Opinion

David Cay Johnston

Meltdown redux

David Cay Johnston
Nov 15, 2011 15:30 UTC

The author is a Reuters columnist. The opinions expressed are his own.

KANSAS CITY, Mo. –  The U.S. politician-businessman that Congress put in charge of determining the reasons for the 2008 financial crisis has a sobering message for us: “It’s going to happen again.”

Phil Angelides, the real estate developer and former California state treasurer who chaired the Financial Crisis Inquiry Commission, said on Friday that “all across the marketplace the warning signs were there” of a coming disaster but the mechanisms and political will to stop it were not.

He and I both spoke at a University of Missouri-Kansas City Law School symposium on the financial crisis and the commission set up to examine it.

Angelides warned of a recurring economic nightmare unless Congress and the next president start paying attention to the facts and stop listening to the people who caused, profited from or failed to detect the crisis.

While Wall Street and laissez faire Republicans have attacked the commission’s final report — all 22 footnoted chapters of it — Angelides boasted that not one fact had been proven wrong.

A history of audit failures

David Cay Johnston
Nov 11, 2011 20:07 UTC
The author is a Reuters columnist. The opinions expressed are his own.

The admission by Olympus Corp that it falsified financial reports for more than a decade should not shock anyone. The shock is that, for years, auditors failed to detect such massive fraud.

The failures of auditors to uncover cooked books, which run the gamut from Adelphia to Waste Management Inc, are a cancer on the accounting industry.

The failures go back years. How about Al Dunlap’s manufactured numbers at Sunbeam in 1998? Or teenage con man Barry Minkow’s ZZZZ Best, which turned out to be a Ponzi scheme and collapsed in 1987? Or Equity Funding, with its computer program to fabricate life insurance policies, in 1973? Or the National Student Marketing “pooling of interests” fraud in 1970, which gave birth to the Financial Accounting Standards Board? Or the 1938 McKesson & Robbins scandal, which gave us the first American audit standards? Or Ivar Kreuger’s 20 percent dividends Ponzi scheme in 1932?

You’re paying taxes, so why aren’t energy companies?

David Cay Johnston
Nov 8, 2011 17:42 UTC

By David Cay Johnston

The views expressed are his own.

In a competitive market, economists argue endlessly about who bears the burden of corporate income tax. Is it owners, who get a smaller net return? Or workers, who make less? Or suppliers, who get lower prices? Or customers, who pay higher prices?

In one sector of the U.S. economy, however, the answer is clear-cut. Corporate-owned utilities (mostly electric and natural gas) and pipeline partnerships, all of them legal monopolies, pass their income tax burdens on to customers.

Now a study, released last week, provides powerful new evidence that these two industries convert corporate income taxes from a burden to a benefit.

A gift, from NY to Abu Dhabi

David Cay Johnston
Nov 1, 2011 16:37 UTC

The author is a Reuters columnist. The opinions expressed are his own.

How does being taxed to give money to the oil-rich kingdom of Abu Dhabi and its hereditary ruler strike you?

The cost, if you live in New York State, comes to about $1.4 billion, or roughly $190 per household, for an economic development deal with a privately held company called GlobalFoundries to build a microchip plant near Albany.

As you ponder this forced transfer from you to the chip-making giant, which is controlled by Abu Dhabi‘s ruler Sheikh Khalifa bin Zayed Al Nahyan, keep in mind that Abu Dhabi says its citizens enjoy the world’s third-highest per capita income, a third higher than Americans’.

Underpaid women and their men

David Cay Johnston
Oct 26, 2011 18:09 UTC

New data on U.S. incomes, poverty, pensions and philanthropy all show a common economic reality — women are still getting shortchanged. Do men care?

Men’s median total income in 2010 was $1.54 for each dollar women received, my analysis of new U.S. Census data shows. The median — half make more, half less — was $32,137 a year for men, $20,831 for women.

Ignoring investment and other income, at the median men were paid $1.29 to the dollar earned by women in 2010. Men made $47,715 a year, women $36,931, a difference of $207 per week.

Beyond the 1 percent

David Cay Johnston
Oct 25, 2011 15:42 UTC

By David Cay Johnston
The author is a Reuters columnist. The opinions expressed are his own.

The U.S. tax debate tends to focus on the top 1 percent — their share of income taxes and their tax rates. Anti-tax groups encourage this focus, now embraced by the Occupy demonstrators on Wall Street and across America.

Problem is, the top 1 percent is a very misleading measure of who pays federal income taxes. It mixes doctors and billionaires, masking the taxes paid by the middle class and the affluent.

First look at US pay data, it’s awful

David Cay Johnston
Oct 19, 2011 21:15 UTC

Anyone who wants to understand the enduring nature of Occupy Wall Street and similar protests across the country need only look at the first official data on 2010 paychecks, which the U.S. government posted on the Internet on Wednesday.

The figures from payroll taxes reported to the Social Security Administration on jobs and pay are, in a word, awful.

These are important and powerful figures. Maybe the reason the government does not announce their release — and so far I am the only journalist who writes about them each year — is the data show how the United States smolders while Washington fiddles.

Tax repatriation

David Cay Johnston
Oct 19, 2011 16:00 UTC

By David Cay Johnston
The author is a Reuters columnist. The opinions expressed are his own.

The practice of favoring big corporations seems likely to take a costly leap forward soon, if Congress passes an $80 billion tax holiday for a handful of U.S. multinational corporations with untaxed profits overseas.

Sponsors of legislation to grant the holiday, which is gaining support in Congress, say it would encourage these companies to repatriate their profits, giving an infusion of cash to the sluggish U.S. economy that will create jobs.

Pipeline profiteering

David Cay Johnston
Oct 17, 2011 18:14 UTC

By David Cay Johnston
The opinions expressed are his own.

Last year a fourth of the nation’s oil pipelines earned excessive profits, at up to seven times the rates allowed these regulated monopolies, according to an explosive analysis prepared by a former general counsel for the U.S. Federal Energy Regulatory Commission.

R. Gordon Gooch, the former counsel, alleges in his Oct. 3 study, for instance, that Sunoco’s Mid-Valley Pipeline, which carries crude oil from Texas to Michigan, earned a 55 percent return on assets. That is seven times its authorized profit margin, based on a calculation derived from an accounting report the company filed with FERC.

Three other regulated monopoly pipelines earned more than 40 percent on their assets, while another three earned more than 30 percent, an examination of their FERC filings by Reuters shows.

Decoding the lies on tax policy

David Cay Johnston
Oct 11, 2011 14:15 UTC

David Cay Johnston explains the twisted tax logic currently being used by politicians:

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