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“Fundamentally Dishonest”: The Self-Contradictory Argument All Republicans Are Making On The Indiana Discrimination Law

Now that it’s becoming a national story, all the Republican candidates are going to have to take a position on the new Indiana law that for all intents and purposes legalizes discrimination against gay people. (If you’re in the market for a lengthy explanation of what the law does and doesn’t do and what the implications are, I wrote one yesterday.) And they all look to be coming down in the same place—one that’s fundamentally dishonest about the law and its implications. They’re essentially trying to have it both ways, supporting the establishment of a right of discrimination for religious business owners, but claiming that they are supporting no such thing. Here’s Jeb Bush talking to Hugh Hewitt yesterday:

Bush: I think if you, if they actually got briefed on the law that they wouldn’t be blasting this law. I think Governor Pence has done the right thing. Florida has a law like this. Bill Clinton signed a law like this at the federal level. This is simply allowing people of faith space to be able to express their beliefs, to have, to be able to be people of conscience. I just think once the facts are established, people aren’t going to see this as discriminatory at all.

Hewitt: You know, the Religious Freedom Restoration Act was signed in 1993. It’s been the law in the District of Columbia for 22 years. I do not know of a single incidence of the sort that Tim Cook was warning about occurring in the District in the last 22 years.

Bush: But there are incidents of people who, for example, the florist in Washington State who had a business that based on her conscience, she couldn’t be participating in a gay wedding, organizing it, even though the person, one of the people was a friend of hers. And she was taken to court, and is still in court, or the photographer in New Mexico. There are many cases where people acting on their conscience have been castigated by the government. And this law simply says the government has to have a level of burden to be able to establish that there’s been some kind of discrimination. We’re going to need this. This is really an important value for our country to, in a diverse country, where you can respect and be tolerant of people’s lifestyles, but allow for people of faith to be able to exercise theirs.

Just to be clear, the Indiana law is not like the federal RFRA, in both the context in which it was passed and its particular provision. The Indiana law specifically applies to disputes between individuals, whereas the federal law discusses only personal conduct the government is trying to regulate. (The federal law came about because of a case where two Native Americans were denied unemployment benefits because they had used peyote in a religious ceremony.) But in any case, Republicans like Jeb are trying to pretend that we can satisfy everyone, and that the Indiana law does so. But we can’t, and it doesn’t. We have to make a choice.

What Bush is doing here (and what Indiana Governor Mike Pence and the rest of the Republicans defending this law are doing as well) is a misleading little two-step. Their argument is: 1) We must allow religious people to discriminate; and 2) This has nothing to do with discrimination. But both those things can’t simultaneously be true. You can call it “simply allowing people of faith space to be able to express their beliefs” or “people acting on their conscience,” but the whole issue is that the act of conscience that they want to undertake is also an act of discrimination. That’s because the particular acts of conscience we’re talking about are those that are not in the realm of speech or worship but in the realm of commerce, and they involve another person.

The cases in question are essentially zero-sum conflicts of claimed rights. Janet wants to have an anniversary dinner in a restaurant; Mike, the restaurant owner, doesn’t want to serve gay couples. There are only two possible outcomes: Janet and her partner get served, in which case Mike has to give; or Mike gets to refuse that service, in which case Janet has to give. You can dress up Mike’s motivations any way you want—”sincere religious beliefs,” “act of conscience,” whatever—but that doesn’t change the fact that one person is going to win and the other is going to lose.

The liberals who object to the Indiana law are making their choice clear: Janet’s right to be treated equally trumps Mike’s desire to discriminate, even though that desire is based on religious beliefs. The conservatives who support the law are taking the opposite position: If it’s based on a religious belief, Mike’s right to discriminate trumps Janet’s right to be treated equally. I happen to disagree with the conservative position, but I would respect it a lot more if they’d just come out and admit what their position really is. Instead, they’re trying to claim that there’s no conflict between Janet and Mike and they aren’t taking a side.

But they are. These kinds of conflicts are the whole point of this law, the reason why Republicans wanted to pass it and would like to see others like it. Of course, nobody wants to say they support “discrimination.” But if that florist in Washington or that photographer in New Mexico whom Bush is defending have a policy that says, “We will accept the business of straight couples but not gay couples,” then they’re discriminating. Republicans want to make sure that business owners have a legal right to discriminate against potential customers in that fashion. They ought to just admit it.

 

By: Paul Waldman, Senior Writer, The American Prospect, March 31, 2015

April 1, 2015 Posted by | Discrimination, Mike Pence, Religious Freedom | , , , , , , | Leave a comment

“The Ballad Of Lester Maddox”: Supporters Of Discrimination Have Always Cloaked Their Views In Appeals To Personal Liberty

Once upon a time, a restaurant owner refused to serve people who were different. He said he did so in the name of freedom, not discrimination.

The time was 1964, the place was Georgia, and the man was Lester Maddox. He was the owner of The Pickrick restaurant and one July day he chased out three black patrons, waving a pistol. This made him something of a local celebrity and a national symbol of resistance to the big government imposition of civil rights. But he always insisted that he was not motivated by racism but simply defending the rights of private property and his personal beliefs.

“This property belongs to me—and I’ll throw out a white one, a black one, a red-headed one or a bald headed one. It doesn’t make any difference to me.”

Maddox became a hero to conservative populists—most of whom were Democrats at that time in the South, because of a hangover from the Civil War a century before—and he rode the wave of resistance to desegregation all the way to the Governor’s mansion two years later.

“History doesn’t repeat, but sometimes it rhymes,” Mark Twain allegedly said. And there are no perfect parallels between Lester Maddox and the florists, bakers and other small business owners who have been invoked as a reason to protect the religious liberties of those who could legally refuse to serve gay and lesbian weddings. But amid a national debate about gay civil rights a half-century later, as we fitfully evolve toward the promise of a more perfect union, it is useful to listen for echoes of old arguments because they can clarify our current conversations.

We’ve had an age-old argument in our nation between the powers of the federal government and states’ rights. It goes back to the ratification of the Constitution (ironic, because many of the states’ rights advocates since have presented themselves as the purest defenders of the constitution) and found expression in the heated debates between John C. Calhoun and Daniel Webster, and Jefferson Davis and Abraham Lincoln that ultimately exploded into civil war. The arguments resurfaced again in the 1960s over civil rights and desegregation. And so it goes.

But the de facto defenders of slavery and segregation rarely framed their arguments as endorsements of inequality. Instead, their argument was often uplifted, framed as a defense of lofty ideals. Sometimes these were rooted in theological objections—defense of slavery and defense of segregation was at one point imbued with the hue of religious belief. But more often it was framed as a fight between individual liberty and government tyranny, with no irony intended.

George Wallace, the conservative populist Democratic Governor of Alabama who heatedly defended segregation was a case in point. He famously thundered in his inaugural address that “It is very appropriate that from this cradle of the Confederacy, this very heart of the great Anglo-Saxon Southland, that today we sound the drum for freedom as have our generations of forebears before us time and again down through history… In the name of the greatest people that have ever trod this earth, I draw the line in the dust and toss the gauntlet before the feet of tyranny, and I say segregation now, segregation tomorrow, segregation forever.”

But he also made more subtle arguments against civil rights, rooted in private property: “This civil rights bill will wind up putting a homeowner in jail because he doesn’t sell his home to someone that some bureaucrat thinks he ought to sell it to.”

And yet he insisted, “I never made a statement in my political life that reflects on a man’s race… my only interest is in the restoration of local government.”

Apple CEO Tim Cook grew up in George Wallace’s Alabama and as he wrote this week in The Washington Post, “I remember what it was like to grow up in the South in the 1960s and 1970s. Discrimination isn’t something that’s easy to oppose. It doesn’t always stare you in the face. It moves in the shadows. And sometimes it shrouds itself within the very laws meant to protect us.”

It’s this “shroud” line that’s most relevant here. Even old Lester Maddox, looking back on his life in a 1975 memoir, reflected that “I knew then, as I know now, that I was trying to protect not only the rights of Lester Maddox, but every citizen, including the three men I chased off the property.”

This seductive self-justification doubles as self-deception. It’s a trope that tied libertarians up in knots for decades, trying to mediate their own twin imperatives of property rights and individual liberty. But time has made those choices clearer, as conservatives celebrate the now self-evident moral clarity of Martin Luther King, who declared that he was “embarrassed” when Maddox was elected Governor. This was understandable, given that Maddox called desegregation “ungodly, un-Christian and un-American.”

Maddox, if he is remembered today, is perhaps best known as a refrain in the ‘70s-era satirical Randy Newman song “Rednecks,” which proclaims, “well, he may be a fool, but he’s our fool, and if you think that you’re better than him you’re wrong.” The song goes on to jab at the hypocrisy of self-righteous northern critics who denounce the South while ignoring the segregation that hides under their own noses in cities like New York, Chicago and Boston. But as with all satire, the song contains a serious point that echoes on today: when conservative populism rears its head, liberals often make divisions worse by denying the respective humanity and individuality of the people with whom they disagree, compounding resentments that can turn into political backlash that endures for decades.

What’s sinister is the Orwellian mislabeling of the impulses behind resistance to civil rights progress that aims to ensure equal protection as a defense of liberty. And while it’s become fashionable for conservatives to honor Martin Luther King and venerate past civil rights fights, it’s nothing more than an attempt to benefit from historical amnesia unless they are willing to apply those lessons to present day debates. That means respecting the core conservative value of individual freedom in reality rather than just rhetoric.

In the Ballad of Lester Maddox, the lyrics change but the melody remains the same. It echoes across the decades, age-old arguments where freedom to discriminate becomes the emotional litmus-test of liberty. Direct parallels may miss the point, but ignoring these echoes blinds us from the ability to see current events in light of history and to anticipate what arguments will look like generations from now.

 

By: John Avlon, The Daily Beast, March 31, 2015

April 1, 2015 Posted by | Conservatives, Discrimination, Religious Freedom | , , , , , , , , | Leave a comment

“A Cringe-Worthy Display”: The Question Indiana’s Pence Won’t, Or Can’t, Answer

If Indiana Gov. Mike Pence (R) was looking for a way to raise his national visibility in advance of a possible presidential candidate, his new right-to-discriminate law, if nothing else, has given him the national spotlight.

Indiana Gov. Mike Pence on Sunday defended his decision to sign a religious freedom bill into law, saying that it was “absolutely not” a mistake.

In an interview on ABC’s “This Week” the Republican governor repeatedly dodged questions on whether the law would legally allow people of Indiana to refuse service to gay and lesbians, saying that residents of the state are “nice” and don’t discriminate and that “this is about protecting the religious liberty of people of faith and families of faith.”

The interview between the Republican governor and ABC’s George Stephanopoulos featured an extraordinary exchange that matters quite a bit. The host noted, for example, that one of Pence’s own allies said the new state law is intended to “protect those who oppose gay marriage,” leading Stephanopoulos to ask whether a “florist in Indiana can now refuse to serve a gay couple without fear of punishment?”

The governor replied, “This is not about discrimination,” which wasn’t an answer. So, Stephanopoulos asked again, “Yes or no, if a florist in Indiana refuses to serve a gay couple at their wedding, is that legal now in Indiana?” Pence dodged again.

To his credit, the host pressed on, and again the governor wouldn’t answer. Which led to Stephanopoulos’ fourth effort: “So when you say tolerance is a two way street, does that mean that Christians who want to refuse service … to gays and lesbians, that it’s now legal in the state of Indiana? That’s the simple yes-or-no question.”

Once more, the GOP governor simply wouldn’t, or couldn’t answer.

It was a cringe-worthy display. I’m not even sure why Pence agreed to do the interview in the first place – the Indiana Republican had to know the question was coming, but the governor was visibly stuck, refusing to respond to the most obvious element of the entire debate.

And while Pence struggles to defend a pro-discrimination statute, the backlash to the conservative law has intensified in recent days.

Angie’s List, an online concierge to find companies to perform various household maintenance, announced Saturday it was halting a planned expansion to its campus in Indianapolis over the new law, according to CEO Bill Oesterle.

This coincided with protests at the Indiana Capitol, on top of concerns raised by a wide variety of national businesses, groups, and leaders. A Washington Post op-ed from Apple CEO Tim Cook this morning raises the stakes further.

The governor said Saturday he’ll “support the introduction of legislation to ‘clarify’ ” that the Indiana law “does not promote discrimination against gays and lesbians” – an effort that’s no doubt intended to calm the waters – but Pence added yesterday during the ABC interview, “Look, we’re not going to change the law, OK?”

Actually, no, it may not be “OK” with opponents of discrimination that Pence intends to leave the new law intact.

* Postscript: One man claiming to be an Indiana business owner says he’s already begun discriminating against gay customers, taking advantage of the new law, but the man’s story has not been corroborated.

 

By: Steve Benen, The Maddow Blog, March 30, 2015

March 31, 2015 Posted by | Discrimination, Mike Pence, Religious Freedom | , , , , , , , , | Leave a comment

“Separate But Unequal”: Why Do We Tax Ourselves Today So Apple Can Pay Its Taxes Someday?

The richest of the rich are different from you and me because instead of paying taxes, Congress lets them pay interest.

This little-known difference was on full display before the Senate Permanent Investigations subcommittee this week, though you would hardly know that from the news reports of testimony by Apple CEO Tim Cook and his top finance and tax executives.

The reality is that America has two income tax systems, separate and unequal. And as with all such separate and unequal systems, the powerful benefit by sticking everyone else with the costs.

The system is so unequal that corporate tax departments at the biggest multinationals have been transformed from cost centers into what Enron called its tax office: a profit center.

To most Americans, taxes are an expense. The idea that a tax can make you richer may seem hard to believe, but as the Apple executives showed in their testimony, it is standard operating procedure these days.

But instead of reporting this, we got mostly fluffy political stories. The New York Times account was typical, focusing on how Cook so charmed senators he had them “practically eating out of his hand.”

What Apple is really doing is eating your lunch.

Let’s start with how Congress taxes most people. It does not trust them to report their incomes in full or to pay their taxes, and with good reason since numerous studies show that a third or more of self-reported income simply does not get written down on income tax returns.

We all know this as the “underground economy” of people who get paid in cash; clean pools, cut grass or sell another type of grass. (Many drug dealers, however, report their incomes in full knowing that if they get caught dealing and cheating on their taxes their prison terms will be longer.)

People who work, and pensioners, have their taxes taken out of their checks before they get paid — which is why we call the shrunken cash that we pocket “take-home pay.”

Because Congress also does not trust workers and retirees to report their incomes in full, it requires their employers and pension plans to verify how much they make. The Social Security Administration adds up all the W-2 wages-paid forms for people with any paid work. In 2011 there were 151,380,759 people who earned  $6,238,607,249,941.26, which would usually be written up as $6.2 trillion.

Congress also says you can defer tax on money you save in a 401(k) plan if your employer offers one, a maximum of $23,000 for older workers. If you do not have a 401(k) you can save no more than $6,000 this year and pay taxes when you withdraw.

In other words, you get fully or almost fully taxed when you earn.

But Apple operates under very different rules. At the end of March it has more than $102 billion of mostly untaxed profits. If Apple were a worker it would have paid the federal government $36 billion in taxes.

Instead of paying taxes, Apple has taxes that are deferred for as long as it chooses.

In total, I estimate from corporate disclosure documents, American multinational companies have $2 trillion of untaxed profits offshore because they did just what Apple has done.

Had Congress required those companies to pay up last year it would have been the equivalent of all the income taxes paid by everyone in America from January until July 10. Imagine that, all the income taxes taken out of your pay or pension from January into the middle of summer just so Apple and other multinational companies can profit today and pay their taxes someday.

The $700 billion of income taxes that would have come due without deferral would also have reduced the federal budget deficit last year by more than two-thirds. Instead, the federal government borrowed a little more than a trillion last year to pay its bills.

In effect the federal government loaned Apple the $36 billion in deferred taxes at zero interest. Imagine how rich you would be if you could keep all the income taxes withheld from your paycheck this year and then pay the money, interest-free, 30 years from now.

Because taxes deferred are at zero interest, inflation erodes the value of the taxes owed. If Apple waits 30 years and then chooses to pay its taxes the government will get the equivalent of 40 cents on today’s dollar, assuming 3 percent annual inflation.

Meanwhile, Apple will be investing that $36 billion, earning interest. If it earns 3 percent in 30 years, it will have more than $87 billion.

Now jump forward to 2043. Apple pays $36 billion in taxes from its $87 billion cash pile, leaving it with $51 billion after taxes in 2043 dollars.

As advisors to the very wealthy teach their clients, deferring a tax for 30 years is the functional equivalent of not paying any tax.

In the textbook version of events, that huge pile of untaxed profits that Apple keeps offshore cannot be put to work in America. In reality here is what happens:

—Apple has its tax haven subsidiary deposit the money in the United States at a too-big-to-fail-bank, eliminating any risk of loss it would incur with smaller banks.

—Apple has the American bank buy U.S. Treasury bills, notes and bonds so that its untaxed profits, which force the government to borrow, earn interest.

—Apple can also borrow from itself, making short-term loans from its many separate piles of untaxed offshore profits to fund any operational needs in the U.S.

—Rather than tap its $102 billion of offshore cash, Apple sold corporate bonds for periods of up to 30 years at less than 2 percent interest.

As Cook explained to the senators, why pay taxes at 35 percent when you can borrow at 2 percent? Cook is right from a financial perspective. At 2 percent, the interest on the interest, measured to infinity, will never equal the 35 percent taxes avoided.

But here is the best part of the whole deal, which Cook and Peter Oppenheimer, Apple’s chief financial officer, explained to the senators, but the news media neglected to report.

Apple turns some of the profits it earns inside the U.S. into tax-deductible expenses, which it pays to its offshore subsidiaries.

Now, if you move a dollar you earned from your right pocket to your left, nothing significant happens. Your wealth is unaffected and your tax bill is unchanged.

But Apple and other multinationals have an American right pocket, from which they pull cash to put in their Irish, Cayman Islands, Singaporean and other left pockets. When they do that the profit goes poof on their tax return and a tax deduction gets added.

Accountants use black ink to show profit, and red for losses and expenses. This modern accounting scheme is what the alchemists of old sought, hoping to turn lead into gold. But unlike the fictional philosopher’s stone, this alchemy works.

So, to review, you get taxed before you get paid and can set aside only modest sums with the taxes deferred until your old age.

Apple and its corporate peers get to earn profits now, but pay taxes decades into the future and possibly never, while earning interest on the taxes it defers into the future — interest you must finance as a taxpayer through higher taxes, reduced government services or more federal debt.

The one place Apple cannot escape taxes is on the interest it earns on its untaxed hoard of offshore cash, as Apple’s top tax officer, Phillip Bullock emphasized to Senator Carl Levin, the Michigan Democrat who chairs the investigations panel.

Levin’s staff, its reports issued with bipartisan support, also found that Apple did owe some foreign taxes on profits it earned overseas.

It pays the Irish government a corporate tax rate of 2 percent under a deal made in 1980 when it was a pipsqueak company. On some other earnings its tax rate is 0.05 percent – that is a nickel on each $100 of profit.

Rich individuals – very, very, very rich individuals – get to do the same thing: earn now and be taxed much later, if at all, by paying interest on borrowed money instead of paying taxes.

There are different techniques to defer, delay and escape paying income taxes for executives, business founders, managers of hedge and private equity funds and movie stars, all of which will be explained in future National Memo columns.

One of these techniques explains in good part why companies have been slashing health and retirement benefits for workers – because it masks the real costs of letting executives earn now and pay taxes either later or never.

Another explains why Mitt Romney was never going to release his income tax returns for the years he ran Bain Capital Management, the private equity fund that made him rich.

But the bottom line is the same – America has two tax systems, separate and unequal. There is a word to describe such systems: un-American.

There is also a question to ask: Why do we tax ourselves today so Apple can pay its taxes someday?

 

By: David Cay Johnston, The National Memo, May 23, 2013

May 24, 2013 Posted by | Congress, Taxes | , , , , , , , | Leave a comment

   

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