Netherlands to share more tax info with the US

From TJN:

U.S. hunts for black money in Europe Financial Times Netherlands 

A few days ago, the Netherlands announced that it joins the FATCA implementation agreement between the US and Germany, France, the UK, Italy and Spain. Under this agreement, foreign banks and other financial institutions do not need to report information directly to the IRS, but they will be obliged by national legislation to report it to the government of their home country, which then exchanges it on reciprocal terms with the US. This reduces the reporting burden for the banks and other institutions and for that reason, the agreement is supported – somewhat grudgingly – by the Dutch Banking Association. See the government press release Netherlands prepared to join U.S. and G5 on FATCA. 

The links take you to articles in Dutch.  Google tries hard to translate but I think we’ll have to take the TJN’s word for it.  This implies that automatic information exchange is in the works between the U.S. and a country it called a tax haven (but quickly took back); here is the implementation agreement.  Of course all we’re doing right now is agreeing to agree:

“the United States, France, Germany, Italy, Spain and the United Kingdom have agreed to explore a common approach to FATCA implementation through domestic reporting and reciprocal automatic exchange and based on existing bilateral tax treaties.”

The market’s need for a strong state

From Richard Murphy:
Fascinating comment in the Guardian this morning:

Willie Walsh, the British Airways chief executive, will launch an excoriating attack on the government on Thursday for the absence of a coherent growth plan, accusing ministers of “warm words and cold action”. 

At the British Chambers of Commerce conference in London, he will say this government and the last Labour administration “produce a growth strategy every week, but none of them up add up to anything”.

…he’s saying he wants the state to have a growth plan. Now that’s an interesting admission.
Second, he says that it’s been a failure of neoliberal  governments not to have one. Another interesting admission.   Third, he’s implicitly saying as a result that without the state taking the lead then the private sector goes nowhere. That’s true. 

Fourth, in that case he admits the state needs the resources to deliver such a plan. That means paying tax is essential. And yet he argues business taxes must be cut. That’s absurd: that makes him guilty of thinking much worse than any government. 

Fifth, he implicitly says that the state has to do the things the market never can universally to make this work. That includes supplying the private sector with educated, housed, healthy workers who can afford to take the risk on working for the private sector because there’s an adequate safety net to let them do so. The state’s failed in that role for too long too.

The real cost of the U.S. health care system

In American if you are not an employee, you will not have health insurance but must seek it out in the private market if you want it.  If you don’t have insurance, you will be billed directly for the costs of any health care you end up using.   Without the (much maligned) Affordable Care Act (aka Obamacare), getting health insurance is optional, so people who are not covered under an employer plan can choose to go without. But when things go badly, those who choose to forego insurance and bear the costs of whatever health care they actually use, do not in fact always bear these costs.   Instead, they can externalize these costs by filing for bankruptcy, throwing the unpaid cost onto health care providers, who in turn pass it on to insurance companies, and from there onto people who do pay for health care coverage.  Allowing people to both under-insure themselves and then discharge health care costs in bankruptcy thus creates a tremendous potential for free riding and externalizing costs onto others in society.

It seems the face of anti-ACA litigation has done just exactly that:

“As someone who chose not to purchase health insurance —and felt strongly that the federal government had no business telling her that she had to buy it whether she liked it or not—Mary had become an active and outspoken critic of the law. As a result, she was the perfect candidate to be a human face on the challenge to Obamacare.

Last fall, Mary Brown and her husband filed a petition of bankruptcy seeking relief for some $55,000 in debts the couple had run up . . . [including] $4500 worth of medical bills… 

Almost half of the medical debt run up by the Browns is owed to Bay Medical Center in Panama City, Florida. A spokesperson for the hospital had this say about their experience with the Browns and the many others who cannot pay their medical bills because they have chosen to remain uninsured.  “This is a very common problem. We cover $30 million in charity and uncompensated care every year,” “If it’s a bad debt, we have to absorb it.”

And related to that is this:

In America, when employment contracts, so does health care coverage:  “From 2007 to 2010, the share of children and working-age adults with employer-sponsored coverage fell  to 53.5 percent from 63.6 percent”.



Conference on Tax Transparency-London

From Richard Murphy: International Tax Review’s Annual Conference this year (London, May 2) is on the topic of tax transparency, i.e., country by country reporting.  He quotes the program:
“The financial crisis has changed everything. Now governments desperate for revenue are looking to close loopholes and claw back as much money as they can from taxpayers, through settlement or in court. 

Meanwhile, the public mood has turned against avoidance as people take to the street to demand companies pay their fare share of tax. … 

Tax transparency, country-by-country reporting, information exchange and transfer pricing rules are becoming increasingly important issues for taxpayers to consider in terms of their investors, their reputation and their exposure to risk. The issue will only continue to grow in importance in the coming years and, as such, it will become an increasing concern for companies looking more nervously at their bottom lines.
International Tax Review has decided to place itself ahead of the curve and is inviting taxpayers and advisers to join this crucial debate. 

More on higher ed & taxes

Reich associates disengagement with public universities with the decline of the middle class.  The problem:
The US is already making it harder for young people of modest means to attend college. Public higher education is being starved and the middle class will shrink even more as a result. 

…The children of middle- and lower-income families are hardest hit. Remember: The median wage has been dropping since 2000, adjusted for inflation.

… public higher education isn’t just a private investment. It’s a public good. Our young people – their capacities to think, understand, investigate and innovate – are the US’ future.  

…Public higher education has been the gateway to the middle class, but that gate is shutting – just when income and wealth are more concentrated at the top than they’ve been since the 1920s, and when the US needs the brainpower of its young people more than ever.

A solution:

A big part of the answer has to be more government support for public education at all levels. This requires more tax revenues – especially from Americans who are best able to pay. 

Most Americans still believe in the ideal of equal opportunity. And most harbour the patriotic notion that we have responsibilities to one another as members of the same society.

And here is a discussion of the growing problem of student debt, with this scary looking chart:

Why do nations fail?

From Planet Money’s Adam Davidson,

Over the centuries, proposed answers have varied greatly. Smith declared that the difference between wealth and poverty resulted from the relative freedom of the markets; Thomas Malthus said poverty comes from overpopulation; and John Maynard Keynes claimed it was a byproduct of a lack of technocrats. (Of course, everyone knows that politicians love listening to wonky bureaucrats!) Jeffrey Sachs, one of the world’s most famous economists, asserts that poor soil, lack of navigable rivers and tropical diseases are, in part, to blame. Others point to culture, geography, climate, colonization and military might. The list goes on.   

He doesn’t mention what continues to be one of my favorite books on the subject, Guns Germs & Steel.  But the column is on the more recent work (linked to last week), which I have ordered but haven’t read yet, by Darren Acemoglu and James Robinson.   Davidson says this book argues

“that the wealth of a country is most closely correlated with the degree to which the average person shares in the overall growth of its economy…when a nation’s institutions prevent the poor from profiting from their work, no amount of disease eradication, good economic advice or foreign aid seems to help.”

This seems in tune with the Spirit Level.