I have another suggestion to incentivize businesses to move their base of operations back here to the good old USA. Give them a chance to cut their tax liability in half. That’s right. You’re hearing me right. I am advocating completely cutting corporate income taxes in half for big business under this plan. Here’s the specifics (and remember, I know that there are very likely huge holes that could be poked in this. I understand that it is not taking many other things into consideration. I offer it for discussion and as a talking point.)

Let’s amend the progressive income tax to a graduated corporate income tax pegged to their investment in the U.S.A. job market. Set up a system with a single tax rate – but adjust the percentage of profit taxed to the percentage of the company’s jobs that are here in the United States.

Under my plan, if your company earned $100,000 in profit and 100% of your jobs are here in the US, you pay taxes on 50% of your income. That’s it. You get to keep half of your money completely tax free. For every percentage of your job equity that is sent overseas, you pay taxes on another .5% of your profits. Thus, if your company earned $100,000 and 50% of your jobs are overseas, you’ll pay taxes on 75% of your income. If 90% of your jobs are overseas, you’ll pay taxes on 95% of your income.

However, it also requires a change in another aspect of the tax code to really drive it home – the part of our tax code that encourages big businesses to keep their profits (and move their profits) overseas. That needs to be addressed – we MUST remove the incentive for companies to move their jobs and keep their profits overseas instead of bringing them home and spending them here.

First, the basic concept that you have to understand is this: multinational companies – companies who do business in foreign markets – are required to pay taxes to that foreign country on the income earned there. They are not required to pay US taxes on those profits AS LONG AS THEY DO NOT BRING THE PROFITS HOME. In other words, as long as those profits are held in a foreign holding company and not attributed to the US company, there is no need to pay US taxes on them. In addition, there are ways to shift US profits to offshore companies and avoid paying US taxes.

Next, let’s take a little side trip to the web site of a company that helps US companies take advantage of all the tax breaks they’re allowed under US tax policies. Here’s a few excerpts:

Foreign Tax Credit Maximizer | Maximize a US taxpayer’s ability to use foreign taxes that the taxpayer’s foreign activities are subject to, as tax credits against the US tax liability.

In other words, if a company pays foreign taxes to a foreign country on earnings in that country, the amount of the tax can be deducted against the amount of tax that they pay in the U.S. Yes – income should be taxed once and only once, but it should be taxed fairly.

Transfer Pricing | Let us assist you with intercompany pricing studies and analysis to support intercompany pricing strategies. We know what various countries’ tax authorities around the world (including the US) will accept as intercompany pricing for goods and services without being subject to punitive costs.
Transfer pricing is one way to shift income earned in the US to companies owned in foreign countries where it is taxed at a lower rate.

Cross Border Transaction Analysis | We can provide tax planning with respect to a US company’s acquisition of a foreign company or a foreign company’s acquisition of a US company to optimize their tax position. Alternatively, we can reorganize a US company’s foreign activities/structure or a foreign company’s US business activities/structure to obtain significant tax savings.

Captive Insurance Company Tax Structuring | Proper planning can help ensure deductibility of premium payments and ensure the most tax efficiency out an offshore captive insurance company.

“Double Dip” Financing Structure/Super Holding Company Structure | Optimize a company’s interest deductions to obtain two deductions (one in the US and one in a foreign jurisdiction) and/or to shift income from a high taxed jurisdiction to a very low taxed jurisdiction to lower worldwide effective tax rate.

Offshore Intangible Holding Company | Companies that own and/or plan on developing various intangible assets for exploitation offshore can use this planning technique to lower their worldwide effective tax rate by “trapping” royalties in low taxed jurisdictions.

Okay? Got that? We are subsidizing companies who take jobs overseas and follow the letter of the law in order to maximize their profits – and in many cases, actually CHEAT the US taxpayers.

Why the hell do we work against our own interests here? Why does government work against the interests of most people in this country in order to benefit a very small slice of the top of the heap? And why, why, why do people BELIEVE that this incredible travesty of a tax code is IN THEIR BEST INTEREST?

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McCain’s announcement that he’s suspending his campaign to go help Congress fix the economy scares the shit out of me, especially coupled with his challenge to Obama to do the same. It’s carefully calculated to make Obama look like a self-serving traitor to the American people if he refuses to do what a ‘responsible’ American does – because we really need McCain, who in his own words ‘doesn’t get the economy’, to go fix the economy. When he’s done fixing the economy, I’m inviting him over to fix my computer.

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Granted, now that the house of cards is collapsing, there are plenty of people eager to point fingers – at the other camp. It’s the Republican policies. It’s the Democratic Congress. It was Bill Clinton’s fault for signing the repeal of the Glass-Steagall Act. It’s the greed of the shysters and predatory lenders. But whenever the discussion comes up on various discussion boards, the one group of people that is always roundly criticized is the homeowners who bought homes based on promises that the housing market was secure, real estate always increases in value, and they’d have no problem refinancing their mortgages in a couple of years.

They should have known better, the traditional wisdom goes. How could they when the people they were supposed to trust – the Federal Reserve, Fannie Mae and Freddie Mac, their banks – were all telling them the same story? How could they when they were watching real estate values soar month after month? When the news AND entertainment media was full of stories about people buying homes and watching them double in value in just a few years? When the saner voices pointing out that this couldn’t continue indefinitely were being drowned out by hecklers – and not just any hecklers, but hecklers who were supposed to KNOW something about this business – calling them pessimists and doomsayers?

Why would anyone believe that the banks would make them a loan if the bank didn’t think they could repay it? These weren’t just loans offered by shady brokers wearing shiny polyester suits and a black hat. The lenders weren’t twirling their mustaches and snickering – at least not obviously. The most dangerous loans on offer were from major banking institutions – who would have believed that they’d be lending money that they never expected to see repaid?

But the fact is that that’s exactly what they were doing. Mortgage brokers knowingly and actively targeted people with marginal credit records, promising them to find them an “affordable” loan. The banks knowingly created loan programs that they knew were unstable and would result in huge numbers of people being unable to meet their payments. They knowingly lowered their standards of creditworthiness – and by that, I mean more than just extending loans to people who were known for not paying their bills.

I mean that they lowered the minimum income and solvency standards for loan qualification. Thirty years ago, my mother taught me that your housing costs should not exceed 25% of gross income and your total long-term debt payments should not be more than 35%. Last year, banks were making loans to people that would bring their total backend debt/income ratio to as much as 68%. That’s flat out insane – unless you’re making so much that 32% of your income is sufficient for all of your expenses besides your rent and loan payments.

And that’s just the start of the changes that drew people into going after mortgages they couldn’t afford in the long term.

Hybrid mortgages with absurdly low introductory rates were touted as a way to get into your new home along with the assurance – not quite a promise, mind you – that after two or five years of making your mortgage payments, when your mortgage payment suddenly jumped by $1000 a month you’d have built up good enough credit to qualify for a fixed-rate mortgage with a lower interest rate. It makes logical sense – five years of on-time mortgage payments equal a higher credit rating equals a lower interest rate. But there was a kicker that they forgot to mention: the fixed introductory rate was already well below the market rate so even with refinancing to a new fixed rate, those payments were going to take a huge jump.

The family home became “your biggest asset”, one to be exploited. Rather than being your security, the family home was presented as an investment that could and should be used to secure other investments.
Okay. Home equity loans have a long history. In principle, it’s not a bad thing. You borrow money from a bank and promise them that if you don’t pay it back, you’ll give them your house so they can sell it and get their money back. Here’s a kicker to the collapsing home mortgage crisis – it’s not those pesky low income first time homeowners (the ones that were supposed to benefit from Fannie and Freddie) who are losing their homes left and right. Over 60% of the homes in default are in default on secondary mortgages, aka refinances, cash-out refis and home equity loans.

The growth of “mortgage backed securities” allowed lenders to make loans to turn a quick buck, making it more attractive to hucksters – and turned the big bankers into the biggest hucksters of all.
It works kinda like this: your friend Sally needs $100. You agree to lend it to her if she’ll pay you back $5 a week for 50 weeks – which means that in the end, she’ll pay you back $250 for the $100 that she borrowed, but she has the money that she needs right now.

You then go find Joe and offer to sell him Sally’s loan payments for $175 – for $175 now, he’ll eventually collect $250. You get your money back and make $75 right now. He makes $75 in the long run. Sally gets the $100 she needs right now. This works just fine as long as Sally makes her loan payments.

Now if YOU were the one who was going to be out $100 (plus your projected profit) if she defaulted on the loan, you’d have made darn sure that she was able to pay you back that $5 a week. Under this system though, you get your money back AND a profit on it BEFORE Sally makes her payments. If she doesn’t make those payments, it doesn’t hurt you because you’ve already got your money – and you can lend it out again to someone else. At this point, it no longer hurts you financially if the person to whom you lend your money can’t pay you back. Under those conditions, it really doesn’t matter if you make risky loans because you’re not risking YOUR money at all.

Because bundling and selling mortgages was such a profitable sideline, all sorts of lenders were paying brokers to bring in loans – and paying them well. As a friend of mine noted last night, we’re talking about predatory lending practices here, folks PRED-A-TORY – do people understand what that means? That means slick-talking hucksters papering poor neighborhoods with flyers telling people about this great opportunity. This means snake-oil real estate agents promising people miracles. This means misrepresentations of government programs and door-knocking campaigns and deceptive language. This means the good old bait-and-switch – bring them in with ads for 0-down miniscule-interest loans, then sell them one that’s out of their reach.

We are all outraged when we hear about some con man bilking a sweet little old lady out of her life savings in some outrageous scheme – but when the oil-slicked con man is the US banking community in collusion with US government, our outrage is turned on the sweet little old lady. She should have known better. She should have known that the valuation of her house couldn’t possibly be that high. She should have ignored all the experts telling her that it was okay – it was better than okay – it was GOOD FOR THE ECONOMY for her to buy and buy and buy.

Banks looked the other way at ‘creative financing’ efforts by brokers and real estate agents. The loopholes and schemes that were created to exploit them were common enough knowledge that you could find out about them with a simple internet search. People were encouraged to borrow their down payments instead of saving for them. They were assisted in falsifying employment records. They were schooled in ways to artificially and temporarily ‘look good on paper’ in order to fulfill minimum requirements. One example: borrow several thousand dollars from a family member and put it in a bank account in your name to pad your assets.

Most of all, though, people believed that a bank would never lend them money if they didn’t believe it would be paid back. They trusted the banks to be looking out after their own interests – and it would obviously be against the banks’ interests to make loans that they didn’t believe would be repaid. And there was their primary sin – they trusted the experts who had already sold out their ethics in return for a quicker buck.

mortgage crisis, finance, predatory lending practices

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You think that stock in a certain company is going to go down in price. You don’t own that stock, but you want to profit from the drop so you put up shares of the stock for sale – even though you don’t own them. When the stock sells, your investment company fills the order by buying the stock at the current market price, and either charges or credits your account with the difference. If the price drops between the time you enter the sell order and the time the company has to fill the order by buying at market price, you make money. If it stays the same, you’re out the fees to the investment company. If the price goes up, you lose money – you have to buy the stocks at the higher price in order to fill the order that you placed to sell at the lower price.

It’s a risky move in most financial climates – except for one thing. When stock prices are dropping like mad, a flood of sell orders on the market will drive the prices further down because of basic supply-demand economics. The most of the stock is available to buy, the less people will be willing to pay to buy it, since there are so many other sellers out there.

In a normal market, buyers will step in when the prices near or breach a support level – a price where a stock has traditionally leveled out or started back up. This is not a normal market, though – major financial institutions are toppling and others all over the world are wobbling. The market is in panic-sell mode, so the buyers aren’t stepping in. And there are buyers out there, trust me. They’re waiting for the fire-sale prices to scoop up as much stock as they can afford in companies that will survive the crisis. These are the times when fortunes are made – not, as most people believe – when the market is on the upswing.

By stepping in to stop short-selling, the SEC is curbing one of the practices that forces prices down artificially. With the order in force, people will only be able to sell shares of stock that they actually already own. This will prevent an oversupply from pushing prices down further and sparking more panic selling which will depress prices further still which will – it’s like holding up a funhouse mirror to a funhouse mirror and watching the distortions warp things further and further from reality.

Right now, the ban covers only stocks in publicly traded financial companies, but the SEC is considering doing the same with other publicly traded stock. It’s going to be interesting to watch how the temporary regulations that are being put in place to shore up the failing economy will play out in the long run. After all, the federal income tax was only supposed to be a temporary emergency measure as well.

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I won’t even talk about the ads for Federal Debt Relief System which charges “subscribers”, already heavily in debt, several hundred dollars a month for “legal services”. Those “legal services” are as shady as the site on which they’re advertised. They consist largely of telling the client to stop communicating immediately with any credit collection agency, and then write to the agency to demand that they cease and desist all collection attempts until they can prove that the creditor incurred a debt with that specific credit collection agency. It’s a sleazy, slimy trick that’s based on a discredited loophole, and it doesn’t work any longer because creditors were onto it.

Even better – oh, let me show you:

See that story about the cancer cure tagged with the flashing BREAKING NEWS arrow? It’s an affiliate ad that links to a sensationalist sales letter (ask me about sales letters – I’m an expert on them) offering a free e-newsletter delivered directly to your mailbox. It’s put out by the Health Sciences Institute of Maryland, a group of alternative health practitioners. Now, let me put in my disclaimer here – I am incredibly open-minded about alternative health theory. I believe in nutritional health, I believe that there are benefits to herbs and to massage and to yoga and to many other things that we don’t understand yet. I also believe that there are those who seriously exploit our credibility and the desperation of those who are seeking a cure for various ailments. What I found on the Health Sciences Institute site was a mission statement that sounds heroic, and links to special reports with names like Drive out toxins (colon cleansing at a special introductory rate of $19.95 – but of course, you need to keep using it so… ), Boost your immunity (a “special report” about ‘immunological defenses’ for $9.95), Goodbye to arthritis (glucosamine and chondroitin with another “special report” for $19.95)..

This “free press for a free people” is no more than a shill for the most reprehensible of affiliate marketing scum – the ones that prey on gullible, uneducated, desperate people to make money. It’s disgusting. And it’s no surprise that they support the right-wing and float the most ridiculous lies of the campaign.

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(We do wonder if the Newsday editors intentionally mis-heard Madsen, and if she meant what we know: that the world is telling us not to get old.)

Our women are 64 to 94 living vibrant lives, when the world is telling you to get old. ..

Oh, no, no, I don’t think she did. I think what she meant was that the world is telling us to ACT old once we reach a certain age. How often have we heard ‘can’t you just act your age’? One of the stock comedic (or maybe that should be tragicomedic) characters in movies and fiction is the mother who is trying to kick it with her kids’ friends. When a guy hits 50 and buys a sporty red Miata and a 23 year old girlfriend, we smile indulgently and joke that he’s going through a second childhood. When a 50 year old woman puts on a bikini and hits the poolside with the cabana boy, we accuse her of trying to stay young. And just try telling your kids that you’ve decided to get a nose piercing and a tattoo – your grandkids will cheer for you. Your kids are more likely to start considering your mental stability.

That is changing a bit, thanks to advertisers recognizing where the deep pockets are, but it was only to be expected that us older folks would be portrayed more admirably when the lion’s share of the market GOT older. I admit to having mixed feelings about the new crop of ads aimed at ‘women of a certain age’. I love that the advertisers have let gramma get out of her rocking chair and take to the sky in a glider. I love that so many advertisers have realized that beauty comes in many shapes, sizes and ages. I love that there are ads showing older men married to older women with whom they are still in love.

What I don’t love is the realization that my chances of taking off in a glider or starting my own vineyard are substantially lower than they are for a man or for a married couple. According to AARP statistics,

There is also a greater risk of poverty in old age for women than for men. Elderly women are nearly twice as likely to be poor as elderly men and the risk of poverty increases as women age. While poverty rates among the elderly are low for married couples, they are significantly higher for unmarried women who are widowed, divorced or never married.

Also, in 2001 when most women in this study were in retirement, the poverty rate was three times higher for African-American women (42 percent) than for white women (14 percent).

The AARP research report states that nearly 2/3rds of white women who are poor in old age were not poor in earlier years; that poverty among older African-American women is more likely to reflect the economic disadvantages of earlier years; that white women are more likely to have income from assets than African-American women and that income from a pension plan plays a greater role in helping African-American women remain solvent than it does in helping white women avoid poverty as they age. For both white and African-American women, marriage lowers the odds of poverty over their entire lifespan.

It does offer some good news for our daughters – and this is part of the reason why women like me have spent lives supporting candidates who support “women’s issues”. According to the report,

Younger women are more likely to have continuous work experience compared to the older generation in this study, most of whom left work when their children were young but returned to work as their children grew older. With a continuous work record, younger women are likely to have higher income from Social Security and pensions.

The recommendations of the authors of the report (Sunhwa Lee and Lois B. Shaw of the Institute for Women’s Policy Research) are that legislators examine the barriers facing older women and employment, and work toward improving the Social Security system and employer provided pensions. I think we need to go deeper than that. I think we need to start younger than that. I want to see practical finances and investment courses being taught to girls from the earliest school years. I want to see as many ads on television featuring young women investing as there are featuring young men investing. I want to see young fashionistas blogging about their financial portfolios and giving tips on picking good investments as easily and readily as they give tips on which scarf to wear with that little black dress. I want more articles in women’s magazines – especially young women’s magazines – about how to build financial security.

We’re talking about different kinds of barriers here, ones that go beyond legislation attacking pink collar ghettos and glass ceilings and pay inequality. I’m talking about a concerted effort to change the way we and our daughters think about saving and making money. I want to see television ads for e*Trade that feature college age girls and young mothers making a trade and buying stock. I want ads for yogurt with two women discussing their IRAs and 401(k)’s poolside. I want, in short, for it to be socially admirable and acceptable for young women to think about finances and money and understand how money makes money as a matter of course. I want my daughters and nieces and grand-daughters to grow up in a world where investment companies and financial institutions talk to them about retirement and estate planning and investment banking just as seriously as they do to their brothers and husbands.

I know that I’m putting the cart before the horse. I realize that women today still earn only 70 cents to every dollar earned by men. If anything, that makes this kind of education more important for young women – even as we work toward pay equity, I want to know that my daughters can make that damn 70 cents work its tail off for them.