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“The Real Welfare Cheats”: The Big Problem Of Welfare Dependency In America Now Involves Entitled Corporations

We often hear how damaging welfare dependency is, stifling initiative and corroding the human soul. So I worry about the way we coddle executives in their suites.

A study to be released Thursday says that for each dollar America’s 50 biggest companies paid in federal taxes between 2008 and 2014, they received $27 back in federal loans, loan guarantees and bailouts.

Goodness! What will that do to their character? Won’t that sap their initiative?

The study was compiled by Oxfam and it comes on top of a mountain of evidence from international agencies and economic journals underscoring the degree to which major companies have rigged the tax code.

O.K., O.K., I know you see the words “tax code” and your eyes desperately scan for something else to read! Anything about a sex scandal?

But hold on: The tax system is rigged against us precisely because taxation is the Least Sexy Topic on Earth. So we doze, and our pockets get picked.

John Oliver has a point when he says, “If you want to do something evil, put it inside something boring.” The beneficiaries of tax distortions are counting on you to fall asleep, but this is a topic as important as it is dry.

It’s because the issues seem arcane that corporate lobbyists get away with murder. The Oxfam report says that each $1 the biggest companies spent on lobbying was associated with $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.

And why would a humanitarian nonprofit like Oxfam spend its time poring over offshore accounts and tax dodges? “The global economic system is becoming increasingly rigged” in ways that exacerbate inequality, laments Ray Offenheiser, president of Oxfam America.

One academic study found that tax dodging by major corporations costs the U.S. Treasury up to $111 billion a year. By my math, less than one-fifth of that annually would be more than enough to pay the additional costs of full-day prekindergarten for all 4-year-olds in America ($15 billion), prevent lead poisoning in tens of thousands of children ($2 billion), provide books and parent coaching for at-risk kids across the country ($1 billion) and end family homelessness ($2 billion).

The Panama Papers should be a wake-up call, shining a light on dysfunctional tax codes around the world — but much of the problem has been staring us in the face. Among the 500 corporations in the S.&P. 500-stock index, 27 were both profitable in 2015 and paid no net income tax globally, according to an analysis by USA Today.

Those poor companies! Think how the character of those C.E.O.s must be corroding! And imagine the plunging morale as board members realize that they are “takers” not “makers.”

American companies game the system in many ways, including shifting profits to overseas tax havens. In 2012, American companies reported more profit in low-tax Bermuda than in Japan, China, Germany and France combined, even though their employees in Bermuda account for less than one-tenth of 1 percent of their worldwide totals.

Over all, the share of corporate taxation in federal revenue has declined since 1952 from 32 percent to 11 percent. In that same period, the portion coming from payroll taxes, which hit the working poor, has climbed.

Look, the period of the Oxfam study included the auto and banking bailouts, which were good for America (and the loans were repaid); it’s also true that the official 35 percent corporate tax rate in the U.S. is too high, encouraging dodging strategies. But we have created perverse incentives: C.E.O.s have a responsibility to shareholders to make money, and tax dodging accomplishes that. This isn’t individual crookedness but an entire political/economic system that induces companies to rip off fellow citizens quite legally.

It’s now widely recognized that corporations have manipulated the tax code. The U.S. Treasury, the World Bank, the International Monetary Fund, the European Union and professional economic journals are all trying to respond to issues of tax evasion.

Bravo to the Obama administration for cracking down on corporations that try to move abroad to get out of taxes. Congress should now pass the Stop Tax Haven Abuse Act, and it should stop slashing the I.R.S. budget (by 17 percent in real terms over the last six years).

When congressional Republicans like Ted Cruz denounce the I.R.S., they empower corporate tax cheats. Because of I.R.S. cuts, the amount of time revenue agents spend auditing large companies has fallen by 34 percent since 2010. A Syracuse University analysis finds that the lost revenue from the decline in corporate audits may be as much as $15 billion a year — enough to make full-day pre-K universal.

Meanwhile, no need to fret so much about welfare abuse in the inner city. The big problem of welfare dependency in America now involves entitled corporations. So let’s help those moochers in business suits pick themselves up and stop sponging off the government.

 

By: Nicholas Kristof, Op-Columnist, The New York Times, April 14, 2016

April 16, 2016 Posted by | Corporate Welfare, Tax Code, Tax Evasion | , , , , , , | Leave a comment

“Corporate Wage Hike Subsidities”: CEOs Call For Wage Increases For Workers! What’s The Catch?

Peter Georgescu has a message he wants America’s corporate and political elites to hear: “I’m scared,” he said in a recent New York Times opinion piece.

He adds that Paul Tudor Jones is scared, too, as is Ken Langone. And they are trying to get the Powers That Be to pay attention to their urgent concerns. But wait — these three are Powers That Be. Georgescu is former head of Young & Rubicam, one of the world’s largest PR and advertising firms; Jones is a quadruple-billionaire and hedge fund operator; and Langone is a founder of Home Depot.

What is scaring the pants off these powerful peers of the corporate plutocracy? Inequality. Yes, amazingly, these actual occupiers of Wall Street say they share Occupy Wall Street’s critical analysis of America’s widening chasm between the rich and the rest of us. “We are creating a caste system from which it’s almost impossible to escape,” Georgescu wrote, not only trapping the poor, but also “those on the higher end of the middle class.” He issued a clarion call for his corporate peers to reverse the dangerous and ever-widening gulf of income inequality in our country by increasing the paychecks of America’s workaday majority. “We business leaders know what to do. But do we have the will to do it? Are we willing to control the excessive greed so prevalent in our culture today and divert resources to better education and the creation of more opportunity?”

Right on, Peter! However, their concern is not driven by moral outrage at the injustice of it all, but by self-interest: “We are concerned where income inequality will lead,” he said. Specifically, he warned that one of two horrors awaits the elites if they stick to the present path: social unrest (conjuring up images of the guillotine) or (horror of horrors) “oppressive taxes” on the super rich.

Motivation aside, Georgescu does comprehend the remedy that our society must have: “Invest in the actual value creators — the employees,” he writes. “Start compensating fairly (with) a wage that enables employees to share amply in productivity increases and creative innovations.” They have talked with other corporate chieftains and found “almost unanimous agreement” on the need to compensate employees better.

Great! So they’ll just do it, right? Uh… no. But he says he knows just the thing that’ll jar the CEOs into action: “Government can provide tax incentives to business to pay more to employees.” That’s his big idea. Yes, corporate wage-hike subsidies. He actually wants us taxpayers to give money to bloated, uber-rich corporations so they can pay a dab more to their employees!

As Lily Tomlin said, “No matter how cynical you become, it’s never enough to keep up.”

First of all, Georgescu proposes this tax giveaway to the corporate elite could “exist for three to five years and then be evaluated for effectiveness.” Much like the Bush tax cuts that helped drive the economic divide, once the corporate chieftains get a taste for a government handout, they will send their lawyers and lobbyists to Washington to schmooze congresscritters into making the tax subsidy permanent.

Secondly, paying to get “good behavior” would reward bad behavior, completely absolving those very CEOs and wealthy shareholders of their guilt in creating today’s gross inequality. After all, they are the ones who have pushed relentlessly for 30 years to disempower labor unions, downsize and privatize the workforce, send jobs offshore, defund education and social programs, and otherwise dismantle the framework that once sustained America’s healthy middle class. These guys put the “sin” in cynical.

If we want to fix income inequality, Larry Hanley, president of the Amalgamated Transit Union, has a solution. In response to Gerogescu’s offer of charity to corporations, Hanley wrote: “Strengthen labor laws, and we can have democracy and equality again.”

 

By: Jim Hightower, Featured Post, The National Memo, August 26, 2015

August 27, 2015 Posted by | CEO'S, Corporate Welfare, Wages, Working Class | , , , , , , , | 1 Comment

“The Real Scandal In Denny Hastert’s Life”: Immersed In The Immoral Swamp Of Washington’s Game Of Money Politics

Washington’s establishment of politicos, lobbyists, and media sparklies are shocked — shocked to their very core! — by the scandalous sexual revelations about Dennis Hastert.

The portly Republican, who’d been Speaker of the House a decade ago, was an affable, nondescript Midwesterner who was popular with his fellow lawmakers. A former high-school wrestling coach in rural Illinois, Hastert was viewed as a solid salt-of-the-Earth fellow embodying Middle America’s moral values. So his recent indictment for paying $1.7 million in hush money to a man he apparently molested during his coaching years has rocked our Capitol.

“I’m shocked and saddened,” said the current GOP Speaker, John Boehner. Likewise, former colleagues from both sides of the aisle were dismayed that “our Denny” would have been engaged in child molestation and now caught in an illegal financial cover-up of that abomination. “This has really come out of nowhere,” exclaimed Rep. Peter King, a longtime ally of the man whom all of Washington considered a straight arrow.

Washington’s gossip mill is spinning furiously over last week’s revelations. Before we join these officials in wailing about Dennis Hastert’s alleged long-hidden molestation, however, let me note that while they are bewildered by his sexual impropriety, they find it not worthy of mention — much less condemnation — that Denny has long been immersed in the immoral swamp of Washington’s game of money politics. The guy they profess to love as a paragon of civic virtue — “the coach,” as Rep. King hailed him — was one of the most corrupt Speakers ever. What about the filthy, backroom affair he has been openly conducting with corporate lobbyists for nearly two decades?

During his tenure as House Speaker, Hastert turned the place into the Willy Wonka Chocolate Factory of corporate favors. By putting campaign cash into Republican re-election coffers controlled by him and his top hitman, Majority Leader Tom DeLay, corporate interests gained entry into Denny’s psychedelic playhouse. With Hastert himself singing “Candy Man,” the favor seekers could help themselves to the river of chocolate running through Congress’ back rooms.

Remember “earmarks,” the sneaky tactic of letting congressional leaders secretly funnel appropriations to favored corporations and projects? Earmarks became the trademark of Hastert’s regime, sticking taxpayers with the tab for such outrages as Alaska’s “Bridge to Nowhere.” Indeed, Denny grabbed a $200 million earmark for himself, funding an Illinois highway near land he owned — land he then sold, netting millions in personal profit.

When he left Congress, Hastert moved just a short limo ride away to become — what else? — a corporate lobbyist. Trading on his former title, personal ties to House members and knowledge of how the chocolate factory runs, he has been hauling in a fortune as a high-dollar influence peddler for makers of candy-flavored cigarettes, Peabody Coal Company, land developers and other giants. And guess what his specialty is? Getting “riders” attached to appropriations bills, so public money is channeled directly to his clients.

Hastert openly traded legislative favors for campaign cash, including profiting personally from his powerful position. And, when he was squeezed out because of the corruption, he didn’t return to the home folks — he became a K-Street lobbyist, continuing to profit to this day by doing corporate favors. That’s how he got so rich he was able to shell out $1.7 million in hush money to the student he abused.

Good ol’ Denny has always thought he was above the law. Just as Hastert should be held accountable for the deep personal damage his alleged molestation would’ve done to his former student, so should he also pay for his abominably indecent abuse of office, his self-gratifying groping of public funds and his repeated, sticky-fingered violations of the American people’s public trust.

 

By: Jim Hightower, The National Memo, June 3, 3015

June 5, 2015 Posted by | Corporate Welfare, Dennis Hastert, Sexual Molestation | , , , , , , , | 2 Comments

“Getting The Sports Moguls Off Our Backs”: The Subsidy-Bloated Profits Generally End Up In The Pockets Of The Owners

It was not out of a sense of decency that the National Football League recently let go of its tax-exempt status. You see, as a tax-exempt organization, the NFL had to disclose Commissioner Roger Goodell’s compensation — $44.2 million in 2012. That seemed an excessive sum for the head of a “nonprofit” freed from having to pay any federal income tax. Now the NFL can keep it secret.

Tax exemption is a subsidy. The taxes the NFL money machine didn’t have to pay, everyone else had to pay. Thanks go to former Sen. Tom Coburn (R-OK), Rep. Jason Chaffetz (R-UT), and Rep. Elijah Cummings (D-MD), for railing against such unsightly deals.

But that’s not the only good news for citizens tired of being milked by billionaire sports moguls. Consider Verizon’s decision to let customers buy TV packages that do not include ESPN or other sports channels.

An explanation: Animal Planet and Food Network are not why TV bills are so ludicrously high. What drive them up are the enormous fees the sports channels extract for their programming.

ESPN alone tacks an estimated $7 on monthly bills. By comparison, USA Network adds less than $1.

An interesting calculation: If every month you put $7 into an investment with an annual return of 4 percent, you’d have $1,027 after 10 years. These things add up.

It was not charity that prompted Verizon to let its customers buy a smaller base package of channels, plus extra bundles containing the channels they actually watch, at lower cost. Every month, thousands of Americans — incensed by their monthly TV bills and now able to get most of what they watch from the Internet — have been “cutting the cord,” that is, dropping their cable, satellite, or fiber-optic TV service altogether.

Anyhow, ESPN has dragged Verizon Communications into court. The sports network, the Disney empire’s most lucrative business, claims that Verizon broke a contract requiring that ESPN channels be part of its basic offerings. Verizon says that any of its customers can obtain ESPN through a bonus bundle at no additional cost and that therefore it is included.

Never did I think I’d say this, but I am rooting for my pay-TV provider.

On to another reason to cheer. President Obama’s proposed budget would ban the financing of professional sports stadiums with tax-exempt bonds. Such bonds lower borrowing costs for the zillionaire team owners. Currently, 22 NFL teams play in stadiums financed by tax-exempt bonds, as do 64 professional baseball, basketball and hockey teams.

Why would tax-exempt bonds — created to help cities, towns, and states pay for needed infrastructure — go to benefit mega-businesses? Because the team owners have succeeded in conning locals to see sports arenas as economic magnets pumping money into their weary tax bases.

Lots of studies contradict this self-serving propaganda. First off, the economic activity generated by the teams often pales next to the concessions wrenched from the taxpayers. Secondly, many of the dollars spent at the games are dollars that would have otherwise been left at local businesses, such as restaurants.

Furthermore, the subsidy-bloated profits generally end up in the pockets of the owners and their magnificently paid players — who promptly take them out of town. With all due respect to Cleveland, one doubts that LeBron James spends many of his millions there.

Ending tax-exempt bonds for sports arenas might reduce our elected officials’ temptation to sacrifice their taxpayers in return for good tickets to the game. That would be the best outcome.

They who love professional sports should pay for them.

 

By: Froma Harrop, The National Memo, May 7, 2015

May 16, 2015 Posted by | Corporate Welfare, National Football League, Nonprofit Organizations | , , , , , | 1 Comment

“Bobby Jindal, Crony Capitalist”: Giving A Whole New Meaning To The Term “Corporate Welfare”

As much as I hate entertainment tax credit programs, and as obsessed as I’ve become with the bottomless well of opportunism known as Bobby Jindal, you’d think I would have guessed at the cash nexus underlying the prize endorsement of the Lousiana governor’s proto-presidential candidacy by Duck Dynasty star Willie Robertson. But afraid it took a report from Bloomberg Politics‘ Margaret Newkirk to get me to see the connection:

Louisiana Governor Bobby Jindal, a potential Republican presidential candidate, is trying to close a $1.6 billion budget hole without touching as much as $415,000 per episode in tax breaks that may be due to “Duck Dynasty.”

The A&E television reality show takes part in the nation’s most generous entertainment-tax credit program. Jindal is proposing no changes, arguing that reducing such breaks is tantamount to raising taxes. The state approves enough incentives each year to make up at least $200 million in proposed cuts that led Louisiana State University to say that it may plan for insolvency….

Louisiana, which was the site of the most English-language film productions in the U.S. in 2013, pioneered movie credits, approving the program in 2002. All but 13 states now have such programs, according to Film Production Capital, a New Orleans firm that brokers credits….

Feeding Time Productions LLC, which produces [Duck Dynasty], has submitted expenses for its first four seasons that would qualify it for $11 million in credits once approved, according to state data. That includes $4.6 million for the fourth season, or $415,000 per episode. None have yet been certified.

Louisiana offers movie makers credits for 30 percent of in-state spending and allows them to be sold to brokers.

Film-production companies set up as limited liability companies don’t owe corporate taxes in Louisiana. Most therefore sell their credits to someone that does. They are also allowed to sell them back to the state for 85 cents on the dollar.

That’s right: it’s not enough for Louisiana to let film and TV production companies eliminate their state tax liabilities; the state gives them “transferable” tax credits that can be sold on special markets to companies that do have tax liability, and if that fails the state will buy them back. So this is the corporate version of the “refundable tax credits” poor people get via the EITC.

This makes me kind of ill as an abstract matter, and gives a whole new meaning to the term “corporate welfare.” But it’s especially egregious in a state like Louisiana, with a horrendous budget shortfall, and even violates Jindal’s own principle that cutting back on refundable tax credits (e.g., credits from the business inventory tax) doesn’t violate his no-tax-increase pledge.

I’m not saying Bobby’s taking this inconsistent and politically damaging position strictly out of solicitude for Duck Dynasty; he’s slippery enough that there are usually multiple reasons for every objectionable thing he does. But on the other hand, when Mike Huckabee was going out of his way to pander to the Robertsons in his recent book, he didn’t have tax credits to hand them either, did he?

 

By: Ed Kilgore, Contributing Writer, Political Animal Blog, The Washington Monthly, May 4, 2015

May 6, 2015 Posted by | Bobby Jindal, Corporate Welfare, Tax Cuts | , , , , , , | Leave a comment

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