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Outrageous: David Cay Johnston Explains How Big Corporations Withhold Your Taxes and Then Pocket Them

And other tales of legal corporate robbery.
 
 
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Nobody has done more to expose the infinite ways in which the American economy is rigged to benefit those at the top than Pulitzer Prize-winning journalist David Cay Johnston. His rigorously researched books – Perfectly Legal, Free Lunch and now his latest, The Fine Print, are not recommended for people with egalitarian views and high blood pressure – they're every bit as maddening to contemplate as they are informative.

Last week, AlterNet caught up with Johnston by phone. Below is a lightly edited transcript of our discussion.

Joshua Holland: David, for years you’ve reported how those who can afford the right accountants game this labyrinthian and opaque tax-code of ours. How surreal has it been for you to observe the amount of political conflict we've faced over the past few years over returning the top marginal rates to the same rate they were during the Clinton era -- taking them from 35 percent to 39 percent?

David Cay Johnston: I am actually heartened, Josh. I think that we’re starting to see the end of those Chicago School economic theories. (By the way, I went to the Chicago School 40 years ago, but I did not drink the Kool-Aid.) The reality is people are now, finally -- and I can claim some of the credit for this through my books and my reporting -- people are looking around and saying, "Wait a minute! Starting back in 1980, I was promised that I was going to have a better life. We’d all prosper. Yet all the gains are going to the top."

Let me give you a stunning number I reported the other day. From 1966 – when Lyndon Johnson was president -- to 2011, 45 years later, the bottom 90 percent of Americans’ average income, as reported on tax returns, went up by a stunning $59 -- almost no change at all. If you measure that $59 increase for the vast majority of Americans as one inch, then on the same scale, the incomes of those in the top 10 percent went up by 168 feet. The top one percent, 888 feet. The plutocrats -- the Mitt Romney crowd, the top one percent of the top one percent? Their incomes rose by almost five miles relative to that one inch.

JH: That is remarkable. We are talking about an economy that simply doesn’t work for 90% of working people in this country.

DCJ: My latest book, The Fine Print , looks at this in a different way. The first two books – Perfectly Legal is about taxes, Free Lunch is about all the subsidies we give to rich people. The Fine Print is about all these laws the mainstream media has either not reported on, or reported on in the most superficial and disconnected ways, that are designed to destroy market competition and replace it with monopolies, oligopolies, duopolies -- with rules that allow the biggest companies to raise prices and reduce services.

There are 6 million corporations in America, but 2,600 of them, a tiny number out of 6 million, own 80 percent of the business assets in America.

JH: One of the things that, I think, really will jump out to readers as they dig into The Fine Print is the way that you looked into all these little nickel-and-dime charges that corporations levy on us constantly, often thanks to deregulation. We tend to take them for granted, because when you look at your phone bill – and you talk a lot about telecoms in the book – 35 cents here and a 60-cent charge there, they don’t seem so pressing, but they really add up. What’s going on with that?

 
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