Give Americans A $2000 Check From “Deferred” Corporate Taxes

U.S. multinational corporations are hoarding an estimated $2 trillion “offshore” to take advantage of a loophole in our tax laws. At our 35 percent top federal corporate tax rate, that represents up to $700 billion in taxes owed but “deferred” because they are “offshore.” This is not imaginary or future money; it is taxes owed on $2 trillion of profits these companies have already made. Who should get this money?

A loophole in the corporate tax code allows companies to “defer” paying taxes on profits made outside of the U.S. until they “repatriate” it – bring the money back to the U.S.. Because of this loophole corporations are holding an estimated $2 trillion of profits “offshore.” Companies are increasingly moving jobs, production and profit centers out of the country to take advantage of this scheme – or are engaging in schemes to make it look like they are. (The amount is increasing 11.8 percent a year and the rate of increase is increasing as well.)

That $700 billion is serious money. Washington lobbyists are working with Congress to come up with various corporate tax “reform” schemes designed to let the corporations off the hook for much of this tax bill – and to lower their future tax bills as well.

The most popular “centrist” idea is to let the corporations just keep much or most of the tax money they owe, if only they would just let us use some of it to maintain our country’s infrastructure. Going along with this would reward these companies for engaging in schemes to “offshore” jobs, production and profit centers, thereby moving (or making it appear that they moved) these profits out of the country – and certainly would encourage doing even more of this from now on.

Send A $2,000 Check To Every Adult – AND Fix Our Infrastructure

Instead of letting these companies off the hook for this tax bill, here is an alternative idea: Let’s collect the taxes that are due on these profits that have already been made, send every adult in the U.S. a check for $2,000, and use what’s left over to fix up our infrastructure.

This is real money, and a lot of it. Instead of making a “deal” on deferment and letting the corporations just keep this money they owe us, let’s fix this loophole and give most of this tax money to the 242 million U.S. residents over 18 as a $2,000 check. What’s left over (and there might be a lot – as much as $215 billion) can be used to fix our infrastructure and other priorities like research and development, fighting Ebola and other diseases, forgiving student debt – you name it.

This is about who gets the money. Do we give the tax money that is already owed to We the People, or do we let the giant corporations just keep it? By making this about a $2,000 check directly to every adult, it becomes personal. It becomes an issue of real money in people’s pockets, not some distant sum that “government” uses for their own good but that people never really feel or touch. Sending people a $2,000 check turns this battle over this money into a personal fight, not just some nebulous, distant, complicated government policy issue.

Who Should Get The Money?

By the way, when we talk about “corporate” money and corporate tax cuts, this is what – more accurately “who” – we are really talking about:

The top 1 percent own 50.9 percent of all stocks, bonds, and mutual fund assets. The top 10 percent own 90.3 percent. The bottom half of all of us own 0.5 percent – one half of one percent. That was 2007 – the top few have only increased their ownership percentages since.

This is about who gets the money. There is up to $700 billion in taxes due and someone is going to get that money. By making this about a $2,000 check to each adult American vs. billions to the owners of the giant corporations, we’re making the “who gets the money” argument personal instead of abstract.

Effect On Economy

What happens to our economy if every adult gets a $2000 check? How much hiring happens in local stores, etc?

What happens to our economy with up to $215 billion going into infrastructure work, with the related hiring and purchases of supplies?

What happens to our economy if companies lose the incentive to move jobs, production and profit centers offshore to take advantage of this loophole?

But wait, there’s more. There’s also that other $1.3 trillion – the “after tax” part that is offshore, too. If we do something about this deferment scam companies would lose the incentive to move jobs, production and profit centers out of the country to make it look like their profits are made elsewhere, and would “bring that money back.” The money would either be invested in the corporation or distributed to shareholders. This would be a big stimulus to the economy either way.

The Numbers

There’s as much as $2 trillion (maybe more) sitting offshore representing up to $700 billion in taxes owed at the top tax rate of 35 percent. (Taxes already paid to other countries are subtracted from what is owed here. This is why the tax bill is “up to” $700 billion. State taxes are also due on these profits, this article concerns itself with the federal share.)

According to the Census Bureau’s QuickFacts there were 316,128,839 Americans in 2013, 23.3 percent of them under 18, leaving 242,470,819 adults.

Sending a $2,000 check to 242.5 million adults costs about $485 billion. Up to $700 billion owed minus $485 billion leaves up to $215 billion for infrastructure and other priorities.

Summary

It’s a great way to accomplish several things that are good for the country:

1) Get cash to people right now. Helicoptered in, $700 billion would make a very big difference that people would feel now and the economy would feel for a while.

2) A $2,000 check shows people how corporate tax breaks are seriously costing them.

3) This puts pressure on “corporate tax reform” deals that reward the corporations by letting them keep any of it.

5) The best part is these companies already owe the money. This is about who gets the money that is owed to We the People. It makes the “We the People” part personal.

The awareness “making this personal” would bring to the issue would lend public support to other efforts to get companies to pay their taxes.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Republicans On Supreme Court Enable Ohio Voter Suppression

The Republican majority on the US Supreme Court by the usual 5-4 today overturned a lower court and blocked a week of early voting in Ohio.

A US Supreme Court just made it much harder for many people to vote — even impossible for some.

Ohio is one of the states that provides plenty of voting machines in affluent, mostly-white precincts while providing few in poorer, minority districts. The result is long, long, long, long lines at the polls in these district, discouraging or making it impossible for people to vote.

I’d call this one of the most blatant uses of raw power for partisan purposes since Bush v Gore, when the Court ruled 5-4 that counting the votes in Florida would “threaten irreparable harm to petitioner Bush, and to the country, by casting a cloud upon what he claims to be the legitimacy of his election.”

Other blatant abuses include letting corporations put money into elections, letting billionaires put as much as they want into elections and getting rid of the Voting Rights Act.

Corporate Courts — A Big Red Flag On “Trade” Agreements

Think about everything you understood about our system of government here in the United States. We’re  governed under a document that starts with the words, “We the People.” Right? When We the People agree that something should done to make our lives better, it’s supposed to get done. Right?

You didn’t know it, but that whole system thing changed several years ago. Our government, in our name, signed a document that placed corporate profits above our own democracy. The “investor-state dispute settlements” chapter in NAFTA (and similar agreements) places corporate rights on above the rights of people and their governments.

As a result of “NAFTA-style” investor protections that are part of so-called “trade” agreements,  giant corporations can and do sue governments for trying to pass laws that protect their citizens from harmful chemicals, ban harmful products, and protect the rights of working people, among  other things. Corporations even sue governments for passing laws that might cause the investors in the corporations to make a bit less money — like raising the minimum wage.

But wait, there’s more.

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Why Is SEC Sitting On Corporate Transparency Rules?

Industrial Diseases and how to be safe in the workplace

Are We the People the boss of the corporations, or are the corporations the boss of We the People? The Securities and Exchange Commission (SEC) needs to be reminded which way that question is supposed to be answered.

The SEC is the agency set up by We the People to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” The SEC states that “all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. … Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions.”

One would think those basic corporate facts and timely, comprehensive, and accurate information needed by investors would include access to a company’s tax returns. One would think they would include information about where the executives of the company are spending millions and millions of the company’s dollars. And one would think they would include disclosure of the ratio of CEO “pay ratio” of compensation to worker compensation, as required by the 2010 Dodd-Frank law.

But so far the SEC is not asking corporations to provide investors and the public with this information. Don’t shareholders — and We the People — deserve to know what these companies are really doing and how much they are really making?

What Are These Companies Really Earning?

Companies tell their investors that they are making tons of money. But to get out of paying taxes the same companies tell the IRS something entirely different. Don’t investors have a right to know what the companies they invest in are telling the tax office?

Last month Catherine Rampell wrote in the Washington Post, in “Shareholders, public deserve tax transparency,” that:

“[There is an] array of eye-glazingly complicated tax avoidance strategies adopted by America’s biggest companies … The basic rationale behind tax transparency is that shareholders (and creditors and the general public) deserve to know what publicly traded companies are doing, particularly if complicated tax acrobatics are distorting their operational and investment decisions.”

She points out that we started out requiring this.

This is not a new idea. In fact, when the modern federal corporate income tax was introduced in 1909, it came with a requirement to disclose the returns. Such transparency mandates were fought over bitterly for the next couple of decades, and U.S. returns have been confidential since 1935.

What About Company “Donations”?

If a company’s executives are literally giving the company’s money away to politicians, “charities” (maybe run by a relative), “think tanks” (that employ relatives, etc.) or other worthy recipients,  shouldn’t investors be provided with information about who is getting the company’s money, and how much they are getting? (Milton Friedman notably claimed that such donations are “theft” from the company.)

(Note: If a company gives money to a politician, and is not simply “giving the money away” for nothing — with absolutely no expectation of getting anything in return — that would be bribery,  under the law.)

Last week in The Nation Zoë Carpenter wrote about this in, “SEC Faces Renewed Pressure to Consider a Corporate Disclosure Rule”:

The campaign to lift the veil on secret corporate campaign donations hit a milestone on Thursday. More than 1 million comments have been submitted to the US Securities and Exchange Commission calling for a requirement that corporations disclose political spending to their shareholders—ten times more than for any other rule-making petition to the SEC, according to the Corporate Reform Coalition.

“Investors want to know how their money is being spent,” Tim Smith, director of shareholder engagement at the firm Walden Asset Management, said at a press conference outside the SEC in Washington. A sign over his right shoulder read, “Your money is being invested in secret. Why is the SEC doing nothing?”

Why Is SEC Sitting On These Rules?

So why is the SEC just sitting on these proposals to disclose basic information to shareholders? In the case of the CEO pay ratio, this is even required by a law passed almost 5 years ago.

Could it be that the people working at the SEC really do know who is the boss now? (“Boss” as in the writer of the big paycheck and future employer.) Maybe, and maybe not. Who’s to say?

In early 2013 the Project On Government Oversight (POGO) released it report, “Dangerous Liaisons: Revolving Door at SEC Creates Risk of Regulatory Capture”:

A revolving door blurs the lines between one of the nation’s most important regulatory agencies and the interests it regulates. Former employees of the Securities and Exchange Commission (SEC) routinely help corporations try to influence SEC rulemaking, counter the agency’s investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals, and win exemptions from federal law. POGO’s report examines many manifestations of the revolving door, analyzes how the revolving door can influence the SEC, and explores how to mitigate the most harmful effects.

At the time of the report’s release Bloomberg reported,

From 2001 to 2010, POGO says, more than 400 SEC alumni filed about 2,000 disclosure forms (which POGO obtained using the Freedom of Information Act) saying they planned to represent an employer before the SEC. That may vastly understate the problem because, as POGO points out, former SEC employees must file such statements for only two years after departing.

The SEC has exempted some senior employees (even sometimes blacking out their names on SEC documents) from a one-year cooling-off period during which they are barred from representing clients before the agency, POGO found.

Soon after the report was released: April, 2013, Ex-SEC chief Schapiro takes revolving door back to private sector,

With her seat barely cold at the chairmanship of the Securities and Exchange Commission, Schapiro will become a managing director at a financial consulting and lobbying firm that has hired a slew of former financial regulators over the last several years and that represents for many a nexus of the cozy relations between banks and their regulators.

Are We the People the boss of the corporations, or are the corporations the boss of We the People? Who’s to say? Not the SEC, apparently.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Six Corporate Tax Myths In One Letter to Editor

How MANY mistruths can you count in a letter in today’s San Jose Mercury News?

Lower corporate taxes would boost economy

When the government wants to raise taxes, the counter argument is always that people and corporations will work harder if they can keep their earnings. It is either that, or pass the costs to the consumers. Either way, high taxes are a no-win situation for everybody. Now that we have the highest taxes of any industrialized nation, corporations are “voting with their feet” and using legal tax-inversion strategies to stay competitive. The administration that pushed for high taxes is crying foul and saying this is not patriotic. Now they don’t like the consequences of their greedy tax policies. Drop the corporate tax rate to 15 percent and watch the economy soar.

  1. Myth: People will work harder if they can keep their earnings. Actually, wouldn’t people work harder to make up for the money that goes to taxes?
  2. Myth: Corporations pass the “cost” of taxes onto consumers. Actually corporations can’t pass taxes to consumers. (And taxes are not a “cost.”) Summary: taxes are on profits and prices are already as high as the company can charge. If corporations could just increase prices to cover taxes then the profits would go up, which raises the taxes, so they wold have to increase prices again, which would increase profits, which raises taxes, so they have to increase prices again, etc.
  3. Myth: Taxes are no-win. Actually they pay for the reads, schools, courts, police, military and the rest of the things that enable corporations to prosper.
  4. Myth: We have the highest taxes. Actually we don’t. Corporations are shifting profits out of the country to avoid ever paying taxes. The solution is to make them pay their taxes, not lower tax rates to let them get away with this.
  5. Myth: The administration raised taxes on corporations. Actually the administration didn’t raise corporate taxes. Corporate taxes have been lowered from 46% to 35% since the 80’s.
  6. Myth: If the corporate tax rate was lowered to 15% the economy would soar. Actually there is no relationship between lower tax rates and higher economic growth. In fact, there is a correlation between lower rates and lower growth, possibly because lower taxes cause government to cut back on the things that help the economy prosper, like education, investing in infrastructure, basic research, etc.

The letter-writer probably actually believes the stuff he wrote. Many people do. This shows the effect of decades of corporate/conservative propaganda on the public. Unfortunately these beliefs are leading to policies that are killing our economy and our democracy.

Now It’s Burger King Renouncing US Citizenship – Let’s Eat Somewhere Else

Burger King is the latest company announcing plans to renounce its U.S. citizenship in order to dodge taxes. It plans to buy Tim Hortons and then pretend Tim Hortons bought them so they can claim to be Canadian. (Tim Hortons renounced its own U.S. citizenship in 2009 and moved their headquarters from Ohio to Canada.)

The announcement is prompting calls like this petition you can sign by the Campaign for America’s Future that calls on Burger King’s CEO to keep the restaurant chain American or “I will dine elsewhere.”

Burger King Didn’t Build That By Themselves

Why is Burger King prosperous? Why do people feel safe eating food served at Burger King? Why do people recognize a Burger King when they see one? Why does something called “Burger King” with outlets across the country (and the world) even exist?

  • Consumers believe Burger King’s beef and other offerings are safe to eat because they know our taxpayer-funded government inspectors and regulations make sure of it.
  • Taxpayer-funded government courts and agencies make sure that other fast-food outlets can’t call themselves “Burger King” to trick people into eating there instead.
  • Taxpayer-funded agencies and courts also make sure that other restaurants can’t call their burger a “Whopper.”
  • Burger King’s customers use taxpayer-funded roads when they drive to a local Burger King outlet.
  • Burger King’s workers and managers were educated in taxpayer-funded schools.
  • The money Burger King collects is created and regulated by the taxpayer-funded government, and it is deposited in banks that are regulated by the government to be safe and trustworthy. (And protected by taxpayer-provided police.)
  • Burger King’s ultra-low-wage employees are paid so little that they receive food stamps, Medicaid, earned income tax credits and other taxpayer-funded government safety-net services.
  • The government enables Burger King to be something called a corporation at all. Corporations are entirely government-created entities with special rights, privileges and protections that are granted by the government.

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Austerity Has Made Europe’s Depression Longer Than in ’30s

Europe’s economic depression has now lasted longer than the Great Depression of the 1930s. Meanwhile, America’s “Great Recession” also drags on thanks to cutbacks in government spending since the stimulus.

Europe’s leaders somehow were convinced that austerity – “deficit reduction” through cutbacks in government – would somehow lead them out of their economic doldrums. They believed that taking money out of the economy would help the economy. The result has been terrible. The Washington Post’s Wonkblog calls Europe’s austerity-lengthened depression “one of the biggest catastrophes in economic history.”

To top it off, Europe’s governments are learning that cutting back on spending not only worsens the economic picture, causing terrible unemployment, poverty and human misery, but the worsened economic picture means less revenue coming in, thereby increasing deficits instead of lowering deficits. In other words, austerity cutbacks to fight deficits have instead made deficits worse and hurt people.

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GOP Vows To Dismantle Or Shut Down Government If They Win Senate

A Politico story being promoted by the Drudge Report, “McConnell’s plan to shut down Obama,” makes it clear that if Republicans capture the Senate this fall they will, as the Drudge Report puts it, “play chicken” and shut down the government if President Obama vetoes their legislation to dismantle the government.

From the Politico interview, a threat,

“We’re going to pass spending bills, and they’re going to have a lot of restrictions on the activities of the bureaucracy,” McConnell said in an interview aboard his campaign bus traveling through Western Kentucky coal country. “That’s something he won’t like, but that will be done. I guarantee it.”

Who does McConnell say would be to blame if the President vetoes bills and Republicans then shut down the government rather than compromise? “McConnell said it would be up to the president to decide whether to veto spending bills that would keep the government open.” (In a related story this week, Islamic State in Iraq and Syria (ISIS) blamed the United States for making them behead an American journalist.)

Dismantle Or Shut Down

Republicans say that if they take the Senate they will pass legislation to dismantle the government. Jim Manley, former aide to Sen. Harry Reid explained in April at the WSJ, “It is very difficult to imagine that House Republicans’ takeaway from such an election would be to search again for moderation.”

Republicans can be expected to:

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Are American Corporations Really Less Competitive Because Of Taxes?

Corporate tax rates used to top out at 52.8 percent. Later rates were lowered to 48 percent and then 46 percent. Then in 1986 corporations complained that this (lowered) rate made them “uncompetitive” and demanded “corporate tax reform.” Because job creators. So the rate was lowered to 35 percent.

Now in 2014 corporations are complaining that this (lowered) rate makes them “uncompetitive” and are demanding “corporate tax reform.” Because job creators – or something. This time they threaten to – or do – renounce their U.S. citizenship, saying it is because of too-high tax rates.

So, here we are again. They want rates lowered even more. But are corporate tax rates really “uncompetitive?” And what does that even mean?

Tax Rates Are Plenty Competitive

At the New York Times’ Dealbook Andrew Ross Sorkin looks at this issue in “Tax Burden in U.S. Not as Heavy as It Looks, Report Says.” Sorkin looks at a paper, “‘Competitiveness’ Has Nothing To Do With it,” by Edward D. Kleinbard. Kleinbard is a professor at the University of Southern California and used to be chief of staff to the Congressional Joint Committee on Taxation. Sorkin quotes Kleinbard:

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Three Charts to Email to Your Right-Wing Brother-In-Law — Updated

Problem: Your right-wing brother-in-law is plugged into the FOX-Limbaugh lie machine, and keeps sending you emails about “Obama spending” and “Obama deficits” and how the “stimulus” just made things worse.

Solution: Here are three “reality-based” charts to send to him. These charts show what actually happened.

Spending

Bush_Obama_Spending_2014

Government spending increased dramatically under President Bush. It has not increased much under President Obama. This is just a fact.

Deficits

Bush_Obama_Deficit_2014

Note that this chart starts with Clinton’s last budget year for comparison.

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Perhaps We Need Corporate ‘Loyalty Oaths’

Several American corporations are using a tax loophole scheme called “inversion” to get out of being American corporations obligated to pay American corporate tax rates. They buy or merge with a non-U.S. corporation (usually located in a tax haven), pretend they are a subsidiary to that corporation and renounce their U.S. “citizenship.”

That’s almost the only thing that changes. Their U.S. executives, employees, facilities and customers remain where they are, along with the benefits and protections they get from our courts, education system, military, infrastructure and all the other things we pay for through taxes. They just stop paying various taxes to help pay for those things.

Walgreens announced today that they will not “invert” and become a non-U.S. corporation. (And their stock tumbled as the bailed-out “patriots” on Wall Street heard the news.) Walgreens’ decision follows the collection of more than 160,000 signatures on a “Tell Walgreens to stay in the USA!” petition organized by a coalition of progressive organizations demanding that Walgreens remain a U.S. corporation.

But that announcement is just one victory in what has to be a continuing campaign to make sure corporations honor their obligations to America and pay their share of the cost for the things that enable them to prosper in America.

Corporate Desertion

At The Daily Beast Monday, Jonathan Alter wrote about this “corporate desertion.” In “The United States Needs Corporate ‘Loyalty Oaths’,” Alter writes that “…it’s time for red-blooded Americans to take matters into our own hands. My answer is to make every corporation sign something.” Alter suggests “… a “non-desertion agreement” with the John Hancock of every board member and CEO in the United States.”

If boards thought for even a second about the long-term interests of their companies, they would summon their lawyers and sign. It’s protection against the risks of resurgent nationalism that could strip them of the many advantages (indirect government subsidies, easy access to American markets) that they currently enjoy.

Alter points out that the president can just do this today with an executive order for corporations that receive federal contracts:

“The president should issue an executive order that says any company that wants to keep its federal contracts must sign a new-fangled NDA. It’s reasonable to expect most federal contractors to be American companies. Obama has already used that leverage to raise the minimum wage for companies doing business with the government and, in a little-noticed move, to force government contractors to pay their suppliers on time.

This executive order would get the attention of major corporations, most of which receive federal contracts.”

The Benefits And Protections Corporations Get

Corporations themselves are not the problem. There is nothing inherently wrong with them, as long as we understand what they are and are not. A corporation is just a tool – a way to get something done. A corporation really is just a legal contract – entirely a creation of government (We the People) – a legal form of business organization that allows multiple investors to aggregate funds in order to accomplish projects that would otherwise be difficult to get done, except by governments. (It takes a huge investment to build a factory, buy the equipment and supplies, and hire the people required to make automobiles, trains, or other goods. The corporate form of a business enables this aggregation of funds from multiple investors.)

Where our relationship with corporations goes wrong is in our understanding of what they are and what they are for. They are neither good nor bad, they can’t be; they are not sentient entities that have morals or “decide to do things.” A corporation is just a contract between investors. A chair or hammer can’t decide things, and neither can a corporation. It is the people who manage the corporations that decide to do things, not the corporation.

Alter writes of the advantages that corporations currently enjoy. They are granted these advantages and benefits because we – through our government – have decided to let groups of investors have them. We did this in order to better accomplish those things that we want to get done. So corporations get many benefits and protections, including (but not limited to):

  • Corporations can raise and concentrate money. Corporations can add new investors, issue stock and borrow. Also the corporation’s stock can be traded, providing liquidity.
  • Corporations provide limited liability. The personal assets of the shareholders of a corporation are protected from the corporations debts and liabilities. A shareholder doesn’t have to come up with money to cover what the company might owe from borrowing or from a legal penalty or fine. Shareholders also are not criminally liable for the things the corporation might do.
  • Corporations get special tax treatment. They pay lower tax rates than other kinds of “persons.” They get all kinds of tax deductions, subsidies, exclusions, etc. that regular persons do not. A huge benefit and protection shareholders of corporations get is something called the “capital gains tax rate.” When one of these owners of corporate stock sells the stock the profits from that sale are not taxed at the same rate as the income of working people. That sale is called a “capital gain.” (That tax rate just went from 15 percent to 20 percent as part of President Obama’s budget compromise.) The reason that the wealthiest people get most of their income from capital gains is because the capital gains tax rate is lower – and the reason the capital gains tax rate is lower is because the wealthiest people get most of their income from capital gains. Makes sense, doesn’t it?
  • Corporations can own property in their own name, including shares of other corporations. Even though they are not “people” we let them “own” things. This enables a certain level of “hidden” ownership of things.
  • Corporations live forever. They survive aside from the lives of the shareholders.

For The Benefit Of We The People?

We the People allow the corporate form to exist and grant these benefits and advantages to corporations because it enables the aggregation of funds from multiple investors to help accomplish those things we believe these corporations can do for us. We the People grant them special benefits, such as tax breaks, and in exchange we are supposed to get certain things back from this deal, beginning with well-made goods and high-quality services, good-paying jobs with benefits, and most importantly a share of the proceeds – taxes – to use to run our society, maintain and improve our infrastructure, educate ourselves, and all the other things We the People established our government for. In other words, this is supposed to be about making our lives better.

Why else would We the People make laws that allow this business form and grant these advantages and benefits to these corporations, unless it was for the benefit of We the People?

We the People create the fertile ground – education, infrastructure, courts, police and military protection, customers, etc. – for these corporations to thrive and We the People are supposed to reap the harvest.

We Get In Trouble When We Misunderstand What Corporations Are For

These advantages and benefits are supposedly granted in order to advance our – We the People’s – interests in getting certain things done and providing us with certain benefits, period. It is when we misunderstand what a corporation is that trouble begins.

One example of this trouble is that many people mistakenly believe that shareholders “own” a corporation. In fact, shareholders only have a contractual agreement related to the value of the stock. A corporation has no “owners.” It is just a contract, an understanding, a piece of paper.

Another example of the trouble that can occur from misunderstanding what a corporation is comes from the mistaken belief that the purpose of a corporation is to make money – and that there is a corresponding rule that they are required to “maximize shareholder value.” In fact, a corporation exists to allow investors to pool funds to accomplish certain tasks that benefit us. Their purpose is to better enable the accomplishment of those tasks.

Just Who Are We Talking About?

Unfortunately, public understanding of corporations has migrated from the original purpose of this form of business organization. Why is this? The answer might come from understanding who benefits from owning shares in corporations. This chart from the 2011 post “Nine Pictures Of The Extreme Income/Wealth Gap” explains who we are really talking about when we talk about corporations today:

The top 1 percent own 50.9 percent of all stocks, bonds, and mutual fund assets. The top 10 percent own 90.3 percent. The bottom 50 percent of us own 0.5 percent. That’s one half of one percent.

So Here We Are

We have drifted very far from our understanding of the relationship that is supposed to exist between We the People, our government, and the businesses that our government allow to exist. Why would we pass laws that set up corporations and grant them special benefits, except to make our lives better? How have we allowed these legal constructs called corporations (and the people behind them) to gain so much power that they can tell us what to do, and tell us they are going to just leave the country if we don’t let them have their way?

If We the People are not benefiting from the existence of these things called corporations, maybe it is time for We the People to put a stop to the special advantages and benefits they get. Why should the 1 percent enjoy limited liability, special tax breaks, use of courts, and police and military protection if We the People are not getting well-made goods and high-quality services, well-paying jobs with good benefits, good schools and the rest of the things called for in the original bargain that created corporations in the first place?

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Backed By China? House Republicans Block Critical ‘Make It In America’ Bill

Last week one more example of Republican obstruction occurred – blockage of an important “Make It In America” bill – and one more time not a single corporate media outlet reported it.

The House Republican leadership last Tuesday blocked a bill to secure for American companies critical minerals used in the production of energy-efficient products, renewable energy systems, electronics and other technologies. The result is companies – and the Defense Department – continue to be forced to turn to China to make or obtain critical electronics components.

The China Problem

Put simply, China undermined most of the world’s other sources of these strategic minerals by such practices as underpricing, putting them out of business. Once an industry leaves a country it becomes enormously difficult to start it up again. The supply chain is gone. The expertise is gone. The educators are gone – and so on. And, of course, with the industry goes the jobs and the ability for a country to make a living in the world. A huge investment is required to rebuild all of this.

Now China is the main source (90 percent) for many critical minerals used in electronics manufacturing. China is using that 90 percent advantage to force other industries to come to China. China has been using export controls and other restrictions to drive up the price of manufacturing outside of China. If you simply cannot make or obtain certain critical electronics products anywhere else you either get them from China or go out of business. And yes, that includes our military.

The Bill

The Securing Energy Critical Elements and American Jobs Act of 2014 (H.R. 1022) from Rep. Eric Swalwell, (D-Calif.) was written “to assure the long-term, secure, and sustainable supply of energy-critical elements to satisfy the national security, economic well-being, and industrial production needs of the United States.” It would have increased exploration, research and development, and other national means to secure these critical minerals by coordinating the actions of federal agencies to:

  1. promote an adequate and stable supply of energy critical elements,
  2. identify energy-critical elements and establish early warning systems for supply problems,
  3. establish a mechanism for the coordination and evaluation of federal programs with energy-critical element needs, and
  4. encourage private enterprise in the development of an economically sound and stable domestic energy-critical elements supply chain.

This bill is one part of the overall Make It In America series of bills from House and Senate Democrats.

The Vote

A majority of the House voted for the bill, but House leadership set it up for failure by requiring a two-thirds vote to pass. It was voted on “under suspension of the rules” requiring the two-thirds instead of the normal majority.

The reason? Heritage Foundation and Club for Growth objected to our government helping American companies compete with China. They said that the American government securing necessary materials for American companies to manufacture is “interference with the free market.”

To some there apparently is no national interest, only “market” interests.

Of course, it is not a “free market” because China subsidizes its companies and uses strategic chokepoints like this to take over entire industries. China sees itself as a country with a national interest. Conservatives say we should not.

Heritage argued that government “interference in a functioning market is self-defeating.” In other words, let China have the business.

It really is time to find out if Heritage Action and Club for Growth receive funding from China as part of China’s national strategy to capture the world’s strategic industries. China would be foolish not to. But, on the other hand, maybe China doesn’t have to.

This is important stuff. Really important. You should help spread the word that this happened.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.