Five Ways Deregulation Is Ripping America Apart

commondreams.org

(1) The tax loss from one scheming businessman could have paid the salaries of 30,000 nurses

The lack of regulation in the financial industry allowed hedge fund manager John Paulson to conspire with Goldman Sachs in a plan to create packages of risky subprime mortgages and then short-sell (bet against) the sure-to-fail financial instruments. The ploy paid him $3.7 billion. Deregulation in the tax code allowed him to call his income "carried interest," which is taxed at a 15% rate. More deregulation allowed him to defer his profits indefinitely.

The lost taxes of $1.3 billion (35% of $3.7 billion) could have paid the salaries of 30,000 LPNs, 10 nurses for every county in the United States. Instead, one clever businessman took it all.

I'd also like to mention that most of those homes now sit empty. There are plenty of families that can afford what they are valued at now but are denied because those homes are being held until prices come back up to where they were before the bubble burst.

(2) The 10 richest Americans made enough money last year to feed every hungry person on earth for a year

The richest 10 Americans increased their wealth by over $50 billion in one year. That's enough, according to 2008 estimates by the Food and Agriculture Organization and the UN's World Food Program, to feed the 870 million people in the world who are lacking sufficient food.

But should anyone be blamed for this imbalance? Didn't the rich people EARN their money through hard work and innovation? No, they didn't. 60 percent of the income for the Forbes 400 came from capital gains. A lot more of it came from other forms of deregulatory subterfuge. CEOs have used carried interest, performance-related pay, stock options, and deferred compensation to make off with extra money that is only available to the beneficiaries of diminishing government.

Now before anyone starts flailing arms and screaming Socialism... no one is asking that that money be surrendered to feed the poor of the world but, how about jobs for those hungry people? No, no silly! The kind of jobs that don't exploit people and pay them slave wages. How about paying people living wages? How about not participating in Colonialism? You'd still be rich and people would be able to take care of themselves.

(3) Avoided taxes could pay off the deficit -- or pay for 20 million jobs

The backlash against government regulation has led to tax abuses that cost us almost a trillion dollars a year.

Corporations doubled their profits to $1.9 trillion in less than ten years, but since 2008 they've reduced their tax payments from a twenty-year average of 22% to just 10%. That's a dropoff of over $225 billion.

Next, the Tax Justice Network estimated that up to $32 trillion is hidden offshore, untaxed. With Americans making up 40% of the world's Ultra High Net Worth Individuals, and with a historical stock market return of 6%, $750 billion of income is lost to the U.S. every year, resulting in a tax loss of about $260 billion.

Finally, the IRS estimates that 17 percent of taxes owed were not paid, leaving an underpayment of $450 billion.

Add it up, and it's almost the size of the U.S. deficit. All because of lax or non-existing regulations that allow wealthy individuals and corporations to avoid their tax responsibilities.

But, but, but when 'job creators' pay less taxes they create jobs! What the hell happened with that? Let's employ some logic here, just for a minute. Virtually no manufacturer is going to create any more jobs here ever again no matter how good the economy is or how little taxes they pay. Why? Because they can pay people pennies to do it in China et al.

Oh yeah, did you notice the drop began in 2008? Screw you, Obama! That's another reason I'm voting for Johnson.

(4) An unregulated trading industry costs us another $350 billion a year in taxes

For a $10.00 purchase of children's clothing, mothers pay up to a dollar in sales tax.

For a $10.00 purchase of financial instruments, investors refuse to pay one cent.

We had a financial transaction tax from 1914 to 1966, but it was repealed in an early surge of Congressional deregulation. Now, it is estimated that $350 billion could be generated every year, enough for almost ten million teachers or nurses or firefighters or medical technicians.

Come on Wall Street, how about a little thank-you to the country that enabled you to get richer than great great grandchildren can spend?

(5) Redistribution is destroying entrepreneurship in America

Largely because of financial deregulation, our country's income and wealth keep moving to the top while the middle class shrinks. Entrepreneurship is going down with it.

Studies reveal that relatively few business startups are initiated by the very wealthy. Only 3 percent of the CEOs, upper management, and financial professionals were entrepreneurs in 2005, even though they made up about 60 percent of the richest .1% of Americans. Instead, they invest over 90% of their assets in a combination of low-risk investments (bonds and cash), the stock market, and real estate.

Entrepreneurs come from risk-takers in the middle class. But with financial deregulation causing a redistribution toward the top, the money has been taken out of the hands of middle-class innovators, resulting in a 53% decrease in the number of entrepreneurs per capita since 1977.

We're at the mercy of the deregulators. But they have no mercy. The once-muscular entrepreneurial fiber of our country is being ripped apart, stretched to the limit, thinning in the middle until it eventually snaps in two.

Common sense regulation on Big Business (no buying out of it) would be the best thing that could happen to Small Business in America.

Shame isn't it. Considering that the 1% control congress and the corporations. They aren't going to start regulating the cheating and tax loopholes that keep them rich. Self intrest will prevail. The middle class will disappear. There will be rich overlords and the poor slaves. Just like in the middle ages. Seeing the paralell here.

So welcome the new lords and ladies of the New world order of America. Long may you rein. Who do you think our new king for life will be? I vote for sorous. Oh wait you don't vote for kings.

reply to post by lonegurkha

Shame isn't it. Considering that the 1% control congress and the corporations. They aren't going to start regulating the cheating and tax loopholes that keep them rich. Self intrest will prevail. The middle class will disappear. There will be rich overlords and the poor slaves. Just like in the middle ages. Seeing the paralell here.

So welcome the new lords and ladies of the New world order of America. Long may you rein. Who do you think our new king for life will be? I vote for sorous. Oh wait you don't vote for kings.

Well put!!!!! I suggest those who believe in the two party system google the term "Feudalism"! Won't take long to realize that the exact same style of ruling has once again reared it's ugly head in the history of man! The only difference between the two parties is the agenda they use to keep us divided. I am sure they make toasts to each other watching us fight over them like dogs in the streets fighting over a scrap of meat........

I don't see how any of the examples you listed ( Never mind if they were sourced correctly) are actually "TEARING" America apart. The title seems a bit sensational to me.

Never ever ever advocate for MORE regulations. Unless of-course you want to drive any remaining jobs overseas.

Wages should never be taxed to being with. We have a right to the fruits of our labor.

NEVER suggest that taxes should be higher. The LAST thing we want to do is give MORE money to our incompetent failure of a government.

A great start would be for the government to cut spending, which they will never do because they are insane.

And there should be no bailouts. These mega corporations have no fear of failure. They can risk as much as they want knowing the government will come to their rescue. If the big banks were not bailed out by both Bush and Obama, you would see a change in their practices overnight.

reply to post by gladtobehere


Jobs did not go overseas because of regulation, they went overseas because suddenly it became okay to do business with er in Nations that used to be aptly named Human Rights violators, in other words jobs went overseas mostly because of deregulation.

reply to post by Kali74


That is partly true - but I think there are more reasons than that. The company is usually most concerned with generating the most revenue for the lowest cost. That is the driver for much of the outsourcing. It can be cheaper labor, it can be moving closer to the main market, it can be a bunch of different things in combination.

This article explains pretty well the reasons companies outsource overseas.. Outsourcing for Dummies (Including the Willfully Ignorant)

The article does paint outsourcing in a positive light. However, I do also think that outsourcing has, overall, hurt the US instead of making it stronger as jobs lost seem to have not been replaced in many cases.

reply to post by Frogs


That's because once that floodgate is open there is no getting the water back. No manufacturer in their right mind, unless highly, highly principled... is going to pay more to produce than they have to. There will never again be mass manufacturing in this country under the status quo.

I understand the math, but that "scheming businessman" was probably just following the letter of the law. Remember that everything Hitler did was legal. Maybe after a few decades or hundred years people will start putting the blame where it belongs: the law itself. Why does Goldman sachs spend more money on lobbyists than they do on taxes? Because those taxes, believe it or not, help maintain the monopolies. GS has sitting agents all over the treasury and the IRS is no different. It's called corporate welfare for a reason, corporations couldn't get bailed out if there were no tax code. Why won't goldman sachs support ron paul and other libertarians if deregulation is so great for them?

Maybe in this context regulation means something different but I dont see any example where there is a lack of regulation.

I see plenty of examples where partial-deregulation has permitted an oligarchical class to benefit from legislation put into place by bought and paid for dynasty politicians.

The myth of deregulation is used to feed this corporatocracy we've been living under for over 70 years now.

Just taking the first example we had loans not made to high-risk borrowers for a very long time until regulation came in and demanded high-risk loans be made and as a consolation the government promised to insure them.

That's partial deregulation of the worst kind. Basically demanding bad business practices take place while promising to shoulder all ill-affects.

There is no unregulated industry save the black market and even that is clandestinely partially regulated with CIA drug enterprises.

Deregulation is like class-warfare. Never existed (in our lifetimes) yet marched out for political points whenever needed.

True deregulation is a free market. A dodo bird in America for a century or more now.