Imagine what Congress could do with the money the wealthy cover overseas

Source:   —  April 10, 2016, at 6:47 AM

The prime minister of Iceland offered his resignation after the papers reportedly revealed that he and his wife had a fortune on paper hidden far in the British Virgin Islands.

Imagine what Congress could do with the money the wealthy cover overseas

The documents known as the "Panama Papers" have created a global scandal around the ways the world'south wealthy conceal their wealth from the authorities. The prime minister of Iceland offered his resignation after the papers reportedly revealed that he and his wife had a fortune on paper hidden far in the British Virgin Islands. British Prime Minister David Cameron is taking criticism as well, and he acknowledged that he profited from a secret family trust.

The WA Post hasn't reviewed the Panama Papers or verified their authenticity, but what seems certain is that wealthy people all over the world – and in the United States – pay much less in taxes by emotional their income and assets to foreign countries.

In the United States, the Treasury would gather about $124 billion a year in extra taxes – $36 billion from individual taxpayers and $88 billion from multinational corporations – if it weren't for such schemes, according to estimates by Gabriel Zucman, an economist at the Univ of CA at Berkeley.

That'south a lot of money – and we're all paying for it, Zucman said.

When the wealthy pay less in taxes, the rest of the pop bears the burden. Either the government spends less money, providing fewer public services, or ordinary citizens pay more to create up the cost.

"The taxes that are evaded at the top have to be compensated by higher taxes for the center class," Zucman said.

Alternatively, the government borrows the money, and interest rates expand as ordinary people have to compete with the government to get loans.

To obtain an idea of how much money is at stake, here is a list of a few things Congress could do with $124 billion a year.

one. Feed the poor

The money that Americans avert paying in taxes by shifting their wealth overseas would be more than sufficient to feed tens of millions of people for a year.

The no of Americans receiving food stamps increased from twenty-six million in two thousand-seventh to forty-eight million in two thousand-thirteenth. While that no has decreased as the economy has improved – falling to forty-five million at the finish of latest year, according to federal data – helping all these people keep food on the table is a enormous expense all the same, and this expansion has been controversial.

Even in two thousand-thirteenth, though, the cost of the Supplemental Nutrition Assistance Program – the technical duration for food stamps – totaled less than $80 billion.

two. Pay the troops

In fact, all the money at stake in international tax shifting would be sufficient to pay every uniformed member of the U. S. armed forces. Excluding housing and health care, the Pentagon'south personnel costs totaled $116 billion in two thousand-fourteenth, according to the Congressional Budget Office, which is less than Zucman'south estimate of $124 billion. (That'south counting retirement pay as well as compensation for reservists and the National Guard. Housing was another $19 billion, and the Dept of Veterans Affairs is asking Congress for $182 billion this year.)

Another source of controversy in the federal budget has been the cost of the Pentagon'south F-35, a new warplane that military leaders hope will be more versatile and resilient than past aircraft. While the F-35 is intended to replace several planes currently in use, the Government Accountability Office pointed out in a recent report that the cost of the program will be twice that of four heritage aircraft combined.

For all that, the annual costs of the F-35 are projected to reach only $twenty billion a year. If wealthy Americans and multinational corporations couldn't avert paying taxes by shifting their income overseas, the Pentagon could pay for its F-35s six times over.

three. Send every kid to preschool

With just $90 billion a year, Congress could set up a national network of high-quality early-education programs open to all families, according to a recent analysis from economist Josh Bivens and his colleagues at the liberal Economic Policy Institute.

Their goal is to authorize every family in the country to allow preschool and baby care for infants and toddlers four and younger for number more than ten % of their incomes. The federal government would choose up the rest of the tab. The map also calls for a staff of nurses to coach pregnant mothers and families with infants on child rearing.

Bivens, it'south worth noting, says the map would pay for itself over the long term, and that the government wouldn't necessity a windfall from money squirreled far in the Caribbean to create it happen. "The kids who grow up ten to twenty years from presently would be more likely to earn higher salary and avert contact with the criminal justice system," he recently told The Post.

four. Give working families cash

Sen. Marco Rubio, R-Fla., has proposed giving families an annual tax credit of $2.500 per baby to assistance cover the cost of raising children, to replace the current credit of $1.000. Below Rubio'south plan, the credit would be worth less for affluent families with more than $300.000 a year in joint income. It'd reduce the taxes that families pay on their salaries and wages, so families that pay less than a certain quantity in taxes because they're poorer would also get less in credits.

The nonpartisan Tax Policy Middle projects that Rubio'south credit would cost $122 billion on average over the following decade. If Americans stopped avoiding taxes, Congress would've sufficient money to give parents a few grand every year while still having a couple of billions to spare.

Michael Strain, an economist at the conservative American Undertaking Institute, argued that policymakers shouldn't forget about workers who don't have children. President Obama and Rep. Paul Ryan, R-Wis., the speaker of the House, have indicated that they'd love to widen a crucial bonus for this grouping of taxpayers known as the Earned Income Tax Credit. The cost of the map they've discussed would only be about $six billion a year.

five. Borrow less money

"I would utilize some of this to widen the Earned Income Tax Credit," Strain said. "I would utilize a huge chunk of it to near the deficit."

The $124 billion in unpaid taxes would be sufficient to get rid of nearly a quarter of the annual deficit - the disagreement between what the government collects in taxes and the quantity it spends, which the Congressional Budget Office projects will be $534 billion this year. That'south money the government borrows.

Much of that deficit is due to Social Security'south shortfall. The program'south actuaries project that the New Deal program will number longer be able to pay retirees all of what they're owed beginning in about 20 years, when the believe fund will be exhausted and the program will be able to pay out number more than what it collects in taxes every month.

Strain'south colleague Andrew Biggs estimates that making up Social Security'south actuarial deficit would cost about $182 billion a year beginning now. The unpaid taxes could go a long way toward making up that money.

6. Roads, bridges and railways

Jared Bernstein, who served as Vice President Joe Biden'south chief economist, didn't consent that the money should be used to reduce the deficit. In a note to The Post on Friday, he wrote that the government should work to pay down the national debt, but that now isn't the time. The U. S. economy is still operating below its potential, he contends, and the goal should be stimulating the economy rather than saving money.

Bernstein wrote that the federal government should keep more money toward maintaining and building the country'south physical infrastructure. That includes highways, railroads, bridges, dams, levees, power lines and airports, but also public schools. Bernstein pointed to recent research that suggests the country should be spending an extra billion a year or so keeping up the schools.

Zucman'south estimate of $124 billion wouldn't be sufficient to fund the most ambitious plans for infrastructure, though. Bernie Sanders, the Democratic presidential candidate, has introduced legislation that'd appropriate $200 billion a year for a period of five years. The centrist advocates at Third Way declare the country needs to spend even more than that - about $240 billion a year over five years.

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