Monday Morning Links

Miscellaneous material to start your week.

- Mike Konczal discusses the distribution of U.S. tax breaks and incentives, and finds that measures normally presented as offering breaks for everybody in fact serve mostly as giveaways to the wealthy:

(T)he government is very responsive to the interests of the top 20 to 40 percent of Americans, and so far it has been very difficult to approach scaling back the tax expenditures in deductions and exclusions. Again, since these benefits scale with income, these tax expenditures disproportionately benefit those up the income scale.  Obama’s signature proposal for raising taxes right now is limiting the value of these itemized deductions and expenditures for couples making more than $250,000 a year to just 28 percent.

This, then, is the fight in American politics. Democrats want to expand the tax break state for the poor and cut it for the rich. Republicans want to keep it for the rich, or possibly use it to lower tax rates on the rich, but they’re uncomfortable with the part of the tax break state that benefits the poor. Although shrouded in arcane tax terminology, this is one of the most important battles over who will benefit from our economic progress, and how.

- Meanwhile, Andrew Goodall writes that reining in offshore tax avoidance will require both better laws (reflecting a commitment by governments around the globe to eliminating loopholes) and more ethical corporate behaviour:

Vanessa Houlder of the Financial Times has pointed out: "Governments are complicit in the problems they are condemning. It is their tax systems that have created incentives for businesses to behave in this way."

Law journalist Edward Fennell wrote in The Times: "Recent tub-thumping by politicians over the alleged tax avoidance by the likes of Google and Amazon is creating a cacophony of vituperation. It may seem a neat way to claw back a few votes, but whether it actually addresses the underlying problems is less clear." 

He quoted Miles Dean, of Milestone International Tax Partners, as saying that companies are using the tax system in the way intended, and that the OECD model convention – on which most double taxation agreements are based – is designed to facilitate international trade by "allowing multinationals to trade internationally without necessarily creating a taxable presence in each country".

Pascal Saint-Amans told the OECD forum that big business was not to blame. "What we have seen is that the elimination of double taxation [by means of bilateral double tax agreements] may have [resulted in] double non-taxation, which is not politically or economically acceptable. You have some players who are not exposed to international transactions being taxed at the statutory rate." He added: "It's legal. If you don't like the outcome you need to change the law."

I am not sure he's right – business must take a share of the responsibility. But the priority now must be to fix the system, and international agreement is essential.

- Steven Shrybman weighs in on Judge Mosley's finding that the Cons' voter database was used to commit widespread election fraud in 2011. But the Cons have moved on from claiming vindication, to complaining that they're enveloped in a cloud of dishonesty caused by their own party's efforts to cover up the identities of those responsible.

- Mike de Souza reports on the Cons' petulant response to his earlier stories on how omnibus budgets were used to eliminate environmental assessments for the vast majority of tar sands development - as DFO scientists were prevented from discussing the story in retaliation.

- Finally, Tim Harper writes that the scandals surrounding the Senate have been caused by patronage enablers as well as by individual senators. Michael Harris explores how the Cons have used BS tactics in trying to hide from their responsibility for Clusterduff.  Joanna Smith documents a two-party culture of entitlement, with Con and Lib bagmen alike asserting that voters are somehow better served if unaccountable partisan hacks can use their cushy sinecures to win votes for their party. And Ralph Surette rightly notes that the only answer to abuses by a narrow privileged class is broader public participation.