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“Crime-For-Profit Syndicates”: Why Are We Taxpayers Subsidizing Corporate Crime?

“Do the crime, do the time,” the old saying goes. Unless, of course, the criminals are corporate executives. In those cases, the culprits are practically always given a “Get out of jail free” card.

Even the corporate crimes that produce horrible injuries, illnesses, death, massive pollution, consumer ripoffs, etc. are routinely settled by fines and payoffs from the corporate treasury, with no punishment of the honchos who oversee what amount to crime-for-profit syndicates. The only bit of justice in these money settlements is that some of them have become quite large, with multibillion-dollar “punitive damages” meant to deter the perpetrators from doing it again. Yet the same bad corporate actors seem to keep at it.

What’s going on here is a game of winkin’ ‘n’ noddin’, in which corporate criminals know that those headline-grabbing assessments for damages they’ve caused have a secret escape hatch built into them. Congress has generously written the law so corporations can deduct much of their punitive payments from their income taxes! As Senator Pat Leahy points out, “This tax loophole allows corporations to wreak havoc and then write it off as a cost of doing business.”

For example, oil giant BP certainly wreaked havoc with its careless oil rig explosion in 2010, killing 11 workers, deeply contaminating the Gulf of Mexico and devastating the livelihoods of millions of people along the Gulf coast. So, BP was socked with a punishing payout topping $42 billion. But — shhhh — 80 percent of that was eligible for a tax deduction, a little fact that’s been effectively covered up by the bosses and politicians.

This crazy quirk in America’s laws to deter corporate crime forces victims to help subsidize criminals. Follow the bouncing ball here: First, a court orders a corporation to pay punitive damages to a victim of its criminal acts; second, the corporate offender pays up, and then merrily subtracts a big chunk of that payment from its income tax, effectively taking money out of our public treasury; third, while the criminal is counting its tax break, the victim is notified that the punitive damage money he or she received from the corporation will be taxed as “regular income;” fourth, that means a big chunk of the victim’s payment goes into the treasury to replenish the public money the corporate villain subtracted.

This is nothing but shameful pandering by government officials to rich and powerful criminals. It’s bad enough that corporate-financed lawmakers legalize such encouragement of criminality, but corporate-coddling judges are playing the same disgraceful game — drastically reducing the amounts that juries order corporations to pay. In a Montana case, for example, a jury awarded $240 million in punitive damages to the families of three people, including two teenagers, killed in a car crash. The deaths were blamed on a steering defect that South Korean automaker Hyundai was found to have known about and “recklessly” ignored for more than a decade. But a district judge has since supplanted the jury’s ruling with her own. While declaring that Hyundai’s “reprehensibility” certainly warrants a sizeable punishment, she cut the corporation’s punitive payment down to $73 million.

Hello — that’s not punishment to a $79-billion-a-year car giant, it’s pocket change. Why would Hyundai executives quit putting corporate profits over people’s lives if that’s their “punishment”?

Plus, we taxpayers and the victims’ families are still lined up to subsidize whatever “punishment” Hyundai ultimately pays. With subsidies and wrist-slaps, the corporate criminal whirligig will continue to spin, making a mockery of justice. Fortunately, Senator Leahy has had the good sense to introduce legislation to lock down this escape hatch for thieves, killers and other executive-suite villains. For more information on the moral outrage of ordinary taxpayers being forced to subsidize corporate criminals, contact U.S. PIRG at http://www.uspirg.org.

 

By: Jim Hightower, The National Memo, March 11, 2015

March 11, 2015 Posted by | Congress, Corporate Crime, Corporations | , , , , , , | Leave a comment

“GOP Response; The Breadbags Of Empathy”: From Tiny Booties Made From Hostess Twinkie Wrappers To Bidding For Plutocrats

Imagine going to the doctor and saying, “My back is killing me. I can barely move. What can you do to help me? Should we do an X-ray? Physical therapy? Medication?” And the doctor responds, “Yeah, I hurt my back once. It was awful. So I know exactly what you’re feeling. Anyway, thanks for coming in—just see the receptionist on the way out to pay your bill.”

That’s not too far off from what we heard from Senator Joni Ernst in the GOP response to the State of the Union address last night. I’m particularly interested in this part:

As a young girl, I plowed the fields of our family farm. I worked construction with my dad. To save for college, I worked the morning biscuit line at Hardees.

We were raised to live simply, not to waste. It was a lesson my mother taught me every rainy morning.

You see, growing up, I had only one good pair of shoes. So on rainy school days, my mom would slip plastic bread bags over them to keep them dry.

But I was never embarrassed. Because the school bus would be filled with rows and rows of young Iowans with bread bags slipped over their feet.

Our parents may not have had much, but they worked hard for what they did have.

These days though, many families feel like they’re working harder and harder, with less and less to show for it.

Because America is still the home of the world’s most creative and inspiring strivers, within minutes people were not only posting pictures of themselves with bread bags on their feet to Twitter, some even crafted shoes out of bread to photograph. But what, precisely, is the point of the bread bag story supposed to be?

The point is affinity, saying to ordinary people, in Christine O’Donnell’s immortal words, “I’m you.” I understand your struggles and fears, because I’ve experienced them. I don’t need to walk a mile in your shoes to feel your pain, because I’ve already done it, though mine were covered in bread bags. At a time like this, Ernst’s ability to tell stories about her hardscrabble roots is no doubt one of the big reasons Republican leaders chose her to deliver their response.

There’s a second part of this message that no Republican is going to lay out too explicitly, and Ernst certainly doesn’t, which is that because I’m just like you, when it comes time to make decisions about the policies that will affect you, I will have your interests at heart.

But there’s a problem with that, because despite the years she spent trudging through the snow in her bread bag feet, Joni Ernst’s beliefs about economics are no different from Mitt Romney’s, Jeb Bush’s, or those of any other Republican whose childhood feet were shod in loafers hand crafted from the finest Siberian tiger leather. There’s almost perfect unanimity within the GOP on economic issues, an agreement that the minimum wage should not be raised, that taxes on the wealthy are onerous and oppressive and should be reduced, that regulations on corporations should be loosened, and that government programs designed to help those of modest means only serve to make them indolent and slothful, their hands so atrophied that bootstrap-pulling becomes all but impossible.

But now that both parties agree that they must address economic inequality and stagnant wages, you really need to follow up the tale of long-ago hard times with some specifics about what you want to do now. And this is where things break down. When Ernst got to laying out the GOP economic agenda, here’s what she offered: First, the Keystone XL pipeline, which as an economic stimulus is a joke. For whatever combination of reasons—the fact that environmentalists hate it is the most important—Republicans have locked themselves into arguing that a project that will create at most a few thousand temporary jobs is the most important thing we can do to boost the American economy. Second, Ernst said, “Let’s tear down trade barriers in places like Europe and the Pacific.” Kind of vague there, but nobody likes trade barriers. She didn’t elaborate, however. And finally, “Let’s simplify America’s outdated and loophole-ridden tax code.” Which, again, nobody disagrees with in the abstract, but I doubt there are too many struggling families saying that their biggest problem is that the tax code is riddled with loopholes.

So that isn’t much of a program. But she did close by saying that America is “the greatest nation the world has ever known.” And it’s inspiring that someone like Joni Ernst can start life in the most modest of circumstances, fitted as a baby with tiny booties made from Hostess Twinkie wrappers, then graduate to bread bags as she learned to castrate hogs (they do help keep the blood off your one good pair of shoes), and eventually grow up to do the bidding of the nation’s noblest plutocrats. It shows what’s possible in this great country of ours.

 

By: Paul Waldman, Senior Writer, The American Prospect, January 21, 2015

January 23, 2015 Posted by | GOP, Joni Ernst, Plutocrats | , , , , , , , , | 1 Comment

“This Isn’t The Debate Republicans Want To Have”: Republicans Befuddled By Obama Plan To Cut Middle-Class Taxes

Even President Obama’s most fervent opponents must acknowledge that he’s getting quite good at putting them on the defensive. Facing a Republican Congress and with only two years remaining in his presidency, he seems to come up with a new idea every couple of weeks to drive them up a wall. So he certainly wasn’t going to let the State of the Union address go by without using the opportunity — days of pre- and post-speech commentary, plus an audience in the tens of millions — to its utmost.

At Tuesday’s speech, Obama will announce a series of proposals meant to aid middle class and poor Americans and address inequality, most particularly an increase in the child care credit and a $500 tax credit for working couples (here’s the White House’s fact sheet on the proposals). To pay for it, investment and inheritance taxes on the wealthy would be increased and some loopholes that small numbers of the super-rich (like one Willard Romney) exploit will be closed. While the SOTU is often the occasion for dramatic announcements that are soon forgotten, this one lands in the center a debate that is looking like it will shape the upcoming presidential race. Naturally, Republicans are not pleased.

But if you listen carefully to what they’re saying, you’ll notice that they are barely mentioning the proposals for middle-class tax breaks which are supposed to be the whole purpose of this initiative; instead, all their focus is on the increases America’s noble job creators would have to endure in order to pay for it.

“Slapping American small businesses, savers and investors with more tax hikes only negates the benefits of the tax policies that have been successful in helping to expand the economy, promote savings, and create jobs,” said Orrin Hatch. “More Washington tax hikes and spending is the same, old top-down approach we’ve come to expect from President Obama that hasn’t worked,” said John Boehner’s spokesperson. “This is not a serious proposal,” said Paul Ryan’s flak. “We lift families up and grow the economy with a simpler, flatter tax code, not big tax increases to pay for more Washington spending.” For the record, a “flatter” tax system means either the poor paying more or the rich paying less, though Republicans never say which they prefer.

Marco Rubio was on the same page. “Raising taxes on people that are successful is not going to make people that are struggling more successful,” he said on Face the Nation. “The good news about free enterprise is that everyone can succeed without punishing anyone.” That was about as close as any Republican came to actually talking about the tax cuts Obama is proposing (though this National Review editorial does discuss them, by arguing that it’s an attack on motherhood). That’s probably because Republicans been in favor of ideas like them in the recent past.

While Obama does want to provide new funds to make community college free to anyone who wants it, most of his proposals in this round use the tax code to help people of modest means, which is exactly what Republicans usually suggest when they’re forced to come up with an idea to help the poor or middle class. Since they believe that government programs to help ordinary people are useless almost by definition, the only way to give anyone a hand is with a tax cut. And yes, the hand they usually extend is toward the wealthy, whose burdens are so crushing that justice demands that lawmakers not rest until they can be afforded relief. But tax cuts are so magical they can help anyone, which is why Republicans been in favor of expanding the Earned Income Tax Credit and the child care tax credit before.

But paying for it by increasing investment and inheritance taxes on the wealthy, like Obama is proposing? Not on your life.

One thing’s for sure: as the economy improves, both parties are now being forced to address the underlying issues of stagnant wages and inequality that have been an anchor around ordinary people’s lives for the last few decades. It’s fair to say this isn’t the debate Republicans want to have, and it’s easy to mock them for their insistence that they’re really the party with something to offer the middle class and the poor. But it’s a lot more productive to just take them at their word and see what they actually propose to do.

So Mitt Romney says he has cast off his previous contempt for those of modest means and now wants to focus his 2016 presidential campaign on the issue of poverty? All right — what are his ideas? If they’re actually worthwhile, he should get whatever credit he’s due. If it’s more trickle-down policies and stern lectures about bootstrap-pulling, then we’ll know nothing has changed.

You can argue — and many will — that it’s pointless for Obama to introduce significant policy proposals like this when he knows they couldn’t make it through the Republican Congress. But what alternative does he have? He could suggest only Republican ideas, but he wouldn’t be much of a Democratic president if he did that. Or he could offer nothing at all, and then everyone would criticize him for giving up on achieving anything in his last two years. If nothing else, putting these proposals forward can start a discussion that might bear legislative fruit later on. Major policy changes sometimes take years to accomplish, so it’s never too early to start. And if Republicans have better ideas, let’s hear them.

 

By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line, The Washington Post, January 19, 2015

January 20, 2015 Posted by | Middle Class, Republicans, Tax Cuts | , , , , , , , | Leave a comment

“Be The Smarter Bush Brother, Jeb; Don’t Run!”: Why Would A Guy Running For President Create A Brand Spanking New Bain Capital?

So Jeb is running. Or is he? And he’s really formidable! Or… is he?

I can’t remember in my adult lifetime a presidential candidate quite like Jeb Bush. Every presidential election we have our A-list candidates, your Clintons and your Romneys and your Humphreys and indeed your Bushes. And, every election, we have our quasi-comic-relief candidates, your Al Haigs and Gary Bauers and Bill Richardsons. These archetypes usually reside in separate life forms. But in John Ellis Bush, they exist in the same body.

The A-list case is: He’s a Bush. And… and… OK, he was the governor of a huge and electorally important state. And largely considered to have been, to those who can still remember, a successful and reasonably popular one. And there’s his Latina wife. But really, the A-list case comes down to the fact of his last name. Just as a football coach named Lombardi is going to win automatic positive “free media” until he turns out to be a total loser, a politician named Bush is going to be assumed to be a serious playah until he undeniably proves otherwise. Until then, establishment money is going to cascade to him.

The quasi-comic-relief case consists of a much longer list. First of all: Well, he’s a Bush. That is to say, while the name confers a certain status among insiders and the media, at the same time it reminds too many voters of the brother. This would be an obvious problem in a general election, but I think even in a primary. The Republican red-hots, the pols who play to the base that dominates the primary process, have been ranting against Dubya and his big-spending ways since the day he left office. There’s no reason to think the family tree will bring much good will.

The bigger thing is this. What in the world is a guy who wants to run for president doing, precisely during the months of presidential speculation, starting up an offshore private-equity firm? But Bush has done exactly that, filing the papers for BH Global Aviation with the SEC right around Thanksgiving. The fund raised $61 million in September, largely from foreign investors, and it incorporated in the U.K. and Wales to avoid paying American taxes. Business questions are raised—who starts a PE firm and bails on it in a matter of mere months?—but more salient are the political questions: Why would a candidate, on the eve of a presidential run, go out of his way to create what is in effect his very own brand spanking new Bain Capital?

Then there’s the service gap. He hasn’t been in office since January 2007, and more to the point hasn’t run a campaign since 2002. To find a presidential candidate with as long a gap between campaigns (excluding those like Eisenhower, who’d never run), you have to reach back to James Buchanan. Questions of rust will arise, of course, but more than that, we can fairly wonder whether he has a feel for the politico-culture landscape these days. The conservative movement of today is a rather fiercer creature than the one his brother held at bay with a few Scriptural dog whistles.

Here’s more, in terms of problems he’ll have with the base: He’s on the board of Bloomberg Philanthropies. Come have a look at the “our work” page at the philanthropy’s website: Beyond Coal. Vibrant Oceans. Reproductive Health. Tobacco Control. No, no guns per se, but of course Mike Bloomberg is so identified in the right-wing mind with the torching of the Second Amendment that that one will undoubtedly come up.

Beyond this there’s the pro-immigration position. Rush Limbaugh has been laying into Bush on this one. There is such a thing in presidential primary politics as a single-issue deal-breaker. Ask Rudy Giuliani about how his pro-choice position worked out for him. And Jeb, of course, will also have to deal with his outspoken support for Common Core, which the Republican base loathes.

The polls? He runs a little bit ahead of the competition, with 14 percent in the current RCP average to Chris Christie and Mike Huckabee’s 10 and Paul Ryan’s 9.7 (and Ben Carson’s 8.8)! And with regard to taking on Hillary Clinton, he does no better than any of the rest of them. He’s 5 to 10 points behind her in just about every poll. That just is not the traditional idea of the frontrunner.

Throw it all into the kettle and, what? Well, it’s possible to imagine Bush as the nominee and even as the next president. To return to the Lombardi analogy, one would always imagine that a Lombardi would have it in him to find a way to win. So it is with a Bush. They are two-for-two, after all.

But maybe that’s just a psychological mirage. Maybe it’s just as easy, if not easier, to imagine him lasting four primaries. Here’s your 2016 GOP presidential primary calendar, at least as it currently exists. It starts as usual with Iowa and New Hampshire, which seem respectively more like Huckabee/Cruz and Ryan/Paul states than Bush states. Florida doesn’t come along until March 1. Has anyone ever—or since 1976, when we really started having lots of primaries and caucuses—won a party nomination without winning a primary or caucus until March? I don’t think that can be done.

And it might be easiest of all imagining him “exploring” a candidacy for a while and then deciding the hell with it. As has been oft-observed, he doesn’t seem to want to be president, and by most accounts his wife has never been hot on the idea. It used to be frequently said back in 2000 that Jeb was “the smart brother.” Given the tribulations that await him on the hustings versus the easy millions that dangle before him in the global aviation business, the choice that would prove he’s the smart one seems pretty clear.

 

By: Michael Tomasky, The Daily Beast, December 17, 2014

December 18, 2014 Posted by | Election 2016, GOP Presidential Candidates, Jeb Bush | , , , , , , , | 1 Comment

“Chief Tax-Dodging Officers”: It’s Gotten Pretty Easy For Large Corporations To Avoid The Taxman

Republican and Democratic leaders don’t often see eye to eye on taxes.

But surprisingly, corporate tax reform looks like one area where there might actually be some potential for bipartisan action in Washington. This should be good news, since our corporate tax system is clearly hopelessly broken.

Here’s a stark indicator of just how broken: Last year, 29 of the 100 highest-paid CEOs made more in personal compensation than their companies paid in federal income taxes. That’s according to a new report by the Institute for Policy Studies and the Center for Effective Government.

Source: Fleecing Uncle Sam,  an Institute for Policy Studies and Center for Effective Government report

Source: Fleecing Uncle Sam, an Institute for Policy Studies and Center for Effective Government report

Yes, it’s gotten that easy for large corporations to avoid the taxman.

This is true even for the country’s wealthiest companies. Citigroup, Halliburton, Boeing, Ford, Chesapeake Energy, Chevron, Verizon, and General Motors all made more than $1 billion in U.S. profits last year, but still paid their CEOs more than they paid Uncle Sam. In fact, most of them got massive tax refunds.

How is this possible?

While big businesses moan about the U.S. corporate tax rate of 35 percent, most of them pay nowhere near that. Between 2008 and 2012, the average large corporation paid an effective rate of less than 20 percent.

Hiding profits in tax havens is one of the most common ways large corporations avoid paying their fair share to the IRS. And indeed, the 31 firms who paid their CEOs more than Uncle Sam operate 237 subsidiaries in low- or no-tax zones like the Cayman Islands and Bermuda.

But that’s just one tax-dodging trick. Corporations have lobbied successfully for a plethora of other tax loopholes and subsidies.

Boeing, for example, has figured out how to double dip in the Treasury’s pool.

The aerospace giant hauled in more than $20 billion in federal contracts in 2013. According to Citizens for Tax Justice, taxpayers also picked up the tab for $300 million of Boeing’s research expenses last year through a tax break that Congress is now considering making permanent.

When tax time came, Boeing got $82 million back from the IRS, despite reporting nearly $6 billion in U.S. pre-tax profits. Meanwhile, Boeing chief executive Jim McNerney made $23.3 million.

Corporate tax dodging is bad for ordinary Americans — and our nation’s long-term economic health.

For example, if Boeing had paid the statutory corporate tax rate of 35 percent on its $6 billion in profits, it would’ve added an extra $2 billion to the funds available for public services. That sum would’ve covered the cost of hiring 2,775 teachers for a year.

Shirking taxes may boost the bottom line in the short term, but in the long run it erodes the economic infrastructure businesses need to be competitive.

Unfortunately, the current political rhetoric has little to do with cracking down on corporate tax avoidance.

Republicans are hooked on corporate tax giveaways. And President Barack Obama has suggested that he’s ready to reward corporations for stashing money overseas by giving them deeply discounted tax rates on their profits if they’ll just agree to bring them home.

Both of these positions are based on the unfounded claim that smaller corporate tax burdens translate into more good jobs.

In a Hart Research poll of voters on election night, only 22 percent favored taxing corporations less. In the same poll, less than 30 percent wanted Congress to make tax cuts a higher priority than investments in education, health care, and job creation.

The American people have their priorities straight. They deserve leaders who do too.

 

By: Sarah Anderson and Scott Klinger are the co-authors of “Fleecing Uncle Sam”; The National Memo, November 19, 2014

November 24, 2014 Posted by | CEO'S, Corporations, Tax Loopholes | , , , , , , , | Leave a comment

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