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Tereza Coraggio

Third Paradigm is an out-of-the-box thinktank on community sovereignty and regenerative economics.

We look at how to take back our cities, farmland and water; our money, production and trade; our media, education and culture, our religion and even our God.

We present a people's history of the Bible and a parent's view on how to raise giving kids in a taking world.

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Past Shows

 

The Upside-Down Tax Pyramid

February 15, 2009

3P-014 Show Information (includes MP3 download link)


Our title this week is The Upside-Down Tax Pyramid. In our feature rant, we'll look at taxation. What does our tax system reward and what does it discourage? What does it force us to do and what does it force underground? Is it possible to make an honest living in Santa Cruz? Finally we'll argue that centralized taxation sets up socialized capitalism, but the antidote to civilization as we know it may be capitalized socialism. We'll outline a migratory path back down from the precipice we're on.

We'll also look at Obama's ice-cream and the trouble with chocolate, today after its biggest day of the year. But because poetry is always fair trade, unlike flowers, diamonds, candy, or cell phones, we'll celebrate Valentine's Day with a love poem by Joy Harjo called This is My Heart.

http://www.panhala.net/Archive/This_is_My_Heart.html

This is My Heart

This is my heart. It is a good heart.
Bones and a membrane of mist and fire
are the woven cover.
When we make love in the flower world
my heart is close enough to sing
to yours in a language that has no use
for clumsy human words.

My head is a good head, but it is a hard head
and it whirs inside with a swarm of worries.
What is the source of this singing, it asks
and if there is a source why can't I see it
right here, right now
as real as these hands hammering
the world together
with nails and sinew?

This is my soul. It is a good soul.
It tells me, "come here forgetful one."
And we sit together with a lilt of small winds
who rattle the scrub oak.
We cook a little something
to eat: a rabbit, some sofkey
then a sip of something sweet
for memory.

This is my song. It is a good song.
It walked forever the border of fire and water
climbed ribs of desire to my lips to sing to you.
Its new wings quiver with
vulnerability.

Come lie next to me, says my heart.
Put your head here.
It is a good thing, says my soul.


~ Joy Harjo ~
http://www.wisdomoftheelders.org/prog7/transcript07_tr.htm
From A Map to the Next World

Love, indeed, is a good thing. How did it come to keep such bad company? Love has sold its image in order to sell some of the most destructive products on the planet. What's the formula? A guy should spend three months of his income on a ring, so anyone looking at your hand can calculate his net worth? For a history of diamonds and oppression, go to Derrick Jensen's book, The Culture of Make-Believe. Eve Ensler has turned Valentine's Day into V-day with an annual focus on violence against women, especially in the Congo. Cell phones, laptops, prosthetic devices, and rockets all have one thing in common – coltan, a unique mineral with a melting point of almost 3000 degrees. It's a magic dust needed to insulate any small computerized device, and 85% of this critical supply is located in the Congo. Activists believe that it's funding the femicide, which is genocide against women. In the forefront of justice for flower workers is The International Labor Rights Forum.

They're also the champions of child laborers and slaves on cocoa plantations in the Ivory Coast. Their updated cocoa scorecard ranks chocolate from bitter to sweet in labor practices. The most bitter are Nestle (which owns Haagen-Daaz), M&&M/Mars (which owns Dove) and Hershey (which owns Scharfenberger and Dagoba). When Dagoba sold to Hershey, they pledged to continue to be socially-responsible, but what does that mean except green-washing? In the 1980's, Hershey single-handedly devastated Belize by getting farmers to plant cocoa with the promise of a high price. They went into debt and, years later, the harvest was ready. Hershey then only paid them a third of the promised price. Some farmers left their crops to rot in the field rather than selling. So Dagoba is a thin deceptive shell on this history. Godiva has also been sold by Campbell's Soup – bet you didn't know there were chicken and stars in your truffles. The buyer is the largest food commodity seller in Turkey. This doesn't bode any better for those child slaves.

http://www.slavefreechocolate.org/index.html

Forced labor is a problem affecting the entire world. Human beings
are considered an expendable commodity. Children are being used
and discarded. The information presented here is an attempt to
bring about awareness of this problem. Based on existing surveys,
documents and reports, it brings to light disturbing facts that
many choose to just ignore.

Speaking of Haagen-Daaz, there's a vignette making the email rounds these days in conservative circles. In it, two kids are running for 5th grade class president. One kid presents a careful, point-by-point analysis for how he'll make improvements and address problems. The little girl gets up and just says four words – "ice-cream each Friday." She wins by a landslide. The email makes the analogy that Obama is promising ice-cream, but, it queries, "Who's going to milk the cow and clean up the barn?"

This was sort of encouraging. I didn't know that Republicans were with me on a return to dairy farming. I've been wanting to start a dairy co-op, and I know just the place for it. I need some folks who know their way around a mobile milking barn, and I don't care if they play Rush Limbaugh to the Jerseys. Now, when I walk around the farmer's market, I'll keep an eye out for the secret Republicans. We can rake the muck together to clean up the barn. Meanwhile, our economic chickens are coming home to roost and we've yet to see if the stimulus package will lay an egg.

My Republican buddies are blocking it because a "Buy American" campaign is protectionist. "Protectionist" has become a dirty word. Spending taxpayer money on taxpayer-made goods is protectionist. Refusing to trade with countries where children are put to work and unionists are put to death is protectionist. Let me ask you, if we're not going to protect ourselves, who is? How did protection, meaning buying from neighbors, become a bad thing, and defense, meaning killing people who never did anything to us, become a noble thing? A Google ad I just saw advertised used military equipment. Can you give a retired Uzi a good home?

China is now the third-biggest economy in the world, and their military spending is increasing by 18% per year. Weapons and low labor costs seem to go hand in glove. But for the US, high labor costs are promoted as the reason to produce more weapons. We need good defense jobs. Lockheed Martin ran a full-page ad in the Washington Post to show that the F-22 Raptor, an expensive weapon of dubious utility, is tied to 95,000 jobs in 44 states. The shipbuilding industry is lobbying Congress to double ship production to save 400,000 jobs in 47 states. It's no accident that workers in Kansas are building ship parts. When defense contracts go before Congress, each representative has jobs in their constituency riding on it.

But there's an even more sinister aspect to this military Keynesianism – selling arms abroad protects jobs at home. Last year, US arms exports totaled $32 billion. In the previous two years, we sold weapons to more than 170 nations, up from 123 at the start of the Bush administration. Taiwan just bought $6.5 billion. But activists in the US and Asia have launched the Pacific Freeze Campaign to reduce military budgets, freeze arms imports and exports, stop the construction of new military bases, and halt the development of new weapons systems. Six countries - the US, Russia, China, Japan, South Korea, and North Korea, account for 65% of global military spending, with the US alone accounting for nearly 50%.

So let me get this straight. We're selling weapons to the people to whom we owe trillions in debt. They use these weapons to control their own population, keeping wages low. This floods our market with cheap goods we can't compete with, creating a huge trade deficit. Our trade policy prevents us from adjusting for this by charging a duty, which could both bring in revenue and protect jobs. We can't even use marketing to boost domestic production with a Buy American campaign. Plus, we're subsidizing weapons production with our tax money while borrowing trillions more to create the jobs that do things we actually need. On that pathetic note, let's listen to Manu Chow with Politic Kills.

[Manu Chao – Politik Kills]

http://www.youtube.com/watch?v=KV0-biHAtNY

That was Manu Chow with Politic Kills, which says politics is a dirty dance. Politics is finance. My daughter Veronica and I just presented a session at the UCSC Strengthening the Roots Convergence on Food, Trade and Justice. One of the students was telling me how to swag a rhyme and make it less predictable. Another rapper technique, he said,

"...was to pair the words that almost rhyme
and then work backwards to the lines.
So call me a secret Republican,
but I don't understand how more debt can
help us. It figures that the next generation
will have a faster circulation
of cash and the future that we plunder
won't be a force that sucks them under.

So how will we make the great escape
When the ones who get the big tax break
Are those who have a job to tax
And not the ones who get the ax.
Tomorrow's lookin' grim, US,
With or without the stimulus.

Well, I better stick to my day job. Although I'm not sure my lecture and diagrams were any cheerier. The sessions were held in a large open space. I was explaining how taxes favor wealth monopoly and why, unless they changed the tax system, they were screwed whatever they did. Meanwhile, the group next door was throwing a fair-trade soccer ball and introducing themselves – "I'm Bridget!" "Thanks Bridget, I'm Luis." It was like trying to give a eulogy for the world over a pep rally.

This morning, the seven wonderful students who stayed with us left, leaving a fair-trade chocolates, a lovely thank you note, and leaving the garage cleaner than they'd found it. They said my presentation had sparked a lot of discussion and they want to help work on a way out. Since this will take all of us, let me explain here why our tax system dooms our chances to be productive, secure, and to trade fairly.

First of all, I'm not against taxes, and I'm not against the amount we pay. What's inside-out is what we tax and what we don't, and what's upside-down is who the taxes go to. We tax working for a living and we tax having a place to live, perchance to farm. We don't tax putting the next generation into debt, or forcing terrible working conditions on the rest of the world. The bulk of taxes we pay go directly into a centralized system, which then controls who it goes to. The communities that provide the social services we need, are then funded by extra taxes that make us dependent on the things that are destroying us. Let me illustrate.

Every time a dollar circulates, turning our labor into a product, 43.25 cents goes to the Federal or State government. Federal income tax averages 25%, with over half of the discretionary budget going to defense. State income tax is 11%. But CA State sales tax adds 7.25%, which goes to the State. That adds up to 43.25% of the value of our labor going into a nationwide or California-wide coffer. So working for a living takes almost half to fund governments we have no control over. Taxes on capital gains in the stock market, however, are only taxed at 15%. A product I make and sell to my neighbor deducts 18.25% to the State, between income and sales tax, and 25% to the Fed. But when Hershey buys cocoa beans from exploited Bolivians, they pay no import tax. These products of exploited labor become the same as any product of our labor. That's what the free market is.

The State makes the most money on sales tax from these products, but the local district is allowed to add from .25% to 1%. Santa Cruz, however, has added 1.25%. It was the only one I saw on the chart this high. This is a slim margin of the 44.5% the government takes from each labor to product cycle. But this 1.25 sales tax is all we have discretion over, which is why Big Box retailers and car dealerships get tax breaks to come here. I guess a percent in the hand is worth two in the Bush, speaking of our last Federal government.

The other local tax is on property. In most states, this is set at 1% of the speculative value if the house were sold. Over the last few years, the average house in Santa Cruz county has sold for $750,000. If you paid 1% of that, it would be $7500 per year or $625 per month. This is on top of your mortgage, which is calculated at the most debt you can absorb for 30 years. It was impossible for retired homeowners, so Proposition 13 was passed. This limited values from going up more than 2% a year. Some years ago, I faked my way into getting the roll values from the County treasurer, which are the assessed values vs. the sale values. While assessed value could only go up 2%, sale value and therefore rents had gone up 8% a year for 25 years. So the city was getting less than half of the actual cost of living here, which is the primary complaint of teachers and city employees. To make up the difference, they add school district and parcel taxes. These add another 11.5% to the property tax plus $200.

So let's imagine that you inherited a bunch of money and you were able to buy outright an average single-family house in Santa Cruz for $750,000 cash. You're set, secure for life, right? Well, not really. You still have to pay $8500/yr or $713/mo in property tax, or you'll lose your house. Let's say you wanted to rent it to a nice young family for a fair rate. With insurance, utilities, and maintenance, if you rented it for $1000/mo., you might break even, even with A HOUSE that's FULLY PAID! It doesn't make financial sense to hold onto property. But of this $713/mo simply to live in the house you've paid for, the county only controls $88. This margin pays for what means the most to us, because those things are held hostage for new taxes. We wouldn't vote in a new tax to send 10 million dollars a day in military aid to Israel.

So why do people buy? If a house is lived in for 2 years, the owners can make a $500,000 tax-free profit. It's the only source of untaxed profit there is. At a low 5.3% bank mortgage, a half-million payment to the seller passes on 1M in debt to the buyer, with a profit of a half-million to the banks. So the system discourages debt-free living or sustainable rents or owner-financed loans. Instead, it forces sales and new mortgage loans.

As I said to the students, I'm not telling this to depress you. I'm saying this to let you know the depression isn't in your head. It's not a mental condition to be treated with drugs, it's a social condition to be treated with action. You've been told that if you stay in school, get a job and work hard, you can have a secure life. It ain't so. We need to look at why rather than blaming ourselves or feeling survivor guilt if we're still making it.

This has been Tereza Coraggio with Third Paradigm. Thanks to Skidmark Bob for production, editing, and great music suggestions. Our closing song is 33 Degrees from Thievery Corporation.

[Thievery Corporation – 33 Degree]

http://www.youtube.com/watch?v=mAlHy83YEQs

Thank you for listening.

3