“The Limits Of Corporate Citizenship”: Why Walgreen Shouldn’t Be Allowed To Influence U.S. Politics If It Becomes Swiss
Dozens of big U.S. corporations are considering leaving the United States in order to reduce their tax bills.
But they’ll be leaving the country only on paper. They’ll still do as much business in the U.S. as they were doing before.
The only difference is they’ll no longer be “American,” and won’t have to pay U.S. taxes on the profits they make.
Okay. But if they’re no longer American citizens, they should no longer be able to spend a penny influencing American politics.
Some background: We’ve been hearing for years from CEOs that American corporations are suffering under a larger tax burden than their foreign competitors. This is mostly rubbish.
It’s true that the official corporate tax rate of 39.1 percent, including state and local taxes, is the highest among members of the Organization for Economic Cooperation and Development.
But the effective rate – what corporations actually pay after all deductions, tax credits, and other maneuvers – is far lower.
Last year, the Government Accountability Office, examined corporate tax returns in detail and found that in 2010, profitable corporations headquartered in the United States paid an effective federal tax rate of 13 percent on their worldwide income, 17 percent including state and local taxes. Some pay no taxes at all.
One tax dodge often used by multi-national companies is to squirrel their earnings abroad in foreign subsidiaries located in countries where taxes are lower. The subsidiary merely charges the U.S. parent inflated costs, and gets repaid in extra-fat profits.
Becoming a foreign company is the extreme form of this dodge. It’s a bigger accounting gimmick. The American company merges with a foreign competitor headquartered in another nation where taxes are lower, and reincorporates there.
This “expatriate” tax dodge (its official name is a “tax inversion”) is now at the early stages but is likely to spread rapidly because it pushes every American competitor to make the same move or suffer a competitive disadvantage.
For example, Walgreen, the largest drugstore chain in the United States with more than 8,700 drugstores spread across the nation, is on the verge of moving its corporate headquarters to Switzerland as part of a merger with Alliance Boots, the European drugstore chain.
Founded in Chicago in 1901, with current headquarters in the nearby suburb of Deerfield, Walgreen is about as American as apple pie — or your Main Street druggist.
Even if it becomes a Swiss corporation, Walgreen will remain your Main Street druggist. It just won’t pay nearly as much in U.S. taxes.
Which means the rest of us will have to make up the difference. Walgreen’s morph into a Swiss corporation will cost you and me and every other American taxpayer about $4 billion over five years, according to an analysis by Americans for Tax Fairness.
The tax dodge likewise means more money for Walgreen’s investors and top executives. Which is why its large investors – including Goldman Sachs — have been pushing for it.
Some Walgreen customers have complained. A few activists have rallied outside the firm’s Chicago headquarters.
But hey, this is the way the global capitalist game played. Anything to boost the bottom line.
Yet it doesn’t have to be the way American democracy is played.
Even if there’s no way to stop U.S. corporations from shedding their U.S. identities and becoming foreign corporations, there’s no reason they should retain the privileges of U.S. citizenship.
By treaty, the U.S. government can’t (and shouldn’t) discriminate against foreign corporations offering as good if not better deals than American companies offer. So if Walgreen as a Swiss company continues to fill Medicaid and Medicare payments as well as, say, CVS, it’s likely that Walgreen will continue to earn almost a quarter of its $72 billion annual revenues directly from the U.S. government.
But as a foreign corporation, Walgreen should no longer have any say over the size of those payments, what drugs they cover, or how they’re administered.
In fact, Walgreen should no longer have any say about how the U.S. government does anything.
In 2010 it lobbied for and got a special provision in the Dodd-Frank Act, limiting the fees banks are allowed to charge merchants for credit-card transactions — resulting in a huge saving for Walgreen. If it becomes a Swiss citizen, the days of special provisions should be over.
The Supreme Court’s “Citizens United” decision may have opened the floodgates to American corporate money in U.S. politics, but not to foreign corporate money in U.S. politics.
The Court didn’t turn foreign corporations into American citizens, entitled to seek to influence U.S. law and regulations.
Since the 2010 election cycle, Walgreen’s Political Action Committee has spent $991,030 on federal elections. If it becomes a Swiss corporation, it shouldn’t be able to spend a penny more.
Walgreen is free to become Swiss but it should no longer be free to influence U.S. politics.
It may still be the Main Street druggist, but if it’s no longer American it shouldn’t be considered a citizen on Main Street.
By: Robert Reich, The Robert Reich Blog, July 6, 2014
“Running Ethically In Mississippi”: With So Much At Stake, Can Travis Childers Walk The Tightrope?
Travis Childers, who served as a Democrat in Congress from May 13, 2008 to January 3, 2011, was never my kind of Democrat, but I am okay with that. I would not expect great things from him if he were to win a six-year term in the U.S. Senate representing the state of Mississippi. On most contentious issues, I’d expect him to vote with the Republicans in a (probably) vain effort to save his hide in his bid for reelection.
What interests me about this race is the ethics. It’s pretty clear that the Republican Party is badly split between supporters of incumbent Thad Cochran, who is a decent fellow, and his challenger state Sen. Chris McDaniel, who runs in neo-confederate circles and has the support of an extreme Tea Party faction. This wedge pre-exists anything Childers might do to exploit it. If Childers can convince a significant percentage of McDaniel supporters to vote for him, he can actually win this seat, but it is not clear how he can go about doing that without leveraging the racism that is at the core of opposition to Cochran.
Cochran was expected to lose his run-off with McDaniel but exceeded expectations by convincing a not inconsiderable number of black voters to back him. The Tea Party faction is claiming that a lot of these black voters violated the law by voting in the Republican run-off after voting in the Democratic primary. That issue can be settled in court, but regardless of legal merits, Cochran’s open solicitation of black votes is seen as dirty pool by McDaniel’s supporters who think that a Republican primary should be decided by exclusively Republican voters regardless of what the law specifies.
Travis Childers has the option of exacerbating this racial tension for his own political advantage, but this would be the wrong thing to do. Yet, if he doesn’t do it, he will almost certainly lose. In fact, even if he does do it, he will probably lose.
Democrats in Washington are watching the feud cautiously, not yet convinced it will put even Mississippi in play. The Democratic nominee, Mr. Childers, has raised little money and was always seen as a good candidate against Mr. McDaniel but as a marginal one against Mr. Cochran.
Conservative activists are not so sure. Dwayne Hall, vice president of the Miller County Patriots, a Tea Party group in Texarkana, Ark., says he has set up a Google alert for the McDaniel-Cochran fight and emails his network of fellow activists all the news from Mississippi.
“I’m no longer a member of the Republican Party, and I’d expect a lot of my fellow patriots to resign, too,” he said, adding: “I’m perfectly willing to do a protest vote in November if that’s my best option. I’m keeping that option open.”
So, how can Childers convince people like Dwayne Hall to advocate on his behalf without dirtying himself with the racial politics of it all? Childers needs to nurture that “protest vote,” but he doesn’t want to shame himself in the process. So far, he’s walking the tightrope.
The turmoil has given Mr. Cochran’s Democratic challenger, former Representative Travis Childers, an opening to exploit the divide in what is otherwise seen as a race in which he trails badly. “Senator Cochran does not have the confidence of his state, let alone his own party,” Mr. Childers said.
It won’t be easy to maintain that kind of balance with so much at stake. I hope Childers will be able to look back at his campaign and be proud of how he ran it regardless of the outcome.
By: Martin Longman, Washington Monthly Political Animal, July 6, 2014
“Endangering Health And Lives”: How Hobby Lobby Undermines All Americans’ Freedom
The Supreme Court’s recent decision in the Hobby Lobby case demonstrates that the court, at least the five justices who voted in favor of Hobby Lobby, has little concern for, and probably little understanding of, women’s health care. By ruling that corporations, on the grounds of the alleged religious views of their owners, can deny women access to some forms of contraception, the court set a horrible precedent that if followed will endanger the health and lives of many American women.
The Hobby Lobby ruling may at first seem like a victory for the minority of Americans who think that both abortion and contraception should be illegal, and for those who believe that the US should operate more as a theocracy than a country where state and church are separate. However, the ruling not only is terrible news for women seeking a guarantee of good healthcare through their employer, but also for anybody who believes in personal freedom.
In the US, where health insurance is linked to employment, health insurance is part of the compensation package. When most Americans are about to start a new job, or choosing between two or more jobs, one of the first questions they ask is about the quality of the health insurance they will get. In most cases, health insurance varies because some companies offer plans with lower co-pays, better dental care or things like that. Firms that deny dental care are doing it because of concerns about costs, not because they have an ethical or religious problem with healthy teeth. Hobby Lobby is doing something different, denying women access to some forms of health care because of the personal beliefs of the people who run the company.
This decision raises the question of whether the Supreme Court will next rule that employers can tell workers how to spend the money they earn at their jobs. This sounds a bit extreme, but in a very real way that is precisely what the court just did. By limiting how workers can use some of their compensation, the court, despite its own assertions that it was not setting a precedent, opened the door for further limitations. If Hobby Lobby can tell people how they can or cannot use their health care benefits, why can’t they also tell people they can’t, for example, use their salaries to donate to pro-choice political candidates or pro-marriage equality causes? The answer, one would think, would be obvious, but the recent court decision makes it considerably less clear.
The Republican Party has long, if not always sincerely, repeated a mantra of individual freedom, but the Hobby Lobby decision, in which all five justices who formed the majority were appointed by Republican presidents, undermines that. A central belief of all Republican politicians is that Americans should have a right to do what they want with, and keep as much as possible of, their hard-earned money. The Supreme Court made a big move against that idea this week, but the outrage from the Republican side has been absent.
Conservative opposition to healthcare have consistently argued that decisions about health care should be made by patients and doctors, not by the government. The death panel hysteria that Sarah Palin unleashed on the American people a few years ago took that point to a nutty extreme. After last week, conservatives who support Hobby Lobby should probably change their position and argue that health care decisions should be made not by a patient’s doctor, but by a patient’s employer. Similarly, for supporters of the Hobby Lobby decision, the new mantra of individual freedom should now be that Americans should be allowed to do whatever they want with their hard earned money, as long as their boss approves, but somehow that seems an unlikely campaign slogan for Ted Cruz or Marco Rubio.
The Hobby Lobby decision is about women’s health care and individual freedom, but it also is another sign of the consolidation of power by big corporations in the US. It is now legal for corporations to deny workers important medical services, and redefine their compensation packages, simply because, religious claims aside, they want to. During a very tenuous recovery in which real wages have not recovered, unemployment remains high and economic uncertainty on the part of working Americans is an enormous problem, the Supreme Court just gave more rights to corporations while taking wealth, as health care benefits are a form of wealth, out of the hands of working Americans.
By: Lincoln Mitchell, The Huffington Post Blog, July 6, 2014
“In A Partisan League Of His Own”: Alito, Doing Everything He Can To Be ‘A Corporation’s Best Friend’
On Monday morning, around 10 a.m. ET, much of the nation’s political and legal world turned to Scotusblog to learn the outcome of two of the year’s biggest Supreme Court cases. Moments later, the blog told us that Justice Samuel Alito was delivering both rulings.
And it was at this point that everyone immediately knew that conservatives had won both cases.
What about the possibility of a surprise? How could everyone be absolutely certain that Alito would side with the right? Was it really so inconceivable that Alito would honor precedent and play against type?
Actually, yes, it was inconceivable.
Ian Millhiser made a compelling case today that Alito is “the most partisan” justice on the bench, making it pretty clear what to expect when he’s written a ruling.
According to data by Washington University Professor Lee Epstein, Alito is more likely to cast a conservative vote than anyone else on the Court.
To be fully precise, that does not make Alito the Court’s most conservative member. That honor belongs to Justice Clarence Thomas, who is the only member of the Court who openly pines for the days when federal child labor laws were considered unconstitutional. Yet, while Alito can’t match Thomas’s radicalism, he is far and away the most partisan member of the Court.
To explain this distinction, Thomas is not a partisan. He is an ideologue. His decisions are driven by a fairly coherent judicial philosophy which would often read the Constitution in much the same way that it was understood in 1918. While this methodology typically leads him to conservative results, it does occasionally align him with the Court’s liberals…. What makes Alito a partisan is that there is no similar case where his judicial philosophy drove him to a result that put him at odds with his fellow conservatives.
To put this in perspective, note that Millhiser highlighted a striking detail: Alito is the only sitting justice who has never crossed over – in effect, breaking ranks with the usual ideological allies – in a closely divided case.
Nine years ago, you’ll recall that Alito was not George W. Bush’s first choice. Rather, the Republican president initially nominated Harriet Miers, the White House counsel at the time, for the lifetime appointment on the high court.
It was among the more foolish decisions Bush made, which ended in an embarrassing withdrawal.
Miers was obviously unqualified, but Bush’s second choice, Sam Alito, is in many ways worse.
Millhiser’s indictment on Alito’s partisanship, his activism, his reliance on a raw political perspective, his desire to be “a corporation’s best friend,” makes a persuasive case and is worth checking out.
By: Steve Benen, The Maddow Blog, July 2, 2014
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
