IP: Re: "Political Dynamite" Fails to Explode: Extreme proposals of Treasury'sO'Neil

[David Farber <dave () farber net>]

From: "Nathan Cochrane" <nathan_cochrane () hotmail com>

> To: farber () cis upenn edu
> Subject: IP: "Political Dynamite" Fails to Explode: Extreme proposals of 
> Treasury'sO'Neil
>
> Hi Dave
>
> O'Neill's comments sent a chill down my spine.
>
> It seems what he suggests is exactly what we have now in Australia, the 
> Goods and services tax (GST). His phrasebook parrots almost word for word 
> what we have heard in the last few years. What we have now is a 
> fustercluck end-to-end.
>
> The GST was originally sold as a "simplified tax system". How can 
> collecting taxes from 300 million people be easier than from a few 
> thousand companies? It is a dead weight on the economy and a constant 
> source of anxiety for individual taxpayers.
>
> I checked our databases covering all major newsmedia in Australia, 
> including the big broadsheets, financial journals, and daily tabloids. I 
> could find only one story that mentioned O'Neill's remarks, in the tabloid 
> Daily Telegraph Mirror. That paraphrased the original FT story, but left 
> out the juiciest bits (probably lopped off by a sub-editor).
>
> In Australia, taxes for corporations are entirely optional. This is 
> largely due to the influence of tax-free havens and the workings of the 
> Big-Five accounting firms who use transfer pricing to slip out of their 
> obligations. The GST was enacted to shift the tax burden to individuals 
> and away from big companies. It has been said that the GST has sent 
> thousands of small businesses and individuals to the wall as cash flow 
> evaporated. The Reserve Bank credits the it with stalling the economy. The 
> Labor opposition said the tax has "mugged the economy".
>
> The "New Tax System" (official legislative title) has been widely 
> criticised by taxpayer, welfare, elderly, charity, unions, contractors, 
> home buyers, farmers, small business, accounting and virtuall every other 
> group as confusing, costly and poorly handled. It is hard to remember a 
> time when a government has succeeded in alienating so many groups 
> simultaneously.
>
> The Federal Government looks set to lose the next election, in big part 
> because of the GST. It has already lost several crucial by-elections 
> leading up to the poll in December, all cited the GST as a major factor.
>
> The ruling Liberal-National party coalition has tried to buy the votes of 
> the elderly with tax cuts in the recent budget, but those groups don't 
> seem impressed. They say the average pensioner is at least $300 a year 
> worse off after the GST. In a celebrated incident recently an elderly 
> retired gentleman grabbed the PM's hand while he was on the hustings in a 
> local shopping mall and in front of a quiver of reporters and cameramen, 
> asked the PM why he had "lied" to him?
>
> And even the government acknowledges the GST is a big part of its woes. A 
> confidential leaked document from Liberal Party president (the ruling 
> party) Shane Stone said the government and Prime Minister is seen by its 
> own MPs and the public as "tricky", "mean", "dysfunctional", and "out of 
> touch". The government was accused of hurting the people who put it into 
> power. The five-page document published in The Bulletin magazine (a 
> financial and political magazine owned by Australia's wealthiest man) in 
> May blasted Treasurer Peter Costello, the GST's architect.
>
> "you PM and Costello in particular, have gone out of your way to 
> antagonise our traditional support base," Stone wrote. "Perhaps one of the 
> most telling and recurring comments centred on the view that we have gone 
> out of our way to `get' the very people who put us there."
>
> There is an easier solution. Rather than increase the burden on 
> individuals and take it away from corporations, the opposite should be the 
> case. The US government maintains a watch list of terrorist countries. Why 
> not do the same for countries who aid companies dodging their tax 
> responsibilities? These companies are engaging in a form of financial 
> terrorism more destructive than blowing up the Alfred P. Murrah Federal 
> Building. Their actions threaten the fabric of society by cutting off the 
> lifeblood of the government that enables it to fulfill its functions.
>
> Many companies are registered in tiny South Pacific Atolls or other tax 
> havens to avoid paying tax. The answer should be to deny these companies 
> the privilege to sell their goods and services to the citizens of 
> democratic countries such as the US or Australia. Why should companies be 
> rewarded by access to the people who they are hurting?
>
> If Bush and O'Neill implement a similar policy to Australia's, branded by 
> its own ruling party as "mean", "tricky" and "dysfunctional", I think we 
> can add "stupid" to the list of US Government attributes. But that's 
> something to which you Yanks have already grown accustomed, isn't it?
>
> I also found this from Bloomberg:
>
> How a second-rate CEO can still `clean up'
>
> COMMENT
>
> Byline: GRAEF CRYSTAL, SOURCE: BLOOMBERG
>
> Somebody had better keep an eye on United States Treasury Secretary Paul 
> O'Neill. Judging by his past behavior, he has an imperfect grasp of finance.
>
> At the end of 1993, when O'Neill was chief executive of Alcoa Inc, he 
> wrote to me about a study I did that appeared in Worth magazine. The 
> results put him in the unenviable category of CEOs who combined low 
> performance with high pay.



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