held BP accountable for its actions in the Deepwater Horizon disaster, and also included language that denied the corporation any tax deductions from the settlement. The high-profile settlement with JP Morgan also specifically forbid $2 billion of the payment from becoming a tax deduction.
"But this was not a legacy that Holder's Justice Department followed through on. The more recent mortgage-related settlements with Wall Street banks failed to include such safeguards. Last month's $17 billion Bank of America settlement even specifically greenlighted such tax deductions, allowing the bank to claim at least $4 billion in write-offs. Unfortunately, ordinary taxpayers will end up picking up the tab for each dollar lost to these deductions, in the form of program cuts, higher taxes, or greater national debt.
"As Attorney General Holder leaves his position and a new Attorney General is appointed, the Justice Department should not only continue to negotiate tough settlements with corporations accused of misdeeds, but should also be clear about protecting taxpayers from footing the bill."
U.S. PIRG has been watchdogging the tax implications of out-of-court settlements. You can read U.S. PIRG's report on the topic here: "Subsidizing Bad Behavior: How Corporate Legal Settlements for Harming the Public Become Lucrative Tax Write-Offs."
U.S. PIRG has also created a fact sheet on Wall Street settlement tax deductions.
U.S. PIRG, the federation of state Public Interest Research Groups (PIRGs), stands up to powerful special interests on behalf of the American public, working to win concrete results for our health and our well-being. With a strong network of researchers, advocates, organizers and students in state capitols across the country, we take on the special interests on issues, such as product safety,political corruption, prescription drugs and voting rights,where these interests stand in the way of reform and progress.
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"Our proposal for a common minimum tax on billionaires is now on the map. G20 finance ministers have started to engage with it—and there is no going back," said progressive economist Gabriel Zucman.
Jul 26, 2024
Despite pushback from the United States delegation, finance ministers at a meeting of the G20 countries in Rio de Janeiro on Thursday agreed on the need to develop a global taxation system in which the richest in the world are taxed at a higher rate—potentially unlocking hundreds of billions of dollars annually to help close the international wealth gap.
Ahead of the G20 Summit scheduled for November, which Brazilian President Luiz Inácio Lula da Silva's government will host, the finance officials met this week to discuss economic issues and ultimately agreed to start a "dialogue on fair and progressive taxation, including of ultra-high-net-worth individuals."
The Lula government pushed for a proposal by progressive economist Gabriel Zucman, who serves as a G20 adviser and is a professor of economics at University of California, Berkeley.
Zucman's proposal calls for a minimum 2% tax on the fortunes of the world's roughly 3,000 wealthiest billionaires, which could raise approximately $250 billion globally per year.
"With full respect to tax sovereignty, we will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed," the ministers wrote in a declaration that was viewed by Politico.
"Finally, the richest people are being told they can't game the tax system or avoid paying their fair share. Governments have for too long been complicit in helping the ultra-rich pay little or zero tax."
The agreement to discuss higher taxes for the rich was reached despite objections from Germany and the U.S., whose treasury secretary, Janet Yellen, said that "tax policy is very difficult to coordinate globally."
"We don't see a need or really think it's desirable to try to negotiate a global agreement on that," Yellen said at a press conference before the ministers met Thursday evening. "We think that all countries should make sure that their taxation systems are fair and progressive."
Although the agreement only states that countries will discuss the need for the wealthy to pay their fair share to help fight poverty and fund public education and other services, the global anti-poverty group Oxfam International said the meeting represented "serious global progress."
"For the first time in history, the world's largest economies have agreed to cooperate to tax the ultra-rich," said Susana Ruiz, tax policy lead for Oxfam. "Finally, the richest people are being told they can't game the tax system or avoid paying their fair share. Governments have for too long been complicit in helping the ultra-rich pay little or zero tax. Massive fortunes afford the world's ultra-rich outsized influence and power, which they wield to shield, stash, and supersize their wealth, undercutting democracy and widening inequality."
An Oxfam study released ahead of this week's meetingfound that the richest 1% of people in the world increased their fortunes by $42 trillion over the past decade, while taxation fell to "historically" low rates.
Ruiz called on G20 heads of state to "go further than their finance ministers" at the G20 Summit in November "and back concrete coordination: agreeing on a new global standard that taxes the ultra-rich at a rate high enough to close the gap between them and the rest of us."
"Brazil has kickstarted a truly global approach to tax the ultra-rich. But the work is just beginning and international cooperation is crucial," said Ruiz, adding that the task of ensuring the wealthiest people in the world are taxed fairly must not be left up to the Organization of Economic Cooperation and Development (OECD)—"the club of mostly rich countries."
Zucman expressed hope that the agreement between the G20 finance ministers marked a "historic" moment, and called it "an important step in the right direction."
"Our proposal for a common minimum tax on billionaires is now on the map. G20 finance ministers have started to engage with it—and there is no going back," said Zucman. "In its declaration, the G20 finance ministers commit to important preliminary steps. They need to do more and commit to a coordinated minimum tax on the super-rich. We know that it is practically doable—we know the solutions exist. And I'm confident, because there is overwhelming popular demand everywhere to get there."
"The status quo, in which the biggest winners from globalization are allowed to enjoy the lowest tax rates, is simply not sustainable," said Zucman.
The findings released this week by Oxfam highlighted polling that "consistently" found people across the world support raising taxes on the richest individuals.
"Eighty percent of Indians, 85% of Brazilians and 69% of people polled across 34 countries in Africa support increasing taxes on the rich," said the group. "Nearly three-quarters of millionaires polled in G20 countries support higher taxes on wealth, and over half think extreme wealth is a 'threat to democracy.'"
The Independent Commission for the Reform of International Corporate Taxation (ICRICT) applauded the agreement and called on the G20 to "go further in [the] fight to tax the rich."
"To take this forward, G20 should support work on this at the Framework Convention on International Tax Cooperation currently being negotiated at the United Nations," said Jayati Ghosh, co-chair of the ICRICT.
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Guterres' remarks came as part of a "call to action" on extreme heat at a press conference in New York, after record-setting world temperatures earlier in the week and a series of deadly heatwaves across the world this year.
Guterres, who has long been outspoken on the need for climate action, called extreme heat one of the "symptoms" of a "disease" that is the "addiction" to fossil fuels.
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Guterres has long been outspoken on the issue of fossil fuels. At the COP28 U.N. climate change summit in Dubai last year, he spoke forcefully about the need for phasing them out and meeting the 1.5°C target set in the Paris agreement.
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Leaders across the board must wake up and step up their #ClimateAction.
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They must #ActNow as though our future depends on it – because it does.
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Under Conservative leadership, the U.K. joined the U.S., Germany, and other Israel allies in condemning the ICC prosecutor's application for arrest warrants against the top Israeli officials for alleged war crimes in Gaza, including "starvation of civilians as a method of warfare" and "extermination."
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As The Financial Timesreported, U.K. Prime Minister Keir Starmer "had until Friday to decide whether to make legal arguments to support questions raised by the previous Conservative government over the ICC's jurisdiction to issue warrants against Netanyahu and his defense minister."
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Humanitarians applauded the government's decision. Rohan Talbot, director of advocacy and campaigns at Medical Aid for Palestinians, called Tory opposition to the proposed arrest warrants "a disgraceful attempt to delay justice."
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