“The Real Tax Threat To American Businesses”: Big Corporations Don’t Pay Their Fair Share
American businesses face some serious challenges from taxes. But it’s not due to America’s tax rates, as many big business CEOs would have you believe. Our corporate tax problems stem from a corporate tax code with so many perks, credits and loopholes in it that many U.S. multinational corporations pay little to no taxes. This starves our national budget and imperils public education, innovative research and infrastructure, the sort of public investments that help make our businesses and economy competitive. And, maybe even worse, it’s unfair.
I’m an accountant. I know about taxes. I help my clients take advantage of the deductions and incentives to which they are entitled. But because of accounting tricks my clients cannot use, many giant U.S. corporations pay taxes at effective rates far lower than most small businesses and many middle class families. The average U.S. multinational corporation paid just 12.6 percent of its income in taxes in 2010, according to the Government Accountability Office.
Some of the most unfair corporate tax loopholes for America’s competitive position in the world are the offshore tax loopholes. These loopholes alone cost the U.S. Treasury an estimated $90 billion a year. They also create an unfair playing field between domestic businesses like I serve in my practice, and the large multinational firms, whose high priced tax attorneys and lobbyists have devised ways to shift profits earned in the United States to the world’s tax haven countries where those profits are taxed lightly, if at all.
For instance, some software companies take patents on products developed in the U.S. and register them in a foreign tax haven. When a U.S. customer purchases the product, the company sends a large chunk of the purchase price to the tax haven to pay for the use of the patent. Thus the company reduces its effective corporate tax rate – sometimes even below 10 percent.
My clients don’t have this option. Nor would they want it. They are restaurants and dry cleaners, medical practices, small manufacturers and auto repair shops. They work hard and they expect to pay their fair share of taxes. They are the engines of our local economy, just as similar small companies are the engines of local economies across the country. They provide needed goods and services. They provide needed jobs. And they pay needed taxes.
Their taxes help pay for public investment in schools, roads, courts, public transit, public safety, public health – all of the basic infrastructure that enables all businesses to function and thrive. Since they benefit – as we all do – from those tax investments, it’s only fair that they should pay their share.
But their counterparts at large US multinationals don’t have to. And it’s the tax code that lets them. It’s as if the tax code pretends that they are operating in a third world country with no infrastructure to support. That’s ridiculous, of course. I’m good at accounting and bookkeeping, but I sure wouldn’t want a client trying to operate their entire business in a rural part of a third world country.
Our tax code should be fair and should encourage investment in our shared future. When we invest together we start a virtuous cycle of growth. But when people, whether individuals or business owners, think the tax system is rigged in favor of one group or another – say U.S. multinational companies using overseas tax havens – they rightly feel that they are paying more than their fair share. They lose faith in the system.
And when tax revenues are lower than they would be without such loopholes, policymakers look for ways to cut spending. This starts a vicious cycle of ever-shrinking economic activity and ever reducing tax revenue.
Fixing the tax code is the answer, and a good place to start is with the unfair overseas loopholes that undermine our faith in the tax system and rob our communities and the nation of vital investments in the future.
It makes no sense for our tax code to be hurting domestic job creators and undermining the tax base for our schools, roads, police and other vital services and infrastructure.
The tax reform America needs is one that closes many of the unfair loopholes won by big business lobbyists over the last three decades. We need the extra revenue collected to invest in the 21st century economy that will sustain our families, our communities and our businesses.
By: Brian Setzler, U. S. News and World Report, January 17, 201
“Data Is Digital Gold”: Beyond The NSA, What About Big Data Abuse By Corporations, Politicians?
Taking steps to end, or at the very least to constrain, the federal government’s practice of storing information on the personal communications of Americans is a good thing. There is every reason to respect initiatives that seek to prevent the National Security Agency’s metadata programs from making a mockery of the right to privacy outlined in the Fourth Amendment to the US Constitution.
But the moves that President Obama announced Friday to impose more judicial oversight on federal authorities who might “listen to your private phone calls, or read your emails” and the steps that may be taken by Attorney General Eric Holder and intelligence officials to check and balance the NSA following the submission of proposals on March 28 ought not be seen mistaken for a restoration of privacy rights in America.
What the president and his aides are talking about—in response to revelations by former NSA contractor Edward Snowden, congressional objections and public protests – are plans to place some controls on the NSA and perhaps to keep most data in “private hands.”
But what controls will there be on those private hands?
As long as we’re opening a discussion about data mining, might we consider the fact that it’s not just the government that’s paying attention to our communications—and to what they can reveal about our personalities, lifestyles, values, spending habits and political choices.
There’s a reason the NSA has been interested in accessing the servers of Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube and Apple. When you’re mining, you go where the precious resources are, and technology companies have got the gold.
Data is digital gold. Corporations know that. They’re big into data mining.
This data mining, and the commercial and political applications that extend from it, gets far less attention than the machinations of the NSA or other governmental intelligence agencies. Tech publications and savvy writers such as Jaron Lanier recognize these concerns. The Federal Trade Commission, the Federal Communications Commission and the Senate Commerce Committee have taken some tentative steps to address a few of the worst abuses. But that’s not enough, especially when, as Fordham University’s Alice E. Marwick noted in a smart recent piece for The New York Review of Books,
there are equally troubling and equally opaque systems run by advertising, marketing, and data-mining firms that are far less known. Using techniques ranging from supermarket loyalty cards to targeted advertising on Facebook, private companies systematically collect very personal information, from who you are, to what you do, to what you buy. Data about your online and offline behavior are combined, analyzed, and sold to marketers, corporations, governments, and even criminals. The scope of this collection, aggregation, and brokering of information is similar to, if not larger than, that of the NSA, yet it is almost entirely unregulated and many of the activities of data-mining and digital marketing firms are not publicly known at all.
Significantly, it is not just financial profit that data can yield.
As Robert W. McChesney and I note in Dollarocracy: How the Money-and-Media Election Complex is Destroying America (Nation Books), data is also mined by those who seek power.
Political candidates, political parties, Super PACs and dark-money groups are among the most ambitious data miners around. They use data to supercharge their fund-raising, to target multimillion-dollar ad buys and to stir passions and fears at election time.
Both parties do it. All major candidates do it. Obama did it better than Romney in 2012, and that played a critical role in providing the president with the resources and the strategies that allowed him to easily defeat a well-funded and aggressive challenger. The Grand Old Party’s response was to begin hiring the best and the brightest technical talent. A recent headline announced: “Republican National Committee to Build Platform to Share Voter Data.” Another reported: “RNC Pledges $20 Million to Build Data-Sharing Operation.”
So campaigns are going to do more mining. And so are the billionaires who fund so-called “independent” political operations. Last spring, Politico announced: “Karl Rove, Koch Brothers Lead Charge to Control Republican Data.”
Data already drives the money-and-media election complex that is rapidly remaking American democracy into an American dollarocracy, where election campaigns are long on technical savvy but short, very short, on vision.
So, give the president credit for wading into the debate about how the government uses and abuses phone data. Give key members of Congress, like Jerry Nadler, the ranking Democrat on the House Judiciary Committee, credit for pointing out that what the president has proposed is “not enough” to “safeguard against indiscriminate, bulk surveillance of everyday Americans.”
But then go the next step. Recognize that addressing governmental actions and abuses does not begin to restore privacy rights. For that to happen, there must be recognition that Marwick is right to argue: “While closer scrutiny of the NSA is necessary and needed, we must apply equal pressure to private corporations to ensure that seemingly harmless targeted mail campaigns and advertisements do not give way to insidious and dangerous violations of personal privacy.”
And that recognition must extend beyond concern regarding abusive commercial applications to include an examination of and responses to new approaches to fund-raising and campaigning that have the potential to warp our politics—and democracy itself.
By: John Nichols, The Nation, January 17, 2014
“Not A Creator Or Manufacturer In The Lot”: America’s Would-Be Aristocrats Forget The Most Important Thing About Business
To paraphrase Tolstoy, every successful small business shares the same traits. And they all begin with high-quality employees. I’m thinking of three local establishments where I’ve traded for years: an auto repair garage, a dentist’s office, and a one-size-fits-all country store where I buy cattle- and horse-feed.
Along with just about everything else the aptly-named “Toad Suck One-Stop” might conceivably carry: from crickets and minnows to motor oil, pain remedies, kitty litter and homemade sandwiches. If you get up early enough, they’ll even fix you breakfast while somebody else loads feed sacks into your truck. (Toad Suck is a place name designating a long-ago ferryboat stop on the Arkansas River.)
It’s much the same at George Jett’s auto garage down in Little Rock; also at my dentist (his name is Lamar Lane). The first thing you notice is familiar faces. People who work at these places stay for years. And they do so because they’re well-paid, earn decent benefits, and are treated respectfully. So they like their jobs, take pride in their work, and are glad to see familiar customers.
Now I’m not going to lie that I love going to the dentist. But I do like feeling among friends, even if it means hearing Dr. Lane carry on about his LSU Tigers. (Because my wife was born in Baton Rouge, where her daddy played ball, I get a double dose.)
Something else: how a business treats employees also tends to be a reliable predictor of how they treat customers. Dr. Lane does high-quality work and stands by it. If a crown breaks, he replaces it free without asking if you were shelling pecans with your teeth.
My man George Jett hires good mechanics, values their skills, and guarantees their work. If the rattle’s still there, he’ll drive the vehicle around the block and then put it back on the lift to figure out why—also at no additional charge.
Jason down at the One-Stop isn’t exactly a philanthropist — at least not where Bermuda grass hay and Canadian night-crawlers are concerned. Keeping a business with so many moving parts running requires constant attention to detail. New hires that stand out back smoking when shelves need restocking tend not to last. Loyal longtime employees won’t cut them much slack.
Gas is cheaper at the Walmart across the river in Faulkner County, but the One-Stop’s pumps stay busy. It’s the community’s unofficial town hall. If you want to know who’s looking for a lost blue heeler or how Holly’s orphaned baby raccoons are doing, it’s got to be the One-Stop.
Ordinarily, such commonplaces would hardly be worth recording. So there are friendly folks at the country store.
Who’d have thunk it?
Unless, that is, you live in the United States of America, a large proportion of whose tycoon class appears determined to drag us back to the Gilded Age.
If they gave a Scrooge McDuck Award for the nation’s greediest knucklehead, the 2013 winner would be Home Depot’s billionaire founder Kenneth Langone, a Catholic who voiced public alarm at Pope Francis’s seeming enthusiasm for the gospel of Matthew 19. That’s where Jesus observes that “it is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God.”
The Pope didn’t cite that verse, nor discuss politics as such. However, his encyclical Evangelii Gaudium did warn against “crude and naive trust in the… sacralized workings of the prevailing economic system.”
What, not worship money? Never mind that this is elementary Christian doctrine. Langone warned that American plutocrats don’t want to hear about it, even in church.
You may not be surprised this same worthy also regards President Obama as “petulant” and “unpresidential.” His hawklike visage appeared prominently in a Forbes photo lineup of “Anti-Obama Billionaires.”
Scrutinizing the list, I noticed that almost everybody on it made his pile either by manipulating money or squeezing minimum-wage workers dry: casino operators, real estate speculators, corporate buyout scammers, hedge fund geniuses, fast-food franchisers, big-box retailers, and Donald Trump.
Not a creator or manufacturer in the lot. This is our would-be new American aristocracy, largely bereft of — indeed actively hostile toward — the retail virtues I’ve celebrated. (None of whose practitioners necessarily share my partisan views; I’m talking morals here, not politics.)
But the good news is that according to Adam Davidson in the New York Times, old-fashioned business ethics may be making a comeback through the unlikely agency of a Turk. According to Davidson, the going thing in corporate circles is The Good Jobs Strategy, a book by Zeynep Ton, an M.I.T. business professor.
Ton argues that what some call the “Costco” strategy of hiring better-trained, better-paid employees “will often yield happier customers, more engaged workers and—surprisingly—larger corporate profits.”
By: Gene Lyons, The National Memo, January 8, 2014
“Bad History And Bad Policy”: The Hidden Consequences Of Snowden’s NSA Revelations
There is more than a little hypocrisy to the outcry that the government, through the National Security Agency (NSA), is systematically destroying Americans’ right to privacy. Edward Snowden’s revelations have been stripped of their social, technological and historical context. Unless you’ve camped in the Alaskan wilderness for two decades, you know — or should — that millions upon millions of Americans have consciously and, probably in most cases, eagerly surrendered much of their privacy by embracing the Internet and social media.
People do not open Facebook, Twitter, LinkedIn and Instagram accounts because they wish to shroud their lives in secrecy. They do not use online dating services or post videos on YouTube because they cherish their anonymity. The Internet is a vehicle for self-promotion, personal advertising and the pursuit of celebrity.
The Pew Research Center’s surveys confirm that these behaviors are now entirely mainstream. In 2013, 85 percent of Americans used the Internet. Of these, almost three-quarters (73 percent) belonged to social media sites (the biggest: Facebook). Almost one-fifth of adult Internet users have posted personal videos, many hoping, says Pew, that “their creations go viral.” Among people “single and looking” for mates, nearly two-fifths (38 percent) used online dating.
If Americans think their privacy is dangerously diminished, there are remedies. They can turn off their PCs, toss their smartphones and smash their tablets. Somehow, this seems unlikely, even though another Pew survey finds that “86 percent of adult Internet users have taken steps . . . to avoid surveillance by other people or organizations.”
To these conscious sacrifices of privacy must be added murkier, collateral losses that are orchestrated by the world’s Googles, Facebooks, service providers and “data brokers,” writes Alice Marwick of Fordham University in the New York Review of Books. They scan users’ digital decisions (sites visited, products and services purchased, habits and hobbies favored) to create databases, often merged with other socio-economic information. These target advertising, improve political appeals — President Obama’s campaign excelled at this — and influence hiring decisions, as Don Peck notes in the Atlantic.
The NSA’s damage to privacy is dwarfed by the impact of market activity. The sensationalism surrounding Snowden’s revelations obscures this. Case in point: The disclosure that U.S. telephone calls are open to NSA monitoring. Suddenly, Big Brother looms. In our mind’s eye, we see the NSA’s computers scouring our every phone call. We’re exposed to constant snooping and the possibility that the government will misuse the information it finds.
The reality is far more limited. The NSA is governed by legal restrictions. It does not examine the full database. It searches individual numbers only after it has determined there’s a “reasonable, articulable suspicion” that a number might be linked to terrorist groups. In 2012, there were 288 of these findings. After one is made, the NSA can retrieve three items about the number: the dates of calls made and received for five years; the other phones’ numbers; and the calls’ length. The NSA is not entitled to listen to conversations, but it can order similar searches on the other numbers involved. Thousands of calls are caught in the dragnet, but the total is puny compared with the untold billions of annual calls.
Whether these searches are effective in fighting terrorism is disputed. The NSA says they’re valuable. A panel of experts appointed by Obama concluded that the monitoring “was not essential to preventing attacks.” But more important for civil liberties and privacy, the panel found that present practices don’t approach past abuses. During the Vietnam War, the panel noted, the CIA investigated 300,000 anti-war critics. The government also sought to “expose, disrupt, and neutralize their efforts to affect public opinion.”
By all means, let’s debate the NSA. Some policies seem suspect, spying on the heads of friendly governments topping the list. It’s also important to recognize that government can coerce and punish in ways that private markets cannot. The potential for abuse is greater. But let’s also keep the debate in perspective.
In a digitized world, spying must be digitized. Then there’s cyberwarfare. Our electronic systems remain vulnerable, as the recent theft of data from millions of credit and debit cards at Target demonstrates. Government and the private sector need to collaborate more closely to protect vital systems. But these “efforts are as good as dead for the foreseeable future,” says Dmitri Alperovitch of CrowdStrike, a cybersecurity firm. The NSA controversy has “significantly damaged the trust between the private sector and government.” This may be the Snowden affair’s most insidious (and overlooked) consequence.
Vilifying the NSA — letting Snowden dictate the terms of debate — promotes bad history and bad policy. It’s bad history, because the most powerful assaults on privacy have originated in markets. It’s bad policy, because weakening the NSA leaves the United States more exposed to cyberattacks.
By: Robert Samuelson, Opinion Writer, The Washington Post, January 5, 2014
“The Fear Economy”: The Economy May Be Lousy For Workers, But Corporate America Is Doing Just Fine
More than a million unemployed Americans are about to get the cruelest of Christmas “gifts.” They’re about to have their unemployment benefits cut off. You see, Republicans in Congress insist that if you haven’t found a job after months of searching, it must be because you aren’t trying hard enough. So you need an extra incentive in the form of sheer desperation.
As a result, the plight of the unemployed, already terrible, is about to get even worse. Obviously those who have jobs are much better off. Yet the continuing weakness of the labor market takes a toll on them, too. So let’s talk a bit about the plight of the employed.
Some people would have you believe that employment relations are just like any other market transaction; workers have something to sell, employers want to buy what they offer, and they simply make a deal. But anyone who has ever held a job in the real world — or, for that matter, seen a Dilbert cartoon — knows that it’s not like that.
The fact is that employment generally involves a power relationship: you have a boss, who tells you what to do, and if you refuse, you may be fired. This doesn’t have to be a bad thing. If employers value their workers, they won’t make unreasonable demands. But it’s not a simple transaction. There’s a country music classic titled “Take This Job and Shove It.” There isn’t and won’t be a song titled “Take This Consumer Durable and Shove It.”
So employment is a power relationship, and high unemployment has greatly weakened workers’ already weak position in that relationship.
We can actually quantify that weakness by looking at the quits rate — the percentage of workers voluntarily leaving their jobs (as opposed to being fired) each month. Obviously, there are many reasons a worker might want to leave his or her job. Quitting is, however, a risk; unless a worker already has a new job lined up, he or she doesn’t know how long will it take to find a new job, and how that job will compare with the old one.
And the risk of quitting is much greater when unemployment is high, and there are many more people seeking jobs than there are job openings. As a result, you would expect to see the quits rate rise during booms, fall during slumps — and, indeed, it does. Quits plunged during the 2007-9 recession, and they have only partially rebounded, reflecting the weakness and inadequacy of our economic recovery.
Now think about what this means for workers’ bargaining power. When the economy is strong, workers are empowered. They can leave if they’re unhappy with the way they’re being treated and know that they can quickly find a new job if they are let go. When the economy is weak, however, workers have a very weak hand, and employers are in a position to work them harder, pay them less, or both.
Is there any evidence that this is happening? And how. The economic recovery has, as I said, been weak and inadequate, but all the burden of that weakness is being borne by workers. Corporate profits plunged during the financial crisis, but quickly bounced back, and they continued to soar. Indeed, at this point, after-tax profits are more than 60 percent higher than they were in 2007, before the recession began. We don’t know how much of this profit surge can be explained by the fear factor — the ability to squeeze workers who know that they have no place to go. But it must be at least part of the explanation. In fact, it’s possible (although by no means certain) that corporate interests are actually doing better in a somewhat depressed economy than they would if we had full employment.
What’s more, I don’t think it’s too much of a stretch to suggest that this reality helps explain why our political system has turned its backs on the unemployed. No, I don’t believe that there’s a secret cabal of C.E.O.’s plotting to keep the economy weak. But I do think that a major reason why reducing unemployment isn’t a political priority is that the economy may be lousy for workers, but corporate America is doing just fine.
And once you understand this, you also understand why it’s so important to change those priorities.
There’s been a somewhat strange debate among progressives lately, with some arguing that populism and condemnations of inequality are a diversion, that full employment should instead be the top priority. As some leading progressive economists have pointed out, however, full employment is itself a populist issue: weak labor markets are a main reason workers are losing ground, and the excessive power of corporations and the wealthy is a main reason we aren’t doing anything about jobs.
Too many Americans currently live in a climate of economic fear. There are many steps that we can take to end that state of affairs, but the most important is to put jobs back on the agenda.
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 26, 2013
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