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“An Indictment Of The ‘Pay-To-Play’ Political System”: Did the Chemical Industry Write Its Own Oversight Legislation?

For an instructive example of how unfettered money in politics corrupts the legislative process, consider a chemical-safety bill under deliberation in the Senate.

The legislation, sponsored by Louisiana Republican David Vitter and New Mexico Democrat Tom Udall, would reform the 1976 Toxic Substances Control Act (TSCA), which the chemical industry and environmental and public health advocates alike say is severely outdated. In the absence of solid federal protection from the roughly 1,000 chemicals that the Environmental Protection Agency judges as potential health hazards, more than half the states have picked up the slack by putting their own regulations in place. The bill’s opponents warn it would undermine these state laws, without strengthening the EPA’s oversight powers enough to compensate. Unsurprisingly, the proposed overhaul has the “unequivocal support” of the chemical industry.

One of the bill’s chief critics is Barbara Boxer, the ranking Democrat on the Environment and Public Works Committee. Boxer, who has introduced a competing bill with stronger consumer protections, has been highly critical of the role chemical companies have played in the development of the Udall-Vitter legislation. “I’ve been around the Senate for a long time, but I have never before seen so much heavy-handed, big-spending lobbying on any issue,” Boxer was quoted saying in a New York Times article in early March. “To me it looks like the chemical industry itself is writing this bill.”

Boxer may have been right to question its authorship. Early in the week Hearst Newspapers got its hands on a draft version that was circulated by Udall’s office in anticipation of a committee hearing on Wednesday. Someone at Hearst checked the authoring information contained in the Word document—and found that it originated with the American Chemistry Council, the “leading trade organization and lobbyist for the chemical industry.”

Although Udall has a strong environmental record, he’s become cozy with ACC and other industry groups over the two years he’s spent working on the TSCA overhaul, as the same Times article revealed. He has raised “tens of thousands” of dollars from chemical interests, and the ACC even ran a television ad on his behalf. “The leadership he is providing is absolutely critical,” the group’s president and lobbyist Cal Dooley told the Times. Udall and the other sixteen cosponsors of his legislation received, on average, about 70 percent more from chemical companies than other senators.

Udall’s office and ACC insist the digital link between the document and the lobby group indicates only that after Udall’s office circulated the draft to stakeholders, someone at ACC saved a version and sent it back to the senator’s staff. But the Environmental Working Group, one of the bill’s chief opponents, and Boxer’s office told the SF Gate the draft version they received had the same authoring information.

Even if the bill didn’t fully originate with ACC, it’s clear that the chemical industry—which has a financial incentive to keep regulations loose—has left its mark on the Udall-Vitter legislation. The bill would bar states from regulating a chemical once the EPA designates it as “high priority” for assessment, a process that can take up to seven years. It requires the EPA to start reviewing a minimum of twenty-five chemicals within five years, but at that rate, it could be centuries before the agency got through the 1,000 chemicals it says need assessment. (To make matters worse, the underfunded EPA is known for missing deadlines.) To date the EPA has only ever banned five chemicals, and mandated testing on a mere 200 of the 80,000 in use in the United States.

Consumer advocates worry that if the bill passes, protections already in place would be completely undone while the EPA proceeds to examine only a small number of chemicals at a glacial pace. A number of organizations including Physicians for Social Responsibility, the Natural Resources Defense Council, United Steelworkers and the Breast Cancer Fund, along with eight state attorneys general, have pointed out these and other serious flaws. Some, like the Environmental Working Group, consider it worse than the existing regulatory framework; EWG says it “fail[s] to ensure that chemicals are safe, fail[s] to set meaningful deadlines for safety reviews, fail[s] to provide EPA with adequate resources and [denies] states the ability to protect public health and the environment.”

Nevertheless, in a sign of how broken the 1976 law is—the oft-repeated example is that it doesn’t even allow the EPA to ban asbestos—other health and environmental groups support the bill anyway. Anything stronger, they say, and it will lose Republican support, making it impossible to pass. “I don’t want to be facing another Senate committee twenty years from now, testifying about a sixty-year-old law. Nor do I want have to tell my daughter that she and her future children will not have a greater level of protection because we failed to pass a good, even if not perfect, law,” Lynn Goldman, a professor of environmental health at George Washington University, testified before the Senate committee on Wednesday.

It may be true that a bill that truly protects consumers from harmful chemicals can’t pass Congress in its current form. But that’s a stone that shouldn’t be cast against advocates for something better than the Udall-Vitter compromise. It’s an indictment of the pay-to-play political system and the legislators who gamely reward their corporate sponsors.

 

By: Zoe Carpenter, The Nation, March 19, 2015

March 20, 2015 Posted by | Chemical Industry, Environmental Protection Agency | , , , , , , | Leave a comment

“A Dangerous Direction”: Corporate Tax Break Scheme Is Gaining A Momentum We Must Stop

There is no real argument over whether the nation needs to do more to improve its infrastructure – its transportation, water, power and information networks. But there is an argument over how best to pay for it all – and that argument is increasingly turning in a dangerous direction.

Financially stressed working-class households who are at best treading water, if not actually sinking, in today’s economy aren’t eager to dig deeper into their own pockets to foot the bill. That’s even more true of the plutocrat class, which has an army of lobbyists at the ready to shut down any suggestion that those who arguably would benefit the most from such things as better roads and public transportation should shoulder the larger share of the load.

Politicians of both parties in Washington are therefore increasingly relying on one of the schemes in the voodoo economics toolbox: give corporations hoarding money overseas to avoid taxation a form of tax holiday in exchange for increased corporate funding for infrastructure.

The Bond Buyer financial news site reports that Sen. Rand Paul (R-TX) and Sen. Barbara Boxer (D-CA) are close to agreeing on a plan that would give multinationals a deep tax reduction on money they currently have stashed overseas if they bring the money back into the United States, also known as repatriation. Money collected would be deposited into the Highway Trust Fund, which is dedicated to paying for federal transportation projects.

Paul’s promoting of this idea is not new; he had a bill last year that would have permanently cut the tax rate on profits corporations hold overseas, with the funds going into an emergency fund for what it considered high-priority highway projects. But his collaboration with Boxer is likely to give the idea more political momentum.

Meanwhile, the chairman of the House Transportation and Infrastructure Committee, Rep. Bill Shuster (R-PA), told the U.S. Conference of Mayors last week that raising the gasoline tax to pay for transportation improvements – the most logical near-term solution since that tax hasn’t been raised in almost 22 years – is off the table in his committee. Instead, “the number one source that’s being talked about is this repatriation of funds,” he said, according to The Hill newspaper.

Rep. John Delaney (D-MD) is a leading proponent of a repatriation-for-transportation-funding scheme. In December he filed a bill expected to be reintroduced this year that would allow multinational corporations to bring back overseas profits at a tax rate of 8.75 percent instead of the current statutory tax rate of 35 percent. The revenue collected would be placed in the Highway Trust Fund and in a $50 billion America Infrastructure Fund, which would be used to leverage up to $750 billion worth of state, local and private funding for infrastructure projects around the country.

With the White House giving its tacit blessing to such schemes while refusing to support proposals to raise funding in other ways, tapping profits now held overseas at a deeply discounted tax rate is becoming the default position for how to begin covering a more-than-$1 trillion infrastructure investment deficit.

But is rewarding tax avoidance really the way to fund our public infrastructure needs?

The biggest problem with the Delaney proposal, and the similar proposal from Paul, is that “it would allow companies such as Apple and Microsoft, which have parked hundreds of billions of dollars of US profits in offshore tax havens, to pay a US tax rate of no more than of 8.75 percent, instead of the more than 30 percent tax they should pay on these profits,” says an analysis by Citizens for Tax Justice.

These profits – more than $2 trillion – are usually laundered through foreign subsidiaries in low-tax or no-tax countries in ways designed to avoid US taxes. That can be done as simply as having that online purchase you think you are making through an American-based company actually handled by a Swiss or Irish subsidiary, or by transferring a patent to an overseas subsidiary so that revenues on licensing that patent flow through the subsidiary. Sometimes, the money isn’t even actually overseas, but is deposited in US banks and is being used for domestic purposes. In any event, regardless of where the money ends up being deposited, it is not “trapped overseas,” as corporate lobbyists and their supporters in Congress often say; it’s just that they don’t want to pay a higher tax on that money.

The last time corporations got a repatriation tax holiday in exchange for the promise to use the profits in job-creating investments, in 2004, corporations instead ended up using the money brought back into the country to boost shareholder dividends and buy back stock (which drives up stock prices and, often, the compensation of CEOs). There is little reason to believe that the same thing wouldn’t happen again in 2015.

Setting a bargain-basement tax rate for profits booked through foreign subsidiaries serves as nothing more than an incentive for corporations to escalate the schemes – or a wedge to convince lawmakers that if an ultra-low corporate tax rate is good for profits repatriated from overseas, perhaps all corporate profits should be taxed at that rate.

In any event, it is the rest of us who end up being the losers. When multinational corporations don’t pay their fair share in taxes, the rest of us have to make up the difference – or suffer the inability to pay for the things that we need, like good roads and public transportation. That includes businesses who don’t have the capacity to set up the fancy tax dodges that their competitors use.

What we need is honest tax reform that makes corporations and the wealthy pay their fair share, closing the door for good on the loopholes and schemes they use to avoid paying taxes. We also need an honest and equitable way to pay for the infrastructure improvements we need. Both are possible, but not without considerable heat from an aroused public. Congress will have to decide this year how it will pay for a multiyear transportation bill. We can’t let the default option be coins from the table of corporate tax avoidance.

 

By: Isaiah J. Poole, Campaign For America’s Future, January 26, 2015

January 28, 2015 Posted by | Corporate Welfare, Multinational Corporations, Tax Loopholes | , , , , , , , , | Leave a comment

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