Jersey to take ball, go home

If the UK won't play nice.  It seems that the island of Jersey is growing weary of political attacks coming from the UK that label Jersey as an unrepentant tax haven. Tax analysts reports [pdf]:

"Jersey Chief Minister Philip Bailhache, in a June 26 interview with the U.K. newspaper The Guardian, said relations between Jersey and the U.K. have been "strained" over the past several years as their interests have diverged, and that Jersey should be ready to escape the "thrall of Whitehall" if necessary."

I am not sure how independence will stop the UK from using Jersey and its fellow channel islands as a shield to deflect attention away from the notorious city of London, prime tax haven territory.  But in the meantime, the plan is to spend money on marketing to work on Jersey's image:

 "Jersey plans to open an office in London with the specific goal of improving the island's tax image among the British public. (Jersey has already opened a similar office, together with Guernsey, in Brussels.) Noting Jersey's many tax information exchange agreements with EU member states and other countries, Bailhache stressed that Jersey does not market itself as a tax haven or a tax avoidance facilitator."

Jersey's $5.1 billion GDP is built on financial services.  From the US CIA World Factbook, 

Jersey's economy is based on international financial services, agriculture, and tourism. In 2005 the finance sector accounted for about 50% of the island's output. ... Tourism accounts for one-quarter of GDP. ... Light taxes and death duties make the island a popular tax haven. Living standards come close to those of the UK.

That Jersey is a tax haven can't seriously be doubted, I don't think.   Of course the same is true for the UK.  Jersey's chief minister says if UK taxpayers do use Jersey to shelter their income, that it is a governance failure on the part of the UK:

"despite the island's efforts to downplay its use for tax avoidance, ... the real issue is why the U.K.'s and other jurisdictions' tax laws are written in such a way that they allow legal avoidance, which is then condemned."

That's true, but unfortunately for Jersey, it's convenient for them to serve as a focal point for anti-austerity and anti-tax dodger anger in the UK. It would be inconvenient to the UK to target the city of London similarly. 


Update: Tax Analysts sent me a link to an ungated pdf, link replaced above.

The private sector really is doing ok, or, why workers collaborate in their own self-destruction

If by private sector you mean US corporations, which are making more profit than ever:

From Business Insider.  But not if by private sector you mean wage earners.  As we know median wages have plunged in the US; this article shows that in addition wages as a percentage of GDP are at an all-time low:

The author comments that "[o]ne reason companies are so profitable is that they're paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" are other companies' revenue."


The juxtaposition thus paints a zero-sum picture: that as wages fall, corporate profits rise.  We've seen other charts that show corporations and managers claiming most or all productivity gains over the last several decades at least.

Richard Murphy responds: "the reason why we have a crisis is that the wealthiest and companies got too rich whilst most got left behind so the wealthiest and companies lent the rest of us their excess wealth through debt arrangements which people could not repay."

Now consider Yves Smith's post today in response to sociologist Claude Fischer, who asks "Why Don't Americans Take Vacations?" and answers with rugged individualism and something about the American way.  Nonsense, says Yves, the right answer is, because of a systemic and steady diet of anti-labor propaganda.  Yves points us to a related article of interest by Mark Ames from 2006, "We're not going on a summer holiday," which says:

vacation time has been slowly disappearing for American workers ever since the Reagan Revolution, which ushered in a violent shift in corporate culture away from the paternalistic post-New Deal model towards the current stock-price-is-God model. According to Harvard economist Juliet Schor, in the 30 years before Reagan's presidency American workers were getting more and more vacation time; however, in the 1980s, that trend suddenly reversed. By the time Reagan left office, Americans got three and a half fewer days off per year, on average.

Ames says at the same time corporate managers have vastly increased their leisure time and pursuits.  A glance at the FT's How to Spend It can certainly confirm the market for vacation by the ultra-rich.  For Ames the most amazing aspect is that

the designated victims in this drama - America's workers - are such willing collaborators in their own existential demise.

...according to a New York Times article, British workers get more than 50% more paid holiday per year than Americans, while the French and Italians get almost twice what the Americans get. The average American's response is neither admiration nor envy, but rather a kind of sick pride in their own wretchedness, combined with righteous contempt for their European worker counterparts, whom most Americans see as morally degenerate precisely because they have more leisure time, more job security, health benefits and other advantages. 

We have seen a related version of this in the public outrage ginned up over the "generous" health and pension packages of public sector employees that has allowed conservative governors to eviscerate worker's benefits and their rights in the process--c.f. Wisconsin.   A constant stream of propaganda tells us that public sector workers must be stripped of their many unearned and undeserved benefits.  There is no equally powerful alternative stream of propaganda demanding better health and pension benefits for all workers.   There is no alternative stream painting a picture of life as an American worker when wages stabilise to global median levels.  The result seems to perfectly illustrate Ames' willing collaboration in self-destruction.

Transfer pricing: Neither Science nor Law

TJN quotes François Vincent who says transfer pricing is systematically imprecise, not only not an exact science but not a science at all, and moreover, due to its systemic treatment through competent authority decision-making, constitutes "taxation by negotiation rather than taxation by legislation."  The latter is the main argument of my article, How Nations Share, forthcoming (draft here).  Vincent calls the outcome of taxation by negotiation "a secret body of law" but I maintain it is not really "law," at all.   By amalgamating the confidential experiences of the competent authorities of its member countries into "guidelines' and statements on best practices, the OECD functions as an institutional filter between the transfer pricing regime as it actually plays out and public perception about what the law should or does require.  That's no way to make law, but it is remarkably effective at influencing practice.  


Hobbes described "law" as having four core components: it must have certain institutional properties to create binding legal obligations: it must have a known author with recognized lawmaking authority; it must have authentic interpretation; and it must be made known to those subject to it.  (L xxvi. 8-23, 174-81).  The global transfer pricing regime lacks all four components.  That should be very troubling, as I argue in my paper, because it hides a very important legal regime--maybe even the most important tax law regime--from public view.  I am glad to see that people like Mr. Vincent, who know the regime inside and out, are beginning to acknowledge this as a big problem for global tax governance.

Choosing Austerity

Menzie Chinn says the austerity being imposed on Greece, Spain etc is self-defeating, while in the US the states are voluntarily choosing austerity, to their own GDP detriment, in order to reduce the state for political reasons.  More:

...the approach of muddling through, dealing on an ad hoc basis with each crisis with aid conditioned on fiscal consolidation, is not working. It's not working partly because in the demand determined models we teach in intermediate macro work cutting government spending and raising taxes tends to depress output, as highlighted in this post. But when the countries affected are closely linked by trade, then the total effect of the contractionary policies conducted in individual countries results in even greater contraction.

Had these economies been on floating exchange rates, the contractionary effects might have been mitigated by depreciated currencies. But membership in the eurozone meant that shock absorber was gone. That is why the prospect of an expansionary fiscal contraction was never very plausible in the case of the GIIPS. But as long as the rest of the eurozone countries were unwilling to provide substantially more financing or transfers to the GIIPS, these governments had little alternative to fiscal consolidation. That is the fate of many, many countries that have faced IMF stabilization packages in earlier decades.

In contrast, the U.S. has currency flexibility so it can save itself, but the states chose austerity, and Chinn shows this has led to lower GDP growth.  Chinn says:

In contrast to Europe, the choice to slash spending and taxes was unforced. In the absence of tax cuts, spending could have been maintained at higher levels. Furthermore, the Federal government had the resources to further support the state and local governments. 

...Truly, much of the distress at the state and local level is essentially a self-inflicted wound, that allows a push for smaller government to proceed under the guise of austerity. 

Charts and more analysis at the link.

Why don't politicians support public institutions?

Catherine Rampell talks about the vicious cycle that occurs when budget cuts lead to understaffing and inefficiency, which leads to declined trust government institutions, which leads to further cuts. Writing  in response to Tyler Cowan's post on the loss of trust in government, she argues that trying to cut government jobs or government spending will erode public trust further, using the Post Office as a case in point:

Because it is still waiting for Congressional approval to make many of these changes, the Postal Service is cutting costs by reducing staff levels and hours at existing facilities. Reducing costs in the way that’s most politically expedient rather than most efficient and economically sensible means that service will most likely get worse, customers will lose confidence in the agency, market share will fall further and the agency will be forced to make more drastic and possibly inefficient cuts.

Rampell could have looked to the IRS for a similar and I think very troublesome example of this problem.  It seems so perverse to me that politicians can decry and claim to crack down on tax evasion,  while using the next breath to argue that IRS funding should be cut in the name of efficiency in governance.  Tax compliance is a big project and it requires expertise and resources.  Cut those and I think you should expect compliance to fall accordingly.  Less compliance leads to less revenues being collected leads to even more pressure on the budget.   That's a very vicious cycle and moreover it is the fundamental source of all the budget pressure for all the other institutions of government.  But why do politicians let this happen?  Isn't it in their interest to have strong institutions creating virtuous cycles?


From Cowan's post:

 State and local governments are controlled by politicians and, indirectly, by voters. And for better or worse, those voters have lost faith in the social returns of these jobs and our ability to afford them. The voters have responded by looking to cut expenses, and they’ve chosen state and local government employment as a target.

From this we may well extrapolate to the conclusion that politicians undermine government because even though stronger government would be better for politicians as a whole, each individual politician's re-election hinges on satisfying a public that has lost trust in government.

Cowan says all would be well if we could just wait for prices to rise again:

The slow cure for this problem is to allow asset prices, along with perceived wealth and trust, to return to or exceed the previous levels over time. Americans would then spend and invest more money, bolstering both aggregate demand and supply, and in both the private and public sectors. But the process would be cumbersome, partly because trust is more easily destroyed than restored.  

This sounds sort of ridiculous to me as a strategy.  Probably because I am not an economist but I do read children's books and I have heard this story before.

Cowan goes on to talk about the various fixes available to governments, but concludes that basic trust in government needs to be restored before any big policies can be implemented.  I think it's certainly true that lack of trust in government is spurring NGO interest in transparency in tax matters, c.f. the EITI and CBCR movements, UK Uncut's suit against HMRC, Oxfam's suit against the SEC, etc.  I don't see rising prices doing much for the core concerns there.

Why do we subsidize oil & gas?

Easy: because politicians can't get re-elected when fuel prices seem high.  

OECD praises itself via G20 re: progress on tax evasion

The OECD says the G20 reports that "steady progress is being made towards tackling tax evasion more effectively."

I have called the G20 a syndicator of OECD tax views, since the G20 lacks an independent infrastructure in which to form its own positions on tax policy, so when the OECD points to the G20 pointing to success on an OECD initiative, I interpret that as the OECD praising itself.

In this case the praise is out of step with the general sense I have about where things are with tax evasion today.  I don't think there is much evidence at all that the OECD is making progress.  The evidence seems to suggest rather that the best that can be said is that some counties that were viewed as extremely tax-evasion friendly a few years ago may be less so today.  But on the other hand other countries seem to be picking up the slack.  That doesn't seem like progress, that seems like something about deck chairs and a big luxury liner.  Certainly there are no fewer dollars in tax havens, a point that seems to work squarely against any notion of progress against tax evasion.

The OECD says "The Global Forum reports that more than 800 cross-border exchange of information agreements have now been signed," and 35 countries have signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.  What can one possibly make of the attempt to use signed agreements as evidence of progress?  It is a very formalistic way of thinking about things.  "The law exists" is not going to convince anyone that people are in fact following the law, whatever the law may be.  Signing an agreement is not exchanging information.  And I am not even sure that exchanging information is evidence of making progress on tax evasion.  The right information has to be exchanged.  It has to be exchanged in a usable way.  And the information recipient has to have the will and the means to use the information for that purpose.   The commentary I read from non-OECD sources suggests that information is not being exchanged regularly and sufficiently to suggest progress is being made.  Nor do other tools in the anti-evasion toolkit seem to come to the rescue: the OECD itself seems a bit stymied on arm's length transfer pricing, another of its prized weapons against tax evasion.

It is the case that only the competent authorities would know for sure what information they are exchanging under tax treaties and whether they are able to use this information to combat tax evasion.  The competent authorities do not publish any kind of information on this particular data point.  Maybe steady progress is being made.  It would be good to have evidence that it was.  But no amount of prying seems to be opening the door to public access.  We could know so much more about whether progress was being made if we could get some transparency on what the competent authorities do.  But there is a lot of resistance to this form of transparency.

Class Mobility in the U.S.

Bruce Bartlett sees some movement in the top and bottom quintiles and notes:

It is indisputable that the distribution of income in the United States has become more unequal. However, many economists say they believe that turnover among both the poor and the rich substantially mitigates its impact. If everyone remained in the same income bracket year after year, the negative effects of inequality would be far worse.

Update: UK Uncut v HMRC

TJN has a video from the UK Uncut movement on their lawsuit against HMRC regarding the Goldman Sachs tax giveaway, which is making progress as the Guardian reports:

In a ruling on Wednesday Justice Peregrine Simon said the matter was "plainly in the public interest" and that any judicial review of the deal which saw Goldman Sachs let off a £10m interest bill, would be separate to an anticipated National Audit Office investigation on maladministration and bad practice.

Higher Taxes Correlate with Prosperity

Taxes are one of three pillars of prosperity.   From Marginal Revolution:

In a recent book Besley and Persson 2011 argue that fiscal capacity is strongly correlated with economic performance across countries (see also here and here). They cite important historical work by Mark Dincecco who has shown that across Europe, between 1650 and 1900, higher taxes were associated with both limited government and economic growth (see here). The following graph is from Dincecco (2011) which contains similar figures for other European countries.

MR eyes this a bit warily, saying the correlation might be due to selection bias and incomplete data:

Modern states did not emerge out of nowhere.  They replaced pre-existing local systems of taxation, patronage, and rent seeking. ... There is plenty of evidence that these local systems imposed large deadweight losses [so] an increase in the measured size of central government need not have been associated with an increase in the total burden of government.  Rather the total deadweight loss of all regulations and taxes could have gone down in the 18^th and 19^th centuries, even as the tax rates  imposed by the central state went up. 

I am not sure but think this means that MR thinks that revenues could have been higher in the local system period than the data suggest?  Then MR adds a note about what caused revenues to increase:

Note: the increase in per capita revenues in England depicted in the figure is largely driven by higher rates of taxation (notably the excise) and more effective tax collection and not by Laffer curve effects (although the growth of a market economy during the 18th century did make it easier for the state to collect taxes).

So higher rates and better tax collection led to more revenues to be collected.  The Laffer thesis more or less says that low rates lead to more tax revenues since low rates produce more growth and more growth increases the base to be taxed, while higher taxes drive people out of the market and end up lowering revenues.  Leaving aside the evidence (or lack thereof) for the accuracy of this thesis in practice,  I take it that MR wants us to understand that revenues did not rise as a result of increased growth producing a bigger base and therefore more revenues at the same low rate as before, but rather England raised its tax rates and collected more taxes as a result.  Laffer doesn't seem to have played any role so I'm not sure what the point is of bringing him into this at all.  All in all I am finding MR more than usually confusing the point with this note, but I appreciate that they alerted me to the book.  Better just to read that, I think.

Must Read: Factual Free Market Fairness

This is required reading for anyone interested in markets, governance, and human flourishing.  Dierdre McCloskey never disappoints.  I won't even bother to excerpt because you just have to read the whole thing.

Austerity vs the Social Contract

Yves Smith has a post on how austerity is being used to destroy the social contract:

Greece has been told to reduce health care from its current 10% of GDP to below 6%. Imagine what would happen if the US were told to cut its medical expenditures by over 40% in a one or two year period. And if the IMF boot were put on the US neck, and we were told to get medical spending down to 6% of GDP, we'd need to reduce it by 2/3.

In a Real News Network interview, Rob Johnson of the Roosevelt Institute describes further how the EuroCrisis has become a tool to break the social contract:

More discussion and a lot of commentary at the link.

Corruption, American Style

Last week, Bernie Sanders released "Jamie Dimon is Not Alone," a list of the banks and businesses that were handed almost $4 trillion in bailout money after the 2008 crash, many of whom were current and former Federal Reserve regional bank directors (i.e., the people deciding to whom to give the money).  The one-sentence abstract to Sanders' report:

During the financial crisis, at least 18 former and current directors from Federal Reserve Banks worked in banks and corporations that collectively received over $4 trillion in low-interest loans from the Federal Reserve.

That's chilling.  An image of bankers writing themselves blank checks comes into focus after several years of vague generalizations about where the bailout money went.  Sanders says:

"This report reveals the inherent conflicts of interest that exist at the Federal Reserve.  At a time when small businesses could not get affordable loans to create jobs, the Fed was providing trillions in secret loans to some of the largest banks and corporations in America that were well represented on the boards of the Federal Reserve Banks.  These conflicts must end."

I doubt they will end, no matter how many lists are produced.  Sanders has proposed legislation to ban bank and business executives from serving on Federal Reserve bank boards:

No employee of a bank holding company or other entity regulated by the Board of Governors of the Federal  Reserve System may serve on the board of directors of any Federal reserve bank.  

No employee of the Federal Reserve System or board member of a Federal reserve bank may own any stock or invest in any company that is regulated by the Board of Governors of the Federal Reserve System, with-out exception.’’

But it's the age-old problem of expertise in governance.  If you ban the people who know how the system works, who is left to run the system?  If you let the people who know how to run the system run it, who will oversee with a sufficiently knowledgeable critical eye?

Romney = dressage

What is it with horses?  Every time I teach the intro tax course in the U.S., we all have a good laugh at the sheer volume of horse-specific tax rules, many of which are outright giveaways (like the depreciation schedule...check it out, exciting!*  Of course the best laughs** come from the hobby loss case where Prieto, the orthopedic surgeon with the $300k-losing "horse activity" habit tries to pretend the horse activity is a business and not a means of entertaining his bored wife and kids.  Very few of my students ever think Prieto should get deductions for all the money he spent on horses.  Here's a write up in Equine Chronicle (Never heard of it?  Me neither).  This is all to say that the latest on horses is the increasing attention on the Romneys and their dressage activity.  Never heard of dressage before people started talking about Ann Romney?  Me neither.  It's horse ballet.  It's very expensive.  And it's generating tax deductions, apparently.  Big, big deductions:

The Romneys declared a loss of $77,000 on their 2010 tax returns for the share in the care and feeding of Rafalca, which Mrs. Romney owns with Mr. Ebeling’s wife, Amy, and a family friend, Beth Meyers. 

This blogger reminds us, that is more than the median family made last year.  Yes, it's quite a lot more.

Side note: declared a "loss"?   I don't think so.  I think they took deductions.  But I am not sure under what authorization.  It's not obvious from a quick look at their return, but I am sure some enterprising tax prof out there is already looking into it and will supply us with an answer in due course.

For me the story here is more about the effectiveness of using this dressage + tax break narrative as a rhetorical tool for political purposes.  What are the political implications if people equate Romney with some sissy elite thing like dressage, some sissy thing that costs more than they make in a year?  What if they then equate him with using that sissy elite thing to reduce his taxes by more than they made last year?  I am not sure how powerful a political tool this kind of narrative can be.  It is simple enough to be distilled and tweeted in 140 characters or less, perhaps, but only if you don't have to explain dressage.  Lower taxes = freedom is still shorter and more to the point.  Perhaps it is just more read meat for his opponents while completely off the radar for his supporters.

* If you're not excited by the Tax Code, I just don't know what to think of you.
** Some of these "laughs" may have been produced in order not to cry.

Save Taxes, Burn Books!

In another tax story from Michigan, a brilliant if inadvertent tribute to Ray Bradbury (August 22, 1920 – June 5, 2012), from Cory Doctorow:

The Leo Burnett/Arc Worldwide agency has won a gold prize in the Effie awards for their hoax "Book Burning Party" campaign, which is credited with saving the public library in Troy, MI.  Michigan's extreme austerity measures and collapsing economy had put the library under threat, and the town proposed a 0.7% tax raise to keep it open. The local Tea Party spent a large sum of money opposing the measure on the grounds that all taxes are bad, so the Burnett campaign reframed the issue by creating a hoax campaign to celebrate the library's closure with a Book Burning Party a few days after the vote. 

The outrage generated by this campaign was sufficient to win the day for the library, as Troy's residents made the connection between closing libraries and burning books, focusing their minds on literacy and shared community, rather than taxation. 

Here's a video that tells the story:

Is this the same as putting fake but realistic looking eviction notices on people's houses?  Why or why not?

If You Build It They Will Cry, or The Bridge to Direct Democracy

The Ambassador bridge connects the US to Canada between Windsor and Detroit.  It's a private bridge, so every time you go over it you pay a little to a guy named Manuel ("Matty") Maroun, and if you shop at the duty free, you put a little more in his pocket.  Here is the bridge:

Nothing overly remarkable, and in fact, inadequate to its job as the busiest border crossing between Canada and the U.S.  People wanted a second crossing to be built that would be bigger and more convenient.  But Maroun did not want that.  What happens next is a story of lobbying, deception followed by sleight of hand, and a dubious call for "the people" to decide.  From David Frum:

Shippers have long urged the construction of an entirely new border crossing that could connect U.S. Interstates 75 and 94 directly to Ontario’s Highway 401. On the eve of the 2008 financial crisis, those shippers finally got their way: The new crossing gained approval from the Michigan and Ontario highway departments.

...Plans for the new crossing failed, however, to reckon with two characteristics of the increasingly dysfunctional U.S. political system: Its extreme and intensifying tax aversion — and its vulnerability to manipulation by wealthy entrenched interest groups.

...Maroun has mounted a furious lobbying campaign against the second river crossing. He has gained some unexpected allies, including Americans for Prosperity, the Tea Party group headed by Dick Armey. The Michigan chapter of AFP posted convincing-looking (but fake) eviction notices on homes near the proposed crossing route. The group acknowledged that the tactic “was meant to startle people.” 

Dirty deeds, done dirt cheap!  That's pretty low even for lobbyists.  Well, perhaps not as low as telling people that they didn't need to vote if they had previously signed a petition, or sending people to the wrong place on the wrong date to vote.  But pretty low all the same.   The latter tactic was also apparently produced by Americans for Prevarication Prosperity.  But I digress.

Bridges cost money: In this case, almost $4-billion. The state of Michigan’s share of the cost would have been $550-million, with the balance to come from the province of Ontario and the U.S. and Canadian federal governments. That $550-million sounds like a lot of money, but put it in context: Almost $500-million in traffic crosses the river every day. Yet the Tea Party Republican majority in the Michigan legislature — perhaps influenced by their friends, allies, supporters and donors at Americans for Prosperity — has objected to the cost, and passed a law forbidding the state to spend any money to build the bridge.

On Friday, Michigan governor Rick Snyder (also a Republican) announced a last-minute reprieve: Michigan would borrow its $550-million contribution from the government of Canada, with the money to be repaid from a bridge toll. It’s a creative solution to an embarrassing problem. But it’s also an excruciating demonstration of the global consequences of the special-interest domination of the U.S. Congress and the state legislatures.

So now you have Michigan politicians and pundits reassuring Michigan's voters not to worry, they won't be taxed to pay for the bridge.  Well, not upfront, anyway.  Will the tolls be enough to pay the principal and interest?  Maybe, if the bridge draws enough traffic away from Maroun's empire.  No wonder then that Maroun now wants to put the question to a referendum.  Here's the petition, which is called "The People Should Decide."  Call me a fool, but I thought that is what "the people" did do, by way of their duly elected governors.  The petition reads as follows:

The people should decide whether state government may construct or finance new international bridges or tunnels for motor vehicles.  Consistent with this policy, and to shield the people from unnecessary burdens, the State shall not undertake ownership and development of or use state funds or resources for new international bridge or tunnels for motor vehicles unless first determined to be necessary and appropriate by majority vote of the people.

Just in time for Rousseau's 300th anniversary, the bridge debate brings the direct vs representational democracy issue into focus.  This is not something I have studied, but maybe it is time, because I see this theme a lot and it seems connected to taxation in so many ways.  Over the years many of my students express feelings that their distrust of government might be lessened if only we had "real" democracy, i.e., direct democracy, rather than representative democracy which in their minds is mostly corruption and cronyism and definitely not representative of them.   Rousseau of course did not believe in majority rule but in governing by the general will of the people i.e. via common sense.  Any of my students who have been paying attention will know my reaction to that is negative, since common sense is constructed, and too often in politics that is about money, power, and influence, and not at all about sense, common or otherwise.  That seems to describe the bridge project.  Here's a blog with some interesting commentary on the subject.

Lovers in a dangerous time: JP Morgan & the Senate Banking Committee

The Senate Banking committee's questioning of Jamie Dimon is all for show, as the committee and JP Morgan are intimate.  Service on the committee leads to JP Morgan lobbying jobs and vice versa, and there is a steady stream of payments [qua campaign contributions] from JP Morgan and from Jamie Dimon personally to committee members.  Pro Publica reports on the revolving door:

One current staffer on the Senate banking committee, Dwight Fettig, is a former lobbyist for JP Morgan. In 2009, the bank hired him to work on "financial services regulatory reform." Meanwhile, JP Morgan is stacked thick with former committee staff. 

Naomi Camper – Currently a lobbyist for JP Morgan. Prior to that, from 2001-2004, she was an aide to Senator Johnson. 

Kate Childress –A JP Morgan lobbyist since 2008, she is also a former aide to Chuck Schumer, D-N.Y., who sits on both the Senate Banking and Finance committees. 

Steven Patterson –A JP Morgan lobbyist and formerly a staff director for economic policy for the Banking committee. 

Nate Gatten— A JP Morgan lobbyist based in London who was reportedly called back to Washington recently to help with the company's damage control. He is a former lobbyist for Fannie Mae, and, in the 1990s, was a banking aide to former Senator Robert Bennett, R-Utah, who also sat on the committee. 

P. Michael Nielsen – A lobbyist with a firm run by former Senator Bennett, he has been retained by JP Morgan for help with federal probes, according to Bloomberg. He was also a senior policy adviser to the committee from 2007 to 2010.

And on the campaign contributions:

JP Morgan is the second largest campaign contributor to Johnson, the committee chair, and to the top Republican on the committee, Richard Shelby of Alabama, over the past twenty years, according to a tally from American Banker. 

JP Morgan employees have donated more than $80,000 to Johnson since 1998 and more than $136,000 to Shelby since 1990. 

So far in 2012, Dimon has personally donated to committee members Bob Corker, R-Tenn., and Mark Warner, D-Va. In 2008, he gave $2,000 each to Johnson and Shelby.

Pro Public includes lots of links if you are interested.  All in all, of the 22 committee members, only six have not received any money: two of them are retiring and not collecting campaign funds.  What about those other four?  They are, according to OpenSecrets, Robert Menendez (D-NJ), Pat Toomey (R-PA), Michael Johanns (R-NE) and Jeff Merkley (D-OR).  Perhaps this oversight will soon be corrected.

If you search Jamie Dimon on Open Secrets you'll find that he's generous and bipartisan in his attentions, with over $150,000 in campaign contributions since 2008.  Of course that's minor compared to JP Morgan, which, in a generous and bipartisan spirit as well, gave about $10 million over the same period.  

In case the title of this post escapes you:

Middle class wipe out

40% drop in the median income in the past four years.  It looks like this:

via Slate, who attributes the result to declining wages and incomes, the stock market crash, and the bursting of the housing bubble.  The stock market and housing crash might be considered one-offs (if you're an eternal optimist) but declining wages looks to be structural and endearing in nature, and in fact should worsen because labor is engaged in a global competition, with the result, as we have seen, that productivity gains have not gone to workers:

via politics of equality blog.

What do American workers do

1 in 4 works in trade, transportation & utilities; 1 in 5 works in government, and just a bit fewer make things.


via flowing data, the infographic is by GE and explores the makeup of the American workforce, from 1960 to present.

US pressure on EU tax

Will the EU airline emissions tax prevail, or will it fall under pressure from the US?   Opinio juris points us to this story:

(Reuters) – Senate lawmakers and the Obama administration on Wednesday stiffened their opposition to a European law that targets emissions from commercial jetliners and applied new pressure on Brussels and the United Nations to resolve global concerns. 

...The issue is especially important to the United States, whose airlines have a mature and lucrative transatlantic business. American Airlines, United Airlines and Delta Air Lines are looking to grow international travel.

The tax is described as a fee for permits to fly to and from EU airports.  That's not a tax at all really.  It's a toll charge.  Don't want to pay the toll?  Don't fly to or from Europe.  Why are toll charges for roads, or consumption taxes for that matter, perfectly uncontroversial but toll charges for flying a cardinal sin?  The answer is plainly that the airline industry wants to continue externalizing the costs of pollution on the public and the EU tax makes that harder for them to do, so the answer is to seek help from US government to stop that happening.  I call it a clear breach of the government's fiduciary to duty to the polity at large to help industry accomplish this goal (I've been reading Evan Fox-Decent).

Ku says: "The ECJ has held that the EU tax does not violate international treaties or customary law.  This seems plausible to me, but I wonder if the political pushback the EU is getting will ultimately force it to back off.  I'm betting yes."

I would like to think the EU can resist the pressure, but I fear that Ku is making the correct bet.  US industry lobbyists are very well funded and organized and have proved time and time again their ability to get US lawmakers to exert pressure on other countries to change their laws to suit US business interests.  In the case of India's controversial post-Vodafone tax reform, the lobbyists might not have been successful in preventing passage of the law, but they might have prevailed anyway if the law has little effect in practice as this story suggests.  The game theorists out there can comment on the strategy behind pushing forward with a formal law under the assumption that enforcement will be nil.  Sounds like Dodd-Frank, and it seems like an all-too common strategy for politicians, especially in tax, maybe in other regulatory areas involving lots of complexity and trickery.

One additional aspect of the Reuters story is that Transportation Secretary Ray LaHood is calling the EU an outlier, acting alone and unilaterally, and that the US needs to see "real signs of flexibility from the EU."  No mention of why they should be entitled to hold such expectations, why the EU should not be allowed to govern itself.  But a threat if "real signs of flexibility" are not seen:  "The administration has threatened unspecified action if a compromise is not reached, but LaHood said no decision had been made on possible steps.  He said discussions within the administration, however, are centered on the possibility of the United States filing a formal complaint to the United Nations."

After trying to stop the UN from doing something it doesn't like, the US might like the UN to help it stop the EU from doing something else it doesn't like.  I thought the US wanted out of the UN: it's a threat to freedom, it's neither wise nor neutral, etc.  There's a song for this kind of relationship.