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.

Sen. Elizabeth Warren Tells Netroots: “Push Back And Fight Hard”

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Senator Elizabeth Warren took her fight against a rigged system to the Netroots Nation gathering in Detroit Friday morning, saying that she is fighting back, and if We the People “push back and fight hard, we can win.”

Outside the hall, people were passing out “Ready for Warren” hats and signs. Inside the hall, the hats and signs were everywhere.

Fighting back against a rigged system was the theme of Warren’s rousing speech to Netroots. She began by briefly telling the story of how the about Consumer Financial Protection Bureau (CFPB) came to be. She had the idea for the agency, started talking about it, people told her it was a great idea and badly needed, but said to her, “Don’t do it because the biggest banks in the country will hate it and you will lose.”

She said they had that half right. “They spent more than a million dollars a day for more than a year lobbying against financial reforms. But we fought back and we won. We won because you and a zillion other people across the country got in the fight. We said we the people will have this agency and we won.”

And now we have the CFPB and it has already returned $5 billion to people that the big financial firms tried to steal, she said.

Warren’s message was that we should “never miss the central point of this story. The CFPB is proof of how democracy can work in the 21st century. It is proof that if we push back against the biggest, strongest, most ruthless lobbying effort in the country, if we push back and fight hard we can win. We can’t win every time and we are still trying to figure out how to make it all work. We don’t win every time but we’re learning to win. We will keep at it; we will fight and we will win that’s my message today.”

A Rigged System

Warren moved from there to what is happening in the country today. She said companies naturally look for profits. “But many of them have another plan – they use their money and their connections to try to capture Washington and rig the rules in their favor … That’s what we’re up against that’s what democracy is up against.”

She compared what happens to regular people with what happens to wealthy elites at the top, saying, “A kid gets caught with a few ounces of pot and goes to jail but a big bank launders drug money and no one gets arrested.”

Not Just Big Banks

Warren said, “But it’s not just the big banks.” She called on the audience to look at the choices the federal government makes, such as piling debt on students. Then she went straight after Republicans as the enablers of the rigging and corruption. “Instead of building a future, this country is bleeding tax loopholes. Billion-dollar corporations squeeze out deals with foreign countries, renounce their citizenship and pay no taxes. How does this happen? They all have lobbyists and Republican friends in Congress to protect every loophole and every privilege. The game is rigged and it isn’t right.”

Rigged Trade Deals

“Take a look at what happens with trade deals. Trade negotiations are like Christmas morning for the biggest corporations,” she said.

Warren described how corporations can bypass pollution and wage laws. “The corporations can get special gifts through trade negotiations they would never get from Congress,” she said, because trade negotiations are secret, held behind closed doors. The corporations are “all smacking their lips at the possibility of rigging the upcoming trade deals.”

“Stop and ask yourself, why are trade negotiations secret? I have had people involved in the process actually tell me, If people knew what was going on they would be opposed. My view is if people would be opposed then we shouldn’t have those trade deals.”

It’s Everywhere

Warren said the tilt in the playing field is everywhere. “When conservatives talk about opportunity, they mean opportunity for the rich to get richer and the powerful to get more powerful. They don’t mean do something about student loan debt or help someone unemployed to get back on their feet.”

The Fight

“Deep down, this is a fight over values. Conservatives and their powerful friends will continue to be guided by their internal motto ‘I got mine and the rest are on your own.’ ”

“My motto we all do better when we work together and invest in future. The country gets stronger when we invest in helping people succeed. … These are progressive values and these are the values we are willing to fight for.”

She then went into a refrain:

We believe that Wall Street needs stronger rules and tougher enforcement.
And we’re willing to fight for it.

We believe in science and that means that we have a responsibility to protect the planet.
And we will fight for it.

We believe the Internet shouldn’t be rigged to benefit big corporations.
And we will fight for it.

We believe no one should work full time and still live in poverty. That means raising the minimum wage.
And we will fight for it.

We believe that fast-food workers deserve a livable wage.
That means we will fight alongside them.

We believe students are entitled to get a good education without being crushed by debt.
And we will fight for it.

We believe after a lifetime of work people are entitled to retire with dignity. That means protect Social Security and Medicare.
And we will fight for it.

We believe – I can’t believe I have to say this in 2014 – in equal pay for equal work.
And we will fight for it.

We believe equal means equal and that true in the workplace and at home and everywhere.
And we will fight for it.

We believe immigration has made country strong and vibrant.
And we will fight for it.

And we believe that corporations are not people. (The crowd was on its feet making a lot of noise so I don’t know what she said next.)
And we will fight for it.

Right here in this room this is where it happens. This is 21st-century democracy. This is the future of America. This is where we decide that We the People will fight together and do that, we will fight together and we are going to win.

And the crowd went nuts.

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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.

A Moral And Economic Imperative To Extend Unemployment Benefits

Federal unemployment assistance for 1.3 million people who have been unemployed longer than 26 weeks expired last Saturday, after Republicans blocked efforts to extend them. 3.6 million more people will lose these benefits over this year. Restoring these benefits is a moral, economic and political imperative.

On Monday the Senate will hold the first procedural vote on bringing back unemployment benefits for people who have been out of work longer than 26 weeks. The hope is to break a Republican filibuster so the extension can be passed and sent to the House (where Republicans will likely refuse to even allow it to come up for a vote).

Click here to Tell Congress to Extend Unemployment Benefits.

A Moral Imperative

When the financial crisis hit the country provided assistance to (“bailed out”) the largest banks. We have a moral imperative to also help our fellow citizens. A democracy provides assistance for people who need help. A fair and just society provides assistance for people who need help. A moral society provides assistance for people who need help.

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Want to Cut Food Stamp Spending? Raise the Minimum Wage

Wednesday President Obama will give a speech on his plan to grow the economy and the middle class. Thursday fast-food workers will strike in 100 cities and stage protests in 100 others to demand $15 an hour and the right to form a union without interference from employers. Here’s something to consider: raising the minimum wage cuts government spending on Food Stamps and other programs.

The Minimum Wage

According to the Bureau of Labor Statistics (BLS) 1.57 million people in the United States make the minimum wage, and another 1.98 million make even less. These 3.6 million workers make up 4.7 percent of all hourly-wage workers. People who are supposedly paid tips and people under 20 can be paid less than this minimum. Some states allow businesses that are not engaged in interstate commerce (and therefore outside the jurisdiction of the federal government) to pay less. Some territories – notably American Samoa and the Northern Mariana Islands – also are allowed to pay less.

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Martin Luther King’s Dream Of Jobs And Freedom

Martin Luther King Jr. outlined his dream 50 years ago this weekend. We made much of it happen. Let’s dream some more. Let’s dream about what we could do in the next 50 years.

Fifty years ago Martin Luther King Jr. led the March on Washington for Jobs and Freedom and famously told the country “I have a dream.” Fifty years later there is progress and there are setbacks. We no longer have segregation — separate schools and bathrooms and the rest. Many states finally allow everyone to marry the person they love, but at the same time many states are returning to apartheid-era restrictions of voting rights.

One huge part of the “Jobs and Freedom” Dream that still evades us is the goal of full employment or an income until a job becomes available.

On August 16, 1967 King delivered a speech titled, “Where Do We Go From Here?” addressing the need for everyone to have a job or an income,

…our emphasis must be twofold: We must create full employment, or we must create incomes. People must be made consumers by one method or the other. Once they are placed in this position, we need to be concerned that the potential of the individual is not wasted. New forms of work that enhance the social good will have to be devised for those for whom traditional jobs are not available. In 1879 Henry George anticipated this state of affairs when he wrote in Progress and Poverty:

The fact is that the work which improves the condition of mankind, the work which extends knowledge and increases power and enriches literature and elevates thought, is not done to secure a living. It is not the work of slaves driven to their tasks either by the, that of a taskmaster or by animal necessities. It is the work of men who somehow find a form of work that brings a security for its own sake and a state of society where want is abolished.

A Country Based On A Dream

Our country was founded on the dream that We the People can do things for each other instead of depending on the rich and powerful to throw us scraps.

If you look at our Constitution you see that our country is supposed to be for We the People. And I mean just look at it, not read it. The only words you see from any distance are the words “We the People.” The Founders were making a point.

The Constitution told the world about a dream that “We the People” would build a country that protects and empowers us, where together we do things for the common good, to make our lives better. And for a while we did that.

We have lost sight of that dream. We no longer seem to recognize who our country is for. We no longer talk about the common good.

Who is our country for? Who is our economy for? Certainly a We the People economy would at the very least guarantee that We the People have jobs and an income until a job is available.

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“One Threat” — Progressive Power Unifying In Democracy Initiative

Union and environmental leaders arrested together over immigration? What’s up? Here is what’s up: Corporate-funded conservatives … “view us as one threat, and fundamentally we are acting like that now, as one threat.”

Corporate-Conservative War On Democracy

For decades corporate-funded conservatives have gone after all branches of progressive thinking and even potential progressive thinking. Environmentalists, unions, civil rights advocates, public school supporters, Social Security supporters, consumer-rights advocates, professors, scientists, women’s-rights advocates, students, immigrants, minorities, health and nutrition advocates, good-government advocates, you name it, they have been and are being attacked by the conservative movement. You don’t even have to identify yourself as progressive-aligned to be attacked as part of the socialist/communist/terrorist/anti-American/anti-God/whatever conspiracy. You do not even have to think of yourself as progressive-aligned to suffer an attack.

These groups and individuals typically responded on their own, often staying in “silos” of their own issue-group, and always under-resourced… practically defenseless and wide open to further attacks and eventual defeat. Really, why would a consumer-rights organization — already strapped for funds and trying desperately to get our a message about credit-card fraud or whatever — spend time and scarce resources going to bat for a group that is trying to save an old-growth redwood grove? That’s not what they do.

Now all of these groups are realizing they are progressive-aligned because they are seen as the same threat by the corporate-funded conservative movement. It has become clear that the corporate-funded conservative movement is fighting a war against democracy, and every group or person that might be in a position to defend democracy is their target.

So they are doing something about it.

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If We Lower The Social Security Age To 55

millions of jobs would open up. The newly-employed would be paying taxes and would not be receiving Food Stamps, etc. More people employed would mean wages in general would rise, which would mean the economy would boom, tax revenue would rise, etc.

And if we lower the Medicare age to 55 all the new people in the program would cost MUCH less because people between 55 and 64 use far less health care services than people 65 and over. AND the people 55 and over are the most expensive people on private insurance, so the cost of private policies would go way down.

How to pay for this? This is about priorities. How do we pay over a trillion a year for military? How did we pay for Iraq? How did we pay for the bank bailouts? How do we pay for tax cuts for the rich? How do we pay for letting corporations stash money in tax havens to evade (defer) taxes? How do we pay for giving subsidies to oil companies?

Who is our economy and country FOR?

Pledge To Vote, Not Withhold Vote

I have a post over at CAF, Republicans Sabotaging, Not Governing. This Is Who They Are Now., that is gaining traction at other places.

I want to emphasize the last paragraph:

“The answer is not to threaten to withhold your vote when you don’t get everything you want. The answer is for all of us – every single alienated, ignored, disillusioned citizen – to promise to always vote. Then the people you would actually want to vote for will have some assurance they can win, and take the risk of running, even if they can’t raise a poop-load of corporate cash.”

Don’t withhold your vote. Instead pledge to always vote. It’s collective power, and we can beat the corporations if we all pledge to always vote.

North Carolina State Senator Calls ‘Moral Monday’ Protesters ‘Moral Morons’

“The appeal for each Moral Monday has been the same: urging legislators to govern for the good of the whole, rather than for the wealthy.”
— Rev. William Barber.

Since April, North Carolina citizens have been gathering at the state capital in Raleigh for “Moral Monday” rallies and acts of civil disobedience to protest the the cruel things Republican legislators are doing to the people of the state. This week, despite tornado warnings, more than 1,400 protesters gathered for the sixth week’s protests, and more than 80 were arrested, including one reporter clearly wearing news credentials. A week ago Monday, 151 were arrested. Arrests for this and recent Moral Mondays now total 388.

This video is from the June 3 Moral Monday rally:

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Will Social Security Cuts Be The Democratic Party’s “New Coke?”

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All the smartest people in the executive suites just knew that the taste of Coca-Cola needed “reform.” Rival Pepsi was advertising to the “New Generation” and Coke’s executives came to believe their product wasn’t what the “cool” people wanted to drink. Everyone they talked to at the executive-level strategery seminars, and all the other executive-level geniuses they spoke with daily agreed. They were the elites, and they all knew better than their old-fashioned, uncool customers what the company needed. So they all drank the Kool-Aid and came up with “New Coke.” We all know what happened next. (Hint: it was bad.)

It couldn’t have gone better for Pepsi if Pepsi had placed those executives there themselves.

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