In 2004, Congress enacted a law to prevent “corporate inversions” in which corporations reincorporate in a foreign country to avoid paying U.S. taxes, but a gaping loophole allows corporations to get around this law by merging with a foreign company.
Simply put, it allows corporations to avoid paying taxes when they “renounce their U.S. citizenship” and change their corporate address to a foreign country.
In recent months, several large corporations have announced plans to exploit this loophole, with minimal change in their business operations, to avoid paying taxes. This wave of “corporate inversions” threatens to hollow out the U.S. corporate income tax base.
One striking example is Walgreens, the nation’s largest drugstore chain, which may use an upcoming acquisition to become a foreign company in order to dodge more than $4 billion in taxes over five years. Walgreens is talking about abandoning America despite its reliance on the U.S. government — and U.S. taxpayers — for a quarter of its revenue paid for by the Medicare and Medicaid programs.
It’s time for Congress to close the loophole and end this outrageous practice.
Last week, I was encouraged to see Congress finally begin to hold hearings and to hear President Barack Obama double down on his support. Under the president’s leadership, the administration is taking the right approach and has proposed solutions to the problem.
This week, Treasury Secretary Jacob Lew in the Washington Post was right to suggest Congress make this legislation retroactive to May 2014, so corporations have notice that any transactions taking place after that date will not allow them to dodge taxes.
“This inversion loophole must be plugged,” Sen. Ron Wyden (D-Ore.) recently said, and Sen. Carl Levin (D-Mich.) and Rep. Sandy Levin (D-Mich.) have both proposed legislation to plug it.
This is exactly the momentum we need to close the loophole once and for all.
The real problem is that many of these so-called “U.S.” corporations want to keep dictating our economic policies and dominating our politics, yet they have less and less loyalty to the people who actually live and work in America. They want to keep benefiting from all the things our government does for them so they can make profits — our legal system to protect their investments and patents, our education and training system to train their workers, our transportation system to get their products to market, our federally sponsored research, our military — but they want the rest of us to front their share of the bill.
Sixty years ago corporations paid one-third of federal revenues, but today they pay only one-tenth. Now they say even that’s too much. Corporate profits are at their highest ever and wage growth is near its lowest in half a century, but still these corporations are not satisfied. They want more. They want Congress to cut their income tax rate, even though many of the largest corporations get away with paying little or no taxes for years. They want Congress to eliminate taxes on the factories they ship overseas, even though an existing loophole already allows them to lower their tax bill when they outsource jobs. And if we don’t give these corporations what they want, they threaten to renounce their citizenship and stop paying U.S. taxes altogether.
We need to start demanding a little more patriotism from these corporations. If they want to keep benefiting from everything our great country has to offer, they need to start showing a little more loyalty to the people who live and work in America. And they need to stop threatening to desert the United States and stop paying their taxes altogether unless America gives in to their demands.
Documentary filmmaker Michael Moore, the director of films like Roger and Me and Bowling for Columbine, and his wife Kathleen Glynn are separating after 22 years. The proceedings have revealed to the public the extent of Michael Moore’s finances, including a large mansion in Michigan.
Let’s be absolutely clear: that question is ridiculous.
First of all, someone with a blue collar upbringing can most certainly attain great wealth over the course of their life and still maintain the composure, sensibility, and ideals they were raised with. That’s common sense. It’s called economic mobility, and it is something that Americans have felt great pride in throughout our history.
But let’s make something else abundantly clear: Michael Moore and other critics of our economic system do not oppose wealth.
Seriously. This has been a libel against all economic progressives, displayed prominently during the 2012 election when Mitt Romney and others accused President Obama of opposing the very idea of wealth and success (thus the obsession with taking “you didn’t build that” out of context). It’s the insult hurled at anyone who criticizes big money in politics: we are told that we are “jealous” of the Koch Brothers’ massive wealth, because why else would we say mean things about them?
And The Today Show bought completely into this frame, calling Moore’s politics “contradictory” with his big house and his full bank account.
But it’s not contradictory, because Michael Moore doesn’t oppose wealth. Senator Elizabeth Warren, another target of these claims, doesn’t oppose wealth. The millions of Working America members who take action to address income inequality don’t oppose wealth, pursuing wealth, or accruing wealth.
What we oppose, and will continue to fight against, is the following:
• The use of massive wealth to rig our democracy in your favor. We respect the right of Charles and David Koch to grow their business, to hire workers and put out a product. But in addition to running a business, they have spent hundreds of millions of dollars on lobbyists, think tanks, and a constellation of political organizations to insure their company’s success at the expense of others.
For instance, there’s nothing “free market” about the Kochs’ efforts to tax consumers of solar energy in an effort to keep them addicted to the petroleum they produce. If Apple lobbied for a law that would add extra taxes for Android users, there would be an enormous outcry. This isn’t different.
• The use of massive wealth to destroy the ladder of economic mobility that helped create that wealth in the first place. Anyone who runs a business has the right to manage their workforce as they see fit, within the bounds of the law. But businessmen like the Koch Brothers, Art Pope, Rex Sinquefield, and Dick DeVos don’t stop there. Through campaign donations, TV advertisements, lobbyists, and other tactics, they have tried (and often succeeded) in changing laws that protect workers’ rights, wages, and retirement. The DeVos family’s near single-handed funding of the “right to work” effort in Michigan is exhibit A.
Knocking rungs off of the ladder of economic mobility doesn’t create wealth, it destroys it.
Warren understood that when information was presented clearly to consumers–without tricks, traps, and hidden fees–they would be better able to select the products that worked for them. That understanding would allow Wall Street companies to compete on a level playing field, with the best plans and products winning. If that’s not capitalism, what is?
So can Michael Moore criticize inequality while enjoying economic success? Absolutely. Moore just happens to be one of those wealthy people who doesn’t feel the need to use his wealth to destroy others’ ability to become wealthy as well.
That’s not being contradictory, that’s being decent.
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The task force assembled by Chicago Mayor Rahm Emanuel to study raising the city’s minimum wage reached a final recommendation Monday: $13 an hour by 2018. Chicago’s minimum wage is currently $8.25.
The group also recommended raising raising the tipped minimum wage to $5.95 over two years, and pegging both wages to inflation. More importantly, they suggested the Chicago City Council not take any action before November, when Illinois voters will consider an advisory referendum raising the wage statewide to $10.
The Minimum Wage Working Group passed the plan 13-3, with representatives from the Chicagoland Chamber of Commerce, Chicago Retail Merchants Association, and the Illinois Restaurant Association dissenting.
The broad Fight for 15 coalition has been pushing Chicago elected officials to establish a $15 an hour living wage and right to organize without retaliation. “[Mayor Emanuel says] America is due for a pay raise” they tweeted, “absolutely. We need $15 now, not $13 in 2018.”
Two studies released in the past few weeks are busting long-held myths about what makes our economy grow.
The first came in June from three professors: Michael J. Cooper of the University of Utah, Huseyin Gulen of Purdue, and P. Raghavendra Rau of the University of Cambridge. They looked at the long-term performance of 1,500 businesses and found that higher CEO pay has a negative effect on a company’s performance.
Using data from 1994 to 2013, the professors saw that companies in the top 10 percent of CEO pay produced “negative abnormal returns” (lower shareholder returns than other firms in their industry) or around -8 percent over three years. The higher the pay got, the more pronounced the effect: the top 5 percent of highest paid CEOs steered their companies to a 15 percent worse performance.
In a word, overconfidence. CEOs who get paid huge amounts tend to think less critically about their decisions. “They ignore dis-confirming information and just think that they’re right,” says Cooper. That tends to result in over-investing—investing too much and investing in bad projects that don’t yield positive returns for investors.”
The second came this week from the Center for Economic and Policy Research, which compared employment growth between states and found that those states that raised their minimum wage levels experienced higher growth than those that didn’t.
Of the 13 states where the minimum wage went up on January 1, 2014 (either because of legislative action, referendum, or cost-of-living adjustments), all but one had positive employment growth, and nine of them had growth higher than the median. “The average change in employment for the 13 states that increased their minimum wage is +0.99% while the remaining states have an average employment change of +0.68%,” wrote CEPR.
“While this kind of simple exercise can’t establish causality, it does provide evidence against theoretical negative employment effects of minimum-wage increases,” writes Ben Wolcott of CEPR.
Taken together, these studies back up what working people already know: higher wages add to a virtuous cycle that benefits both workers and businesses, and that exorbitant CEO pay does nothing for the broader economy other than line the pockets of an increasingly small and powerful group of uber-wealthy individuals.
Text RAISE to 30644 to join Working America’s fight for fair wages.
We get it. It’s often uncomfortable to think about condemning private citizens in the public sphere. But when we talk about Charles and David Koch, it’s important to keep our eyes on the ball, and to wrap our heads around the sheer magnitude of the damage they have caused to wages, workers’ rights, and the integrity of our democracy.
The problem, as Robert Reich points out in this video, is not that the Koch Brothers are rich, and it’s not that they hold such strong beliefs. It’s that they have utilized that mass wealth to impose their views on the rest of us–undermining our democracy and enriching themselves in the process.
Members of United Students Against Sweatshops (USAS) and interns from Union Summer took action at a Recreational Equipment Inc. (REI) store in Rockville, Md., last weekend to protest the retailer’s association with The North Face, a company that uses sweatshop labor in Bangladesh to produce its products. Nearly 2,000 workers in the factories in Bangladesh that North Face and other companies use have died in recent years because of unsafe workplace conditions. Watch the video to see the students in action.
Of particular note is an exchange in the middle of the video between one of the students and an REI employee who asks what the protests are about. She responds eloquently: “When you do business with people that disenfranchise people worldwide, then what does that say about your brand?”
Income inequality is a very destabilizing thing in the country, a very polarizing thing in the country. In other words, it’s responsible for the divisions in the country. Those divisions could get wider. If you can’t legislate, you can’t deal with problems. If you can’t deal with problems, you can’t drive growth, and you can’t drive the success of the country.
But he also said something else. When the show’s host pointed out that many people are speaking out against income inequality but fewer are taking action, the bank CEO agreed. “Yes, full stop. If there was a lever to pull and a button to push, we would pull it and push it.”
Technically he is correct. There is not a lever or a button. But there are very clear policy solutions that would go a long way toward alleviating the destabilizing force of income inequality:
The financial transaction tax. Also called the “Robin Hood tax,” the FTT is a small fee on stock and bond trades, derivative contracts, and swaps of other complex Wall Street instruments. It would amount to about $0.0003 per dollar, or $18 a year for the median 401(k) holder, but would produce an estimated $352 billion in revenue over 10 years. That extra revenue could be used to pay for things Congress claims we can’t afford: renewing unemployment insurance, restoring cuts to SNAP, investments in infrastructure, and assistance to state and local governments who have been forced to layoff thousands. To folks like Blankfein, who has a $2 million salary and tens of millions more in bonuses, the FTT would feel like a blip.
Raise the minimum wage. This is one you’re familiar with. Raising the minimum wage to $10.10, as proposed in the Harkin-Miller bill filibustered by Senate Republicans, would raise the wages of 27.8 million workers, grow GDP by about $22 billion, and create roughly 85,000 net new jobs. As one of the world’s most powerful bankers, Blankfein support for raising the minimum wage–and his refusal to support politicians who oppose it–would have a huge impact.
Stop attacking the CFPB. The banking lobby, of which Goldman Sachs is a large part, viciously opposed the creation of the Consumer Financial Protection Bureau in 2010 (as detailed by author and Massachusetts Senator Elizabeth Warren in her bestselling book). But since its creation, the CFPB has recouped millions of dollars for consumers from mortgage, credit card, and banking companies that were skirting or outright breaking the law. Oftentimes, the offending companies are directly scams at the most vulnerable Americans: debtors, students, veterans, low-income families and families of color. Forget outright support–if Blankfein called off his lobbying team from attacking and attempting to weaken the CFPB, the Bureau’s future and its ability to recoup losses for consumers would be more secure.
Workers at Walmart are mounting a new initiative not only to get their stories of how Walmart’s low wages, disrespect and intimidation are trapping them in a Walmart economy, but how millions of other workers and their families are caught in that same economy.
A Walmart economy is an economy of inequality manipulated by corporations like the $16 billion-a-year-in-profits retail behemoth and other corporations and 1 percenters like the Walton family, the richest in America.
To workers at Walmart, a Walmart economy means “having to decide between paying my bills and being able to take a day off work to stay with my sick daughter,” says LaShanda Myric, a Walmart worker in Denver.
For Richard Wilson who works at a Chicago Walmart, it means “….Working full-time, but not being able to pay back my student loans.”
What does the Walmart economy of inequality mean to you? Is it struggling to pay your bills or drowning in debt? Is it forgoing health care because you can’t afford health insurance or being unable to retire?
At The Huffington Post, Alissa Scheller has an article that includes nine charts that show very clearly the key takeaways from the AFL-CIO’s recent Death on the Job report. These charts explore the issue of who the 4,600 who die on the job each year are and what is contributing to their deaths.
Propelled by a soaring stock market, the median pay package for a CEO rose above eight figures for the first time last year. The head of a typical large public company earned a record $10.5 million, an increase of 8.8 percent from $9.6 million in 2012, according to an Associated Press/Equilar pay study.
As the Associated Press reports, the median CEO makes 257 times as much as the average worker, up from 181 times as much in 2009.
The Dodd-Frank Wall Street reform law passed in 2010 contained provisions requiring companies to be transparent about the ratio between CEO and average worker pay. But thanks to aggressive lobbying, the SEC has been slow to issue rules.