Report: Key Mortgage Tax Break Just Helps the Wealthy

(Newser) – The tax code is rife with home ownership incentives that are both popular with voters and staunchly defended by lawmakers. But it turns out the breaks mostly just help rich people buy pricier houses, according to a new report from the right-leaning R Street Institute. They “don’t encourage homeownership in any meaningful way,” the study’s author tells the Wall Street Journal. “People just end up buying larger homes.” He estimates that in Washington, DC, the subsides have increased the average home size by 1,400 square feet.

What’s more, the tax breaks are mainly going to the wealthy; homeowners with incomes above $ 100,000 are four times as likely to claim the benefit as those earning less, because low earners rarely itemize their deductions. It’s the kind of report that can anger the right and the left alike. Matt Welch at Reason calls the tax breaks an “upper class entitlement,” while Hamilton Nolan at Gawker calls it a “grotesque policy outcome.” Barack Obama has repeatedly called for making the benefit available only to those making less than $ 200,000 a year.

Politics from Newser

Report: Key Mortgage Tax Break Just Helps the Wealthy

The Political Plight of China’s Wealthy

The Political Plight of China’s Wealthy
http://pixel.quantserve.com/pixel/p-89EKCgBk8MZdE.gif

It is in the interests of China’s wealthy and the country’s government to promote transparency.

By Elizabeth C. Economy for The Diplomat

January 26, 2014

Technically, the news that many rich people in China have personal ties to China’s top leaders is not really news anymore. Nor is it news that many rich Chinese have placed their assets in offshore accounts or even that many rich people in China get that way through peddling influence or corruption. After all, the top fifty members of China’s National People’s Congress boast a combined wealth of $ 94.7 billion, making their American congressional cousins across the Pacific – whose top fifty members are worth only $ 1.6 billion – look positively poverty stricken. The link between politics and money in China is well-established.

So why all the excitement over the recent release of a report from the International Consortium of Investigative Journalists (ICIJ) that 22,000 (out of 1.3 billion) people in China have established offshore companies to hold – or hide – their wealth? Certainly there is the titillation factor. There is always a market for information about the super-rich: how they got their money and how they spend it – particularly when some of the rich are the sons and daughters of senior officials. There is also the issue of the “offshore” accounts in the British Virgin Islands, which to a layperson immediately sound suspicious. Even though every news article on the topic carefully mentions the fact that there is nothing necessarily illegal about these offshore tax havens, guilt is already established in the minds of many. (And, of course, there is some reason for this: a number of senior Chinese officials have already been tried in court and found guilty of using these accounts to hide millions of dollars in embezzled funds.) In addition, amassing personal wealth in China has always been a source of political vulnerability. Despite the obvious attraction of making money for many Chinese, the country’s ideological underpinnings have never fully supported it: it was denigrated by Confucianism and reviled by Communism. During the first decades of Communist rule, to be labeled a “capitalist running dog” meant a life of ongoing vicious political reprisals. Even Beijing’s more recent campaign against several politically outspoken billionaire bloggers carried a whiff of this same witch hunt mentality: questioning the political loyalty of those with money.

What could be seen as surprising, however, is that the Chinese government has gone to such extraordinary lengths to shut down any mention of the report’s findings. Beijing’s much ballyhooed anti-corruption campaign is the signature policy of an otherwise fairly anemic political reform effort by the new leadership. A report that lays bare 22,000 potential corruption cases should be celebrated, not censored. Part of the problem is that President Xi Jinping, himself, is likely unhappy that the face of his brother-in-law has been plastered in the pages of the ICIJ report as one of those with significant offshore holdings. But even beyond any personal considerations, the real challenge for Beijing is that the report represents a substantial loss of power for the Chinese leadership. With transparency comes knowledge – not just for the seven men in the Standing Committee of the Politburo but for the 1.3 billion people they govern. The report offers the Chinese public the opportunity to hold Beijing directly accountable; when the Chinese leadership pronounces the guilt of one official, the Chinese people can ask about one hundred others. By censoring the list, China’s leaders are trying to control who is found guilty and when.

In the end, it is in the interest of both China’s wealthiest citizens and the Chinese government to promote transparency and publication of the list. How else to disentangle the influence peddling inherent in traditional guanxi from meaningful corruption? How else to promote the rule of law and ensure that these 22,000 wealthy Chinese with offshore holdings do not become fodder for politically motivated attacks? And above all, how else to ensure that the Chinese people believe their leaders are holding themselves to the same standards to which they seek to hold everyone else?

Elizabeth C. Economy is C.V. Starr Senior Fellow and Director for Asia Studies at the Council on Foreign Relations. She is an expert on Chinese domestic and foreign policy and U.S.-China relations and author of the award-winning book, The River Runs Black: The Environmental Challenge to China’s Future.  She blogs at Asia Unbound, where this piece originally appeared.

The Diplomat

Read more about The Political Plight of China’s Wealthy and other interesting subjects concerning Asia at TheDailyNewsReport.com

When Charity Begins at Home (Particularly the Homes of the Wealthy)

It’s charity time, and not just because the holiday season reminds us to be charitable. As the tax year draws to a close, the charitable tax deduction beckons.

America’s wealthy are its largest beneficiaries. According to the Congressional Budget Office, $ 33 billion of last year’s $ 39 billion in total charitable deductions went to the richest 20 percent of Americans, of whom the richest 1 percent reaped the lion’s share.

The generosity of the super-rich is sometimes proffered as evidence they’re contributing as much to the nation’s well-being as they did decades ago when they paid a much larger share of their earnings in taxes. Think again.

Undoubtedly, super-rich family foundations, such as the Bill and Melinda Gates Foundation, are doing a lot of good. Wealthy philanthropic giving is on the rise, paralleling the rise in super-rich giving that characterized the late nineteenth century, when magnates (some called them “robber barons”) like Andrew Carnegie and John D. Rockefeller established philanthropic institutions that survive today.

But a large portion of the charitable deductions now claimed by America’s wealthy are for donations to culture palaces – operas, art museums, symphonies, and theaters – where they spend their leisure time hobnobbing with other wealthy benefactors.

Another portion is for contributions to the elite prep schools and universities they once attended or want their children to attend. (Such institutions typically give preference in admissions, a kind of affirmative action, to applicants and “legacies” whose parents have been notably generous.)

Harvard, Yale, Princeton, and the rest of the Ivy League are worthy institutions, to be sure, but they’re not known for educating large numbers of poor young people. (The University of California at Berkeley, where I teach, has more poor students eligible for Pell Grants than the entire Ivy League put together.) And they’re less likely to graduate aspiring social workers and legal defense attorneys than aspiring investment bankers and corporate lawyers.

I’m all in favor of supporting fancy museums and elite schools, but face it: These aren’t really charities as most people understand the term. They’re often investments in the life-styles the wealthy already enjoy and want their children to have as well. Increasingly, being rich in America means not having to come across anyone who’s not.

They’re also investments in prestige – especially if they result in the family name engraved on a new wing of an art museum, symphony hall, or ivied dorm.

It’s their business how they donate their money, of course. But not entirely. As with all tax deductions, the government has to match the charitable deduction with additional tax revenues or spending cuts; otherwise, the budget deficit widens.

In economic terms, a tax deduction is exactly the same as government spending. Which means the government will, in effect, hand out $ 40 billion this year for “charity” that’s going largely to wealthy people who use much of it to enhance their lifestyles.

To put this in perspective, $ 40 billion is more than the federal government will spend this year on Temporary Assistance for Needy Families (what’s left of welfare), school lunches for poor kids, and Head Start, put together.

Which raises the question of what the adjective “charitable” should mean. I can see why a taxpayer’s contribution to, say, the Salvation Army should be eligible for a charitable tax deduction. But why, exactly, should a contribution to the Guggenheim Museum or to Harvard Business School?

A while ago, New York’s Lincoln Center held a fund-raising gala supported by the charitable contributions of hedge fund industry leaders, some of whom take home $ 1 billion a year. I may be missing something but this doesn’t strike me as charity, either. Poor New Yorkers rarely attend concerts at Lincoln Center.

What portion of charitable giving actually goes to the poor? The Washington Post’s Dylan Matthews looked into this, and the best he could come up with was a 2005 analysis by Google and Indiana University’s Center for Philanthropy showing that even under the most generous assumptions only about a third of “charitable” donations were targeted to helping the poor.

At a time in our nation’s history when the number of poor Americans continues to rise, when government doesn’t have the money to do what’s needed, and when America’s very rich are richer than ever, this doesn’t seem right.

If Congress ever gets around to revising the tax code, it might consider limiting the charitable deduction to real charities.

ROBERT B. REICH, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His film, “Inequality for All,” will be out in September. He is also a founding editor of the American Prospect magazine and chairman of Common Cause. Watch the trailer for his new film, Inequality for All:

Follow Robert Reich on Twitter: www.twitter.com/RBReich

Robert Reich

When Charity Begins at Home (Particularly the Homes of the Wealthy)

Wealthy business executives eye political races

File – In this Nov. 3, 2010, file photo GOP gubernatorial candidate Tom Foley talks with reporters in Stamford, Conn., after hearing that Democrat Dan Malloy won a close race for the governor’s office. Foley, a former venture capitalist, is expected to run as a Republican for governor of Connecticut again hoping to take advantage of Malloy’s low approval ratings this time. (AP Photo/Charles Krupa, File)

File – In this Nov. 3, 2010, file photo GOP gubernatorial candidate Tom Foley talks with reporters in Stamford, Conn., after hearing that Democrat Dan Malloy won a close race for the governor’s office. Foley, a former venture capitalist, is expected to run as a Republican for governor of Connecticut again hoping to take advantage of Malloy’s low approval ratings this time. (AP Photo/Charles Krupa, File)

File – In this Sept. 5, 2013, file photo Republican Charles Baker, right, tells reporters that he’ll run for governor again at his home in Swampscott, Mass., with his wife Lauren. Baker, former chief executive of a hospital group, is one of a group of wealthy Republicans who take inspiration from Gov. Rick Snyder of Michigan and Sen. Ron Johnson of Wisconsin, who left the business world in 2010 to beat established Democrats in Democratic strongholds. (AP Photo/Steven Senne)

In this July 9, 2013, photo Illinois Republican gubernatorial hopeful Bruce Rauner speaks to a gathering Republicans and business leaders at a stop on his Bring Back Illinois Tour in Quincy, Ill. Rauner, a former finance executive who’s worth close to $ 1 billion, is the star of a class of wealthy Republicans who take inspiration from Gov. Rick Snyder of Michigan and Sen. Ron Johnson of Wisconsin, who left the business world in 2010 to beat established Democrats in Democratic strongholds. (AP Photo/The Quincy Herald-Whig, Steve Bohnstedt)

Buy AP Photo Reprints

CHICAGO (AP) — He has never been elected to anything, not even “student council in high school,” as he boasts. He has little patience for schmoozing. In dealing with people, he admits to being “pretty blunt” – more suited to running a large private equity firm, which Bruce Rauner did successfully for 30 years, than seeking votes for governor, which he intends to do in Illinois next year.

But the traits that might once have made Rauner a bust in politics are beginning to look like possible assets for a Republican in Illinois and for underdogs elsewhere across the increasingly polarized American political landscape. With three quarters of the states now dominated by one party or the other — the highest ratio in recent history — candidates from the other side often seem to have little chance on election day. In this environment, a handful of outsiders are gambling that the time is ripe for challengers who can break out of normal party mold.

Instead of political skills or experience, they have chutzpah – and a lot of money.

“I come from business. I don’t come from the political world, so I call it as I see it. And I think we need a lot more of that down in Springfield,” Rauner, a Republican, declared to an audience of businessmen in overwhelmingly Democratic Illinois. “I can’t be bribed. I can’t be intimidated.”

Rauner, a tall, big-voiced executive who’s worth close to $ 1 billion, is the star of a class of wealthy Republicans who take inspiration from Gov. Rick Snyder of Michigan and Sen. Ron Johnson of Wisconsin, who left the business world in 2010 to beat established Democrats in Democratic strongholds. While technically Republicans, they ran as problem-solving CEOs.

Tom Foley, a former venture capitalist, is expected to run as a Republican for governor of Connecticut. After losing by less than a percentage point in 2010, he hopes to take advantage of Democrat Dan Malloy’s low approval ratings this time. Scott Honour, who made his fortune in private equity and investment banking, plans to challenge Democratic Gov. Mark Dayton in solidly Democratic Minnesota. And Charlie Baker, former chief executive of a hospital group, is running for governor in Massachusetts.

Meanwhile, the Democratic Party is shopping for its own business stars or mold-busters to run in Midwestern states where Republicans have taken firm control.

The model is Mark Warner, a cell-phone tycoon who took the governorship away from the GOP in Virginia in 2001. In Wisconsin, they have their eye on Mary Burke, a former executive at the company her father founded, Trek Bicycles, to challenge Republican Gov. Scott Walker.

In addition to the success stories that prominent entrepreneurs tell, they can ante up resources that other first-timers can’t.

“The ability to do that is certainly something we look for,” said Danny Kanner, spokesman for the Democratic Governors Association.

It’s still tough to buck the dominant party trend. In Democratic-leaning California, Republican Meg Whitman, who built a fortune as CEO of eBay, resoundingly lost the 2010 governor’s race despite spending $ 140 million of her own money.

For the first time since 1952, the one party holds the governor’s office and both houses of the legislature in 37 states; Democrats command the Northeast and West Coast and Republicans the South and Midwest. For outside challengers, the goal is to run as something other than standard bearer of the party in eclipse. Successful businessmen poll well with independent voters and can project an expertise in economics, which is especially attractive in states with battered public finances and high unemployment.

“Now, many of these folks turn out to be lousy candidates,” said veteran national Republican strategist Charlie Black, adding, “but the ones with good political instincts and money have a leg up on the competition.”

A native of Chicago with degrees from Dartmouth and Harvard, Rauner, 56, began campaigning a year and a half before election day, signing up top-tier consultants, running TV and radio ads and making appearances around the state.

For a meeting with businessmen in rural southern Illinois, the 6-foot-4 Rauner rolled up in his Harley Davidson Ultra Classic. His strong baritone made a microphone unnecessary as he delivered his stump speech in a series of bullet-points, much like a boardroom presentation.

“Unacceptable. Outrageous,” he said, closing his assessment of Illinois schools.

He emphasizes his business background — and his lack of political resume. In his field, “the measure of success is wealth creation for shareholders. And when you create wealth for shareholders, jobs get created and economic growth ensues,” he said in an interview.

For a candidate seeking support, he comes on strong and can sometimes give offense.

“Have you met him? Did you get to talk?” former Republican Gov. Jim Edgar asked sardonically. Edgar has — and didn’t.

Democrats have dominated Illinois for the past decade despite corruption scandals. The past three Republican nominees for governor were GOP establishment figures.

Some voters seem intrigued by a different GOP option.

“The status quo obviously isn’t working,” said Laura Donahue, a Republican who met Rauner in Quincy.

In the Republican field, Rauner will face former state Rep. Bill Brady, state Sen. Kirk Dillard and state Treasurer Dan Rutherford. Democratic Gov. Pat Quinn is expected to run for re-election, challenged by former White House Chief of Staff William Daley.

A major issue will be the state pension system, which is $ 100 billion in debt, and a state bond rating that is the nation’s worst.

Can a rich businessman sell himself as a solution, even to Democratic voters.

Republican professionals are withholding judgment.

Voters “need to know, connect and like Bruce as a candidate,” said Lisa Wagner, an influential Chicago-area fundraiser. “Otherwise, he is just another millionaire running for office.”

—————————————————————————————-

Sara Burnett contributed from Chicago.

Follow Beaumont on Twitter at https://twitter.com/TomBeaumont

Associated Press

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Politics Headlines

Wealthy business executives eye political races

Egypt"s new leaders get boost from wealthy Gulf

A supporter of the ousted Egypt’s President Mohammed Morsi holds up a Quran during a protest in Nasr City, a suburb of Cairo, Egypt, Tuesday July 9, 2013. After days of deadlock, Egypt’s military-backed interim president named a veteran economist as prime minister on Tuesday and appointed pro-democracy leader Mohamed ElBaradei as a vice president, while the army showed its strong hand in shepherding the process, warning political factions against “maneuvering” that impedes the transition. (AP Photo/Manu Brabo)

A supporter of the ousted Egypt’s President Mohammed Morsi holds up a Quran during a protest in Nasr City, a suburb of Cairo, Egypt, Tuesday July 9, 2013. After days of deadlock, Egypt’s military-backed interim president named a veteran economist as prime minister on Tuesday and appointed pro-democracy leader Mohamed ElBaradei as a vice president, while the army showed its strong hand in shepherding the process, warning political factions against “maneuvering” that impedes the transition. (AP Photo/Manu Brabo)

In this image released by the Egyptian Presidency, Hazem el-Beblawi meets with interim President Adly Mansour, unseen, in Cairo, Egypt, Tuesday, July 9, 2013. The spokesman of Egypt’s interim president says a prominent economist, Hazem el-Beblawi, has been named prime minister and pro-democracy leader Mohamed ElBaradei as a vice-president. Ahmed el-Musalamani made the announcements Tuesday after days of political stalemate over the prime minister post. El-Beblawi, who is in his 70s, served as finance minister in one of the first cabinets formed after the 2011 uprising forced Hosni Mubarak from power and the military stepped in to rule. (AP Photo/Egyptian Presidency)

Supporters of ousted President Mohammed Morsi prepare symbolic coffins, representing some 51 people killed Monday, in Nasr City, Cairo, Egypt, Tuesday, July 9, 2013. After days of deadlock, Egypt’s military-backed interim president named a veteran economist as prime minister on Tuesday and appointed pro-democracy leader Mohamed ElBaradei as a vice president, while the army showed its strong hand in shepherding the process, warning political factions against “maneuvering” that impedes the transition. (AP Photo/Nasser Shiyoukhi)

Supporters of ousted President Mohammed Morsi protest in Nasr City, Cairo, Egypt, Tuesday, July 9, 2013. Egypt’s army chief says the military will not accept political “maneuvering,” in thinly veiled warning to the only Islamist party, Al-Nour, that sided with the army’s removal of President Mohammed Morsi but has since had frictions with other factions over forming a new leadership.(AP Photo/Nasser Shiyoukhi)

Supporters of ousted President Mohammed Morsi protest at the Republican Guard building in Nasr City, Cairo, Egypt, Tuesday, July 9, 2013. Egyptian security forces killed dozens of supporters of Egypt’s ousted president in one of the deadliest single episodes of violence in more than two and a half years of turmoil. The toppled leader’s Muslim Brotherhood called for an uprising, accusing troops of gunning down protesters, while the military blamed armed Islamists for provoking its forces. (AP Photo/Khalil Hamra)

Buy AP Photo Reprints

CAIRO (AP) — Egypt’s new leaders have won $ 8 billion in promises of aid from wealthy Gulf Arab allies in moves aimed at stabilizing a political transition less than a week after the army deposed the country’s Islamist president.

Also on Tuesday, the interim president named a new prime minister and Egyptian armed forces warned political factions that “maneuvering” must not hold up the military’s ambitious fast-track timetable for new elections next year.

The sharp message underlined how strongly the military is shepherding the process, even as liberal reform movements that backed its removal of Mohammed Morsi complained that now they are not being consulted in decision-making.

The Muslim Brotherhood denounced the transition plan, vowing to continue its street protests until the ousted Morsi, Egypt’s first freely elected president, is returned to power.

Tuesday’s appointment of economist Hazem el-Beblawi as prime minister, along with the setting of the accelerated timetable, underlined the army’s determination to push ahead in the face of Islamist opposition and outrage over the killing of more than 50 Morsi supporters on Monday.

Saudi Arabia and the United Arab Emirates provided a welcome boost for the new leadership. The two countries, both opponents of Morsi’s Brotherhood, celebrated his ouster by showering the cash-strapped Egyptian government with promises of $ 8 billion in grants, loans and badly needed gas and oil.

In doing so, they are effectively stepping in for Morsi’s Gulf patron, Qatar, a close ally of the Brotherhood that gave his government several billion in aid. During Morsi’s year in office, he and his officials toured multiple countries seeking cash to prop up rapidly draining foreign currency reserves and plug mounting deficits — at times getting a cold shoulder.

The developments underlined the pressures on the new leaders even with the country still in turmoil after what Morsi’s supporters have called a coup against democracy.

The military faces calls, from the U.S. and Western allies in particular, to show that civilians are in charge and Egypt is on a path toward a democratically-based leadership. The nascent government will soon face demands that it tackle economic woes that mounted under Morsi, including fuel shortages, electricity cutoffs and inflation.

White House spokesman Jay Carney said Washington is “cautiously encouraged” by the announcement of a plan to return to democratically elected government.

Still, several groups in the loose coalition participating in the political process were angered over the transition plan issued Monday by interim President Adly Mansour. His declaration set out a seven-month timetable for elections but also a truncated, temporary constitution laying out the division of powers in the meantime.

The top liberal political grouping, the National Salvation Front, rejected the plan late Tuesday. It said it was not consulted — “in violation of previous promises” — and that the declaration “lacks significant clauses while others need change or removal.” It did not elaborate but said it had presented Mansour with changes it seeks.

The secular, revolutionary youth movement Tamarod, which organized last week’s massive protests against Morsi, also criticized the plan, in part because it gives too much power to Mansour, including the power to issue laws. A post-Morsi plan put forward by Tamarod called for a largely ceremonial interim president with most power in the hands of the prime minister.

Egypt remains deeply polarized with heightened fears of violence, especially after Monday’s shootings. The Brotherhood and Islamist allies say they are under siege by a military crackdown that has jailed five of their leaders and shut down their media outlets. Tens of thousands of Islamists massed on Tuesday for another day outside a Cairo mosque. The crowds waved pictures of Morsi and brought in flag-draped empty coffins representing the slain protesters.

Still, there was no huge nationwide turnout that the Brotherhood leaders had called for after the killings. Also, for the first time since even before the June 30 protests began, Cairo’s Tahrir Square — where Morsi’s opponents were centered — was largely without crowds.

It’s unclear if the Islamic holy month of Ramadan, which starts Wednesday, when Muslims fast from sunrise to sunset, will significantly calm the street. The fast cuts down on activity during the day, but the demonstrations have been largely nocturnal affairs. The Islamist camp will likely use it to rally its base.

Mansour called for a reconciliation process called “One People” to begin in Ramadan, traditionally a period for Muslims to promote unity. It called for parties and movements to hold meetings. But there was no sign the Brotherhood and its allies would attend, much like Morsi’s opponents rejected his calls for dialogue, which were dismissed as empty gestures.

The interim president’s spokesman, Ahmed el-Musalamani, said posts in the new Cabinet would be offered to the Islamist camp — including to the Brotherhood’s Freedom and Justice Party and the Salafi Al-Nour Party. He spoke to Egypt’s privately owned CBC TV channel in remarks also carried by the state news agency. El-Beblawi is to start forming a Cabinet on Wednesday.

The statement by armed forces chief Gen. Abdel-Fattah el-Sissi against political maneuvering underlined how the military — while it says it is staying out of politics — remains a powerful presence in a transition ostensibly being led by Mansour and a collection of political factions.

“The future of the nation is too important and sacred for maneuvers or hindrance, whatever the justifications,” el-Sissi said in the statement, read on state TV. “The people and, behind it, the armed forces don’t want anyone to stray from the right path or deviate from the boundaries of safety and security, driven by selfishness or … zealousness.”

A spokesman for Mansour announced the appointment of el-Beblawi as prime minister and of pro-democracy leader Mohamed ElBaradei, a leader of the National Salvation Front, as vice president.

The naming of a prime minister was held up for days because the sole Islamist faction in the coalition, the ultraconservative Al-Nour Party, blocked candidates from secular, liberal and leftist groups. Those factions have been determined to have one of their own in the post.

Last week, Al-Nour blocked ElBaradei from becoming prime minister, then objected to one of his close allies put forward as a compromise. The moves infuriated the secular and liberal factions. ElBaradei, the former head of the U.N. nuclear watchdog agency and a Nobel Peace laureate, is considered one of the strongest pro-reform figures, but many Islamists vehemently oppose him as too secular.

El-Beblawi is from the liberal-secular camp — albeit a less-controversial, well-known or prominent figure than ElBaradei.

El-Sissi’s statement appeared to be a veiled warning to Al-Nour. But it suggests the military is ready to apply pressure on politicians when multiple disputes are almost certain to emerge.

He called for dialogue between the new leadership and their Islamist opponents. “Everyone in Egypt must sit together on the table for dialogue to solve current political differences, stop violence and bloodshed in the street,” he told the AP.

Under the new timetable, two appointed panels would draw up and approve amendments to the constitution, which would be put to a referendum within 4½ months. Elections for a new parliament would be held within two months of that. Once the parliament convenes, it would have a week to set a date for presidential elections.

Following Monday’s bloodshed, the military accused armed Islamists of starting the violence by attacking the headquarters of the Republican Guard. Morsi supporters say no such attack took place and that troops opened fire on their nearby sit-in after dawn prayers. Along with 51 protesters, an army officer and two policemen were killed.

An Egyptian security official said 650 people were arrested for allegedly trying to storm the headquarters. The official said there were Syrian and Palestinian nationals among those arrested. The official spoke on condition of anonymity because he was not authorized to talk to the press.

Associated Press

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Headlines

Egypt"s new leaders get boost from wealthy Gulf

Egypt"s new leaders get boost from wealthy Gulf

A supporter of the ousted Egypt’s President Mohammed Morsi holds up a Quran during a protest in Nasr City, a suburb of Cairo, Egypt, Tuesday July 9, 2013. After days of deadlock, Egypt’s military-backed interim president named a veteran economist as prime minister on Tuesday and appointed pro-democracy leader Mohamed ElBaradei as a vice president, while the army showed its strong hand in shepherding the process, warning political factions against “maneuvering” that impedes the transition. (AP Photo/Manu Brabo)

A supporter of the ousted Egypt’s President Mohammed Morsi holds up a Quran during a protest in Nasr City, a suburb of Cairo, Egypt, Tuesday July 9, 2013. After days of deadlock, Egypt’s military-backed interim president named a veteran economist as prime minister on Tuesday and appointed pro-democracy leader Mohamed ElBaradei as a vice president, while the army showed its strong hand in shepherding the process, warning political factions against “maneuvering” that impedes the transition. (AP Photo/Manu Brabo)

In this image released by the Egyptian Presidency, Hazem el-Beblawi meets with interim President Adly Mansour, unseen, in Cairo, Egypt, Tuesday, July 9, 2013. The spokesman of Egypt’s interim president says a prominent economist, Hazem el-Beblawi, has been named prime minister and pro-democracy leader Mohamed ElBaradei as a vice-president. Ahmed el-Musalamani made the announcements Tuesday after days of political stalemate over the prime minister post. El-Beblawi, who is in his 70s, served as finance minister in one of the first cabinets formed after the 2011 uprising forced Hosni Mubarak from power and the military stepped in to rule. (AP Photo/Egyptian Presidency)

Supporters of ousted President Mohammed Morsi prepare symbolic coffins, representing some 51 people killed Monday, in Nasr City, Cairo, Egypt, Tuesday, July 9, 2013. After days of deadlock, Egypt’s military-backed interim president named a veteran economist as prime minister on Tuesday and appointed pro-democracy leader Mohamed ElBaradei as a vice president, while the army showed its strong hand in shepherding the process, warning political factions against “maneuvering” that impedes the transition. (AP Photo/Nasser Shiyoukhi)

Supporters of ousted President Mohammed Morsi protest in Nasr City, Cairo, Egypt, Tuesday, July 9, 2013. Egypt’s army chief says the military will not accept political “maneuvering,” in thinly veiled warning to the only Islamist party, Al-Nour, that sided with the army’s removal of President Mohammed Morsi but has since had frictions with other factions over forming a new leadership.(AP Photo/Nasser Shiyoukhi)

Supporters of ousted President Mohammed Morsi protest at the Republican Guard building in Nasr City, Cairo, Egypt, Tuesday, July 9, 2013. Egyptian security forces killed dozens of supporters of Egypt’s ousted president in one of the deadliest single episodes of violence in more than two and a half years of turmoil. The toppled leader’s Muslim Brotherhood called for an uprising, accusing troops of gunning down protesters, while the military blamed armed Islamists for provoking its forces. (AP Photo/Khalil Hamra)

Buy AP Photo Reprints

CAIRO (AP) — Egypt’s new leaders have won $ 8 billion in promises of aid from wealthy Gulf Arab allies in moves aimed at stabilizing a political transition less than a week after the army deposed the country’s Islamist president.

Also on Tuesday, the interim president named a new prime minister and Egyptian armed forces warned political factions that “maneuvering” must not hold up the military’s ambitious fast-track timetable for new elections next year.

The sharp message underlined how strongly the military is shepherding the process, even as liberal reform movements that backed its removal of Mohammed Morsi complained that now they are not being consulted in decision-making.

The Muslim Brotherhood denounced the transition plan, vowing to continue its street protests until the ousted Morsi, Egypt’s first freely elected president, is returned to power.

Tuesday’s appointment of economist Hazem el-Beblawi as prime minister, along with the setting of the accelerated timetable, underlined the army’s determination to push ahead in the face of Islamist opposition and outrage over the killing of more than 50 Morsi supporters on Monday.

Saudi Arabia and the United Arab Emirates provided a welcome boost for the new leadership. The two countries, both opponents of Morsi’s Brotherhood, celebrated his ouster by showering the cash-strapped Egyptian government with promises of $ 8 billion in grants, loans and badly needed gas and oil.

In doing so, they are effectively stepping in for Morsi’s Gulf patron, Qatar, a close ally of the Brotherhood that gave his government several billion in aid. During Morsi’s year in office, he and his officials toured multiple countries seeking cash to prop up rapidly draining foreign currency reserves and plug mounting deficits — at times getting a cold shoulder.

The developments underlined the pressures on the new leaders even with the country still in turmoil after what Morsi’s supporters have called a coup against democracy.

The military faces calls, from the U.S. and Western allies in particular, to show that civilians are in charge and Egypt is on a path toward a democratically-based leadership. The nascent government will soon face demands that it tackle economic woes that mounted under Morsi, including fuel shortages, electricity cutoffs and inflation.

White House spokesman Jay Carney said Washington is “cautiously encouraged” by the announcement of a plan to return to democratically elected government.

Still, several groups in the loose coalition participating in the political process were angered over the transition plan issued Monday by interim President Adly Mansour. His declaration set out a seven-month timetable for elections but also a truncated, temporary constitution laying out the division of powers in the meantime.

The top liberal political grouping, the National Salvation Front, rejected the plan late Tuesday. It said it was not consulted — “in violation of previous promises” — and that the declaration “lacks significant clauses while others need change or removal.” It did not elaborate but said it had presented Mansour with changes it seeks.

The secular, revolutionary youth movement Tamarod, which organized last week’s massive protests against Morsi, also criticized the plan, in part because it gives too much power to Mansour, including the power to issue laws. A post-Morsi plan put forward by Tamarod called for a largely ceremonial interim president with most power in the hands of the prime minister.

Egypt remains deeply polarized with heightened fears of violence, especially after Monday’s shootings. The Brotherhood and Islamist allies say they are under siege by a military crackdown that has jailed five of their leaders and shut down their media outlets. Tens of thousands of Islamists massed on Tuesday for another day outside a Cairo mosque. The crowds waved pictures of Morsi and brought in flag-draped empty coffins representing the slain protesters.

Still, there was no huge nationwide turnout that the Brotherhood leaders had called for after the killings. Also, for the first time since even before the June 30 protests began, Cairo’s Tahrir Square — where Morsi’s opponents were centered — was largely without crowds.

It’s unclear if the Islamic holy month of Ramadan, which starts Wednesday, when Muslims fast from sunrise to sunset, will significantly calm the street. The fast cuts down on activity during the day, but the demonstrations have been largely nocturnal affairs. The Islamist camp will likely use it to rally its base.

Mansour called for a reconciliation process called “One People” to begin in Ramadan, traditionally a period for Muslims to promote unity. It called for parties and movements to hold meetings. But there was no sign the Brotherhood and its allies would attend, much like Morsi’s opponents rejected his calls for dialogue, which were dismissed as empty gestures.

The interim president’s spokesman, Ahmed el-Musalamani, said posts in the new Cabinet would be offered to the Islamist camp — including to the Brotherhood’s Freedom and Justice Party and the Salafi Al-Nour Party. He spoke to Egypt’s privately owned CBC TV channel in remarks also carried by the state news agency. El-Beblawi is to start forming a Cabinet on Wednesday.

The statement by armed forces chief Gen. Abdel-Fattah el-Sissi against political maneuvering underlined how the military — while it says it is staying out of politics — remains a powerful presence in a transition ostensibly being led by Mansour and a collection of political factions.

“The future of the nation is too important and sacred for maneuvers or hindrance, whatever the justifications,” el-Sissi said in the statement, read on state TV. “The people and, behind it, the armed forces don’t want anyone to stray from the right path or deviate from the boundaries of safety and security, driven by selfishness or … zealousness.”

A spokesman for Mansour announced the appointment of el-Beblawi as prime minister and of pro-democracy leader Mohamed ElBaradei, a leader of the National Salvation Front, as vice president.

The naming of a prime minister was held up for days because the sole Islamist faction in the coalition, the ultraconservative Al-Nour Party, blocked candidates from secular, liberal and leftist groups. Those factions have been determined to have one of their own in the post.

Last week, Al-Nour blocked ElBaradei from becoming prime minister, then objected to one of his close allies put forward as a compromise. The moves infuriated the secular and liberal factions. ElBaradei, the former head of the U.N. nuclear watchdog agency and a Nobel Peace laureate, is considered one of the strongest pro-reform figures, but many Islamists vehemently oppose him as too secular.

El-Beblawi is from the liberal-secular camp — albeit a less-controversial, well-known or prominent figure than ElBaradei.

El-Sissi’s statement appeared to be a veiled warning to Al-Nour. But it suggests the military is ready to apply pressure on politicians when multiple disputes are almost certain to emerge.

He called for dialogue between the new leadership and their Islamist opponents. “Everyone in Egypt must sit together on the table for dialogue to solve current political differences, stop violence and bloodshed in the street,” he told the AP.

Under the new timetable, two appointed panels would draw up and approve amendments to the constitution, which would be put to a referendum within 4½ months. Elections for a new parliament would be held within two months of that. Once the parliament convenes, it would have a week to set a date for presidential elections.

Following Monday’s bloodshed, the military accused armed Islamists of starting the violence by attacking the headquarters of the Republican Guard. Morsi supporters say no such attack took place and that troops opened fire on their nearby sit-in after dawn prayers. Along with 51 protesters, an army officer and two policemen were killed.

An Egyptian security official said 650 people were arrested for allegedly trying to storm the headquarters. The official said there were Syrian and Palestinian nationals among those arrested. The official spoke on condition of anonymity because he was not authorized to talk to the press.

Associated Press

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Headlines

Egypt"s new leaders get boost from wealthy Gulf

RT News: Corporate America - The Wealthy live, while the Poor Suffer

Tweet

Meet Donors Trust: The Little-Known Group That Lets the Wealthy Secretively Fund Right-Wing Causes

Tweet

Editor"s note: The following is a transcript of a Democracy Now! segment on Donors Trust, a little known group funding the Right"s agenda. 

When it comes to the wealthy funders of right-wing causes, the big names are well known: billionaires like the industrialist Koch Brothers and the casino magnate Sheldon Adelson, super PACs like Americans for Prosperity and Karl Rove’s Crossroads GPS. Now, through them, hundreds of millions of dollars have poured into right-wing causes and candidates. But now it turns out this web of dark-money donations is even more secretive than we previously thought. That’s because the operations of a largely unknown group have now come to light. They’re called Donors Trust, a nonprofit charity based in Virginia.

Since 1999, Donors Trust has handed out nearly $ 400 million in private donations to more than 1,000 right-wing and libertarian groups. The fact Donors Trust has been able to quietly do so appears to explain why it exists: Wealthy donors can back the right-wing causes they want without attracting public scrutiny. Donors Trust is classified as a “donor-advised” fund under U.S. tax law, meaning its funders don’t have direct say in where their money goes. That in turn allows them to remain largely anonymous.

AMY GOODMAN: But the most detailed accounting to date shows Donors Trust funds a wish list of right-wing causes, prompting Mother Jones magazine to label it, quote, “the dark-money ATM of the right.” Donors Trust recipients include the American Legislative Exchange Council, or ALEC, a mechanism for corporate interests to help write state laws; the Franklin Center for Government and Public Integrity, a media outlet that unabashedly promotes right-wing causes; and the State Policy Network, a number of right-wing think tanks that push so-called “free-market” policies.

But the major focus of Donors Trust appears to be funding the denial of global warming. More than a third of Donors Trust donations—at least $ 146 million—has gone to think tanks and other groups that challenge the science of climate change. Later in the broadcast, we’ll take a closer look at that funding of climate change denial, but first we turn to an overview of Donors Trust and look at why it’s been able to evade public scrutiny until now.

Joining us from Washington, D.C., is John Dunbar, politics editor at the Center for Public Integrity, worked on the group’s months-long investigation into Donor’s Trust. We did ask Donors Trust to join us, but they declined our request.

John Dunbar, lay out just what Donors Trust is.

JOHN DUNBAR: Well, they’re essentially a pass through. What they do is, is they act as a kind of a middleman between what are very large, well-known private foundations created by—mostly by corporate executives, like the Kochs, for example, and they direct the money of those contributions to a very large network of right-leaning, free-market think tanks across the country, including those that you’ve named. By doing—by running it through the middleman, it essentially obscures the identity of the original donors, of the folks who have provided the funds themselves. And the organization itself actually makes that clear on its own website, essentially saying people who give money to the organization can avoid being identified or being connected with potentially controversial issues.

AARON MATÉ: And John Dunbar, so the figure is $ 400 million since 1999. Why is it that all this is just coming to light now?

JOHN DUNBAR: Well, we kind of stumbled onto it, to be honest with you. We’ve been, at the Center for Public Integrity—that’s publicintegrity.org if you’d like to read our full report on it—we were looking at activities at the state level, and we were noticing a certain continuity. There was a certain sameness to what was going on in various states on these issues. And we have been looking at the American Legislative Exchange Council for quite some time, and we were looking for how these organizations were funded. And this Donors Trust organization kept popping up, and it seemed to be such an amorphously named organization. We couldn’t really figure out where it was. So we got to wondering, “Well, who’s funding Donors Trust?” And then we backed it up a step, and then we started looking at some of the more better-known right-wing, free-market foundations, particularly those run by the Koch brothers—the Searle Freedom Trust, for example, is another one; the Bradley Foundation—these are all very well-known right-leaning foundations—and found that an enormous amount of the funds that came into Donors Trust came from those—from those organizations.

AMY GOODMAN: John Dunbar, in your report, you speak with the Donors Trust president and CEO, Whitney Ball. She says much of the group’s focus is on the state level because of, quote, “gridlock” at the federal level of government means donors see, quote, “a better opportunity to make a difference in the states.” Ball also sits on the board of the State Policy Network. Can you talk about this focus on activity at the state level?

JOHN DUNBAR: Yeah, I think that—I don’t think anybody would argue with her point that it’s hard to get anything done in Washington these days. They have been a lot more successful at the state level. And I think that in Washington we have a tendency to sort of get tunnel vision: We don’t think that anything that happens outside of Washington really matters, when in fact the laws that are passed in the states are extremely important. Some of the focus of the Donors Trust recipients have been on specific state issues that, you know, affect all of us. You know, some of their favorite issues are right-to-work laws in the states; climate issues; renewable energy, as you’ll hear from Suzanne and The Guardian, which has done such great work on that; and as well as, you know, tax issues, etc. People tend to look at states and what’s happening in a particular state in isolation; they don’t look around and see that the same thing seems to be happening in other states. And it’s—this is clearly a coordinated effort to create state-based think tanks. There’s 51 of them that they’ve funded all across the country to push legislative issues. And then they created their own media empire to support—they even support the ideas behind those issues.

AARON MATÉ: Well, John Dunbar, if you could follow up on that, this media group, the Franklin Center for Government and Public Integrity. They receive 95 percent of their funding from the Donors Trust?

JOHN DUNBAR: Right, and that was kind of shocking, actually. You know, we—that is a foundation-financed reporting organization. I have to say that the Center for Public Integrity is also a foundation-financed reporting organization, so—however, we do not get 95 percent of our funding from any individual donor. Franklin does. The difficulty with that is that, first of all, you have to wonder what—whether the reporting is going to be influenced by that single donor. Secondly, they are a (c)3, which is—which means donations to them are tax deductible, and they don’t pay taxes themselves. That’s a public trust, by the way. That’s—the Donors Trust is in the same position. If they were not a publicly financed nonprofit, they would lose their nonprofit status. By getting all of their money or most of their money through Donors Trust, they’re able to maintain their (c)3 status as a, quote, you know, “publicly financed charity,” unquote. And if all that money came from one person, for example, they would lose that exemption, or they would be part of—they would have to be absorbed by whatever foundation it was that was funding them.

AMY GOODMAN: John, in 2009, Republicans, bloggers, conservative think tanks began to cite a report that the Obama administration had pumped billions of stimulus funds into phantom congressional districts, suggesting money intended to create jobs and shore up the economy had been misused or lost. One of the key websites to report this was newmexicowatchdog.org, which is almost entirely funded by Donors Trust. The story was picked up by Fox News, like in this report from Stuart Varney.

STUART VARNEY: Take a look at this map, please. The government is claiming jobs created in nine Oklahoma congressional districts; problem: There’s only five. Jobs in eight districts of Iowa; big problem: There’s only five. Jobs in eight districts in Connecticut; again, there’s only five. Jobs in three congressional districts in the Virgin Islands; there is only one. And as you point out, Bill, Puerto Rico, the government claims 17,544 jobs created or saved in six congressional districts; there is only one congressional district in Puerto Rico.

BILL HEMMER: I don’t know if we should be laughing or crying over this.

STUART VARNEY: No.

BILL HEMMER: I mean, Puerto Rico alone, 99th Congressional District, 98th Congressional District, a no-number congressional district.

STUART VARNEY: Yes.

BILL HEMMER: I mean, good lord!

STUART VARNEY: Yes, yes, yes. Raise your eyebrows, please. Look, it’s very bad, very unreliable statistics, and it really undermines all of these claims, these gross claims of job creation from stimulus.

AMY GOODMAN: That Fox News report was based on a report by newmexicowatchdog.org, one of the many so-called watchdog websites that are almost entirely funded by the Donors Trust. John Dunbar, your response?

JOHN DUNBAR: Well, I think that the implication of that report was that there were millions and millions of dollars that were being misspent, when the reality was it was data errors. I don’t think anyone would defend the government’s ability to create accurate databases. They clearly didn’t do a very good job on that front, at least on the Recovery Act. However, the implication that all of this money was going into a black hole was actually nonsense. It was kind of a phantom issue about phantom districts, as the Associated Press had reported. A lot of the reporting by these different watchdog organizations that are funded by Franklin has been called into question, including by the Nieman Center at Harvard that’s called it a lack in context and in some cases actually distortions of facts.

AMY GOODMAN: We’re going to break, John Dunbar, politics editor at the Center for Public Integrity, works on this months-long investigation into the Donors Trust called “Donors Use Charity to Push Free-Market Policies in States.” When we come back, Suzanne Goldenberg will also join us, of The Guardian, who’s been investigating the funding of climate denial groups. This is Democracy Now! We’ll be back in a minute.

Tue, 02/19/2013 – 09:35  
AlterNet.org Main RSS Feed

Meet Donors Trust: The Little-Known Group That Lets the Wealthy Secretively Fund Right-Wing Causes

Wealthy French Eye Belgian Tax Breaks (Everyone in France Should Do the Same)

Tweet

The inheritance tax in France is 45%, in Belgium it’s 3%. France has a wealth tax, Belgium doesn’t.

Wealthy French have known and used these loopholes for quite some time, but appeal of such schemes is on the rise following massive tax hikes of president Francois Hollande.

Please consider Wealthy French eye Belgian tax perks.

For decades, Thierry Afschrift’s boutique tax law practice was among the best-kept secrets of Belgium’s wealthy elite, his name passed discreetly between the landed gentry and industrialists in Brussels’ leafy suburbs seeking shelter from the kingdom’s Byzantine tax laws.

But in the past five months, Mr Afschrift’s phones have been ringing off the hook from another clientele altogether – wealthy Frenchmen seeking to set up private foundations in Belgium to protect their family fortunes from onerous taxes imposed by President François Hollande.

“We have loads of people coming every day asking us questions about setting up foundations,” Mr Afschrift said from his office on Brussels’ upmarket Avenue Louise. Other Belgian tax lawyers say they have been receiving around 10 calls a day from France inquiring about private family foundations.

The key to Belgian foundation law is that it permits the patron to hand over all assets to children as a gift, taxed at only 3 per cent instead of France’s 45 per cent inheritance tax. It also avoids France’s annual wealth tax, a levy that does not exist in Belgium. To top it off, the foundation’s benefactor retains full control of the assets while alive and can set disbursement terms for after their death.

“It is a very good tool to transfer assets gradually and assure the children don’t squander that family’s accumulated wealth,” says Manoël Dekeyser, one of Belgium’s most prominent tax attorneys.

“If the children want the money to play at the casino, the foundation’s manager can block them from doing so, if he has been instructed to do so by the parents.”

Said one lawyer, who asked not to be named to protect his firm: “Unfortunately, Arnault brought greater attention to the foundations system than we would have hoped.

“I would have preferred to keep it very discreet. Rich people know how to find us. They don’t need to read it in the Financial Times.”

Arnault Effect

Bernard Arnault is the owner of fashion and champagne house LVMH and reputedly Europe’s richest man.

French actor Gérard Depardieu stirred up tax debate with a threat to seek Belgian citizenship to avoid Hollande’s new top tax rate of 75% on millionaires.

Depardieu, who has been in around 200 films, says he’s moving to Belgium to avoid paying a new 75 percent tax on the superwealthy. The move has divided the country and has focused attention on the Socialist government’s controversial new tax policy.

The uproar began just before Christmas, when it came to light that Depardieu bought a home in Nechin, a drab Belgian village less than a mile over the French border. Depardieu admitted to establishing a foreign residence to escape new French tax rates.

“It’s pathetic really,” Prime Minister Jean Marc Ayrault said earlier this month. “Paying taxes is an act of patriotism and we’re asking the rich to make a special effort here for the country.”

Depardieu shot back at Ayrault in an open letter published in a major Sunday newspaper, Le Journal du Dimanche.

“I am leaving because you consider success, creativity and talent grounds for sanction,” the actor wrote. Depardieu said he has paid more than $ 190 million in taxes over the last four decades. He said he no longer recognized his country and offered to surrender his passport if he was, indeed, so pathetic.

Hollande’s Tax Hikes Backfire

Based on the Financial Times article as well as actual moves by the super-wealthy, it appears Hollande’s tax policies have already backfired.

For every dime collected, a flood of middle-class and wealthy French are setting up foundations to avoid inheritance taxes and shelter current income as well.

Indeed, any French citizen with an estate to pass on should investigate setting up a private foundation in Belgium to avoid onerous inheritance taxes.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

Wealthy French Eye Belgian Tax Breaks (Everyone in France Should Do the Same)