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.

Very Important (Short) Video For Understanding How Money Works

This is the great Richard Eskow interviewing economist Stephanie Kelton for his radio/internet/video/podcast show The Zero Hour. (Click here for The Zero Hour’s YouTube channel.)

This video helps you understand that the country is not “broke” but has PLENTY of money to hire people, fix infrastructure, etc., just like how we had enough money for two wars and then trillions to bail out the banks. PS It’s called “Modern Monetary Theory.”

From her website: Stephanie Kelton, Ph.D. is Associate Professor and Chair of the Department of Economics at the University of Missouri-Kansas City. She is also Editor-in-Chief of the top-ranked blog New Economic Perspectives and a member of the TopWonks network of the nation’s best thinkers. Her book, The State, The Market and The Euro (2001) predicted the debt crisis in the Eurozone, and her subsequent work correctly predicted that: (1) Quantitative Easing (QE) wouldn’t lead to high inflation; (2) government deficits wouldn’t cause a spike in U.S. interest rates; (3) the S&P downgrade wouldn’t cause investors to flee Treasuries; (4) the U.S. would not experience a European-style debt crisis.

If you want more, Stephanie Kelton has also participated in a number of Virtually Speaking episodes.

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.

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Tonight: Frank Clemente, Dave Johnson • Legal tax evasion of multinationals

6pm Pacific/9p Eastern

Dave Johnson (Campaign for America’s Future) and Frank Clemente (Americans for Tax Fairness) discuss the counterproductive, even perverse, policies that have become embedded in the structure of the US Corporate income tax. The result is distortions in economic activity, what amounts to legal tax evasion on the part of large multinational corporations.

Dave and Frank explore current policy, and have recommendations for a fairer system that actually benefits US citizens and the US economy. Jay Ackroyd moderates.

Tweet questions to @DCJohnson @4TaxFairness @JayAckroyd

Listen live or later http://www.blogtalkradio.com/virtuallyspeaking/2014/07/25/frank-clemente-dave-johnson-legal-tax-evasion-of-multinationals

5 Giant Un-American Corporations Trying to Bolt U.S. to Avoid Taxes

I have this posted over at AlterNet: 5 Giant Un-American Corporations Trying to Bolt U.S. to Avoid Taxes

Corporations get enormous benefits that regular “persons” do not. One of the biggest is limited liability. This means that the shareholders are not liable for the debts of the corporation. A corporation can get in a lot of trouble, financial and otherwise, and then just close up shop, divide its assets to its creditors, and the shareholders can just walk away losing only the money they originally put in. While it might be a “person” to certain members of the Supreme Court, there is no person to be made to work off the debt or to put in jail.

Corporations also enjoy lower tax rates than people do. (Except for the people who make a gain from the shares: they get a special, even lower tax rate called “capital gains.” Why is this? The capital gains tax rate is lower because the wealthiest make most of their income from capital gains, and the wealthiest make most of their income from capital gains because the capital gains tax rate is lower.)

And of course, corporate “persons” never have to die.

Read the rest at AlterNet.

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.

Puppy Crushers: How The Front-Group Game Works

Hunter explains how the front-group hame works in this post,

“Sorry—the story of wealthy businessmen funding ballot measures to pass transparently self-serving but state-damaging things is a bit of a sore spot in this state, it being something that happens Every Single Damn Election. The measures are then advertised by groups like “Citizens for Happier Puppies,” which turns out to be a front for the American Puppy Crushers Association, and we get lovely ads about how taxes will go down if we stop oppressing industries that just want to give all our puppies sharp metal hugs.”

A Simplified Way To Tax Multinational Corporations

You’ve been hearing a lot about corporations “renouncing their U.S. citizenship” through “tax inversions.” This is when a company buys or merges with a non-U.S. company and claims to no longer be based in the U.S. to get out of paying certain taxes. The company does, however, keep the same employees, executives, buildings, sales channels and customers it had inside the U.S. before the switch.

The epidemic of tax inversions represents just one of many ways corporations are dodging their taxes by taking advantage of our outdated and rigged corporate tax system. It is time for a serious debate about corporate taxes, and on Monday a new report by District Economics Group economist Michael Udell offered a bold new alternative that is so radically simple that even the most clever corporate tax accountant would have a hard time finding a way around its fair and universal proposition: If a company sells products or services in the U.S., it must pay taxes on the U.S. proportion of its worldwide sales.

Continue reading

Immigrants And Disease

Immigrants and disease? Really? Isn’t this KKK / Nazi stuff?

This is what the right is pushing. It’s old, racist, KKK/Nazi/Bircher stuff. Pushing it out to the public through supposedly “credible” outlets is called “mainstreaming” where they make white supremacist / KKK / Nazi stuff seem more normal and acceptable for people who are not radicalized into the racist right yet. But this is just the same old “mongrel races” and “mud people” stuff they’ve been pushing for a long time.

The following are just headlines, think of all the stuff that doesn’t have it as a headline. And most of this has been pushed out through Drudge, etc…

Beitbart June 2
REPORT: LICE, SCABIES, DISEASE AT CHILDREN’S IMMIGRATION SHELTER ON TEXAS AIRBASE

American Thinker June 8
Illegal immigrant flood bringing disease outbreaks

WND June 17
Deadly diseases crossing border with illegals

Daily Caller June 23
Doctor Says Illegal Immigration’s Causing ‘Public Health Crisis’ [VIDEO]

Breitbart June 23
DOCTORS WARN OF LOOMING HEALTH CRISIS DUE TO FLOOD OF YOUNG ILLEGAL IMMIGRANTS

National Review June 24
Texas Immigration Center a Magnet for Disease

The Blaze June 24
‘Potential for a Public Health Disaster’: Illegal Immigrant Surge Leaves Officials With ‘No Idea’ Which Diseases Are Coming Across

Newsmax June 24
Infectious Disease Outbreaks a ‘High Risk’ for Border Immigrants

American Thinker June 26
Diseases are Crossing the Border, Too

Liberty News June 29
OBAMA’S UNLOADING DISEASE-CARRYING ILLEGAL ALIENS INTO LARGE U.S. CITIES IS A ‘PERFECT STORM’ FOR PANDEMIC DISEASE OUTBREAK IN THE USA

Fox News June 30
Immigration crisis: US experiencing major public health crisis, too

WND June 30
TERRORIST ATTACK VIA INFECTIOUS DISEASE?
“…these illegal disease carriers.”

WND June 30
TB, swine flu assaulting border agents: Who’s next?

WND July 3
Savage: Media ‘hiding’ illegal-alien disease threat

American Thinker July 6
It’s happening: Border Patrol personnel infected by illegal immigrant flood

National Review July 6
Scabies Spreads Among Border Detainees

Fox July 7
Border Patrol union claims scabies ‘outbreak’ threatens agents, public

Fox July 7
Immigration crisis: Tuberculosis spreading at camps

Fox July 7
Dr. Manny: Is America on the verge of a major health crisis?

Fox July 7
Immigrant illness: What you need to know about scabies and tuberculosis

Daily Caller July 7
Scabies Outbreak At US Border

Townhall July 8
Illness on the Rise: Cases of Scabies, Tuberculosis and Swine Flu All Reported at US Southern Border

Breitbart July 8
BORDER DOCTOR: PREVIOUSLY-DEPORTED ILLEGAL ALIEN WITH TUBERCULOSIS IGNORED BY FEDS

TONITE (or later as podcast) Virtually Speaking 6pm PT / 9pm ET Dave Johnson Cliff Schecter

Commentary. Immigration and the right wing media/policy machine. Corporate tax inversions. Plus political satire from Culture of Truth. Jay Ackroyd moderates. Dave Johnson and Cliff Schecter.

Listen here live — or later as a recording:
http://www.blogtalkradio.com/virtuallyspeaking/2014/07/14/cliff-schecter-dave-johnson-vs-sundays

Is Walgreens Trying To Leave The US?

Here’s the latest corporate tax scam: Companies are renouncing their U.S. corporate status and claiming that their headquarters are instead located in one or some other low-tax country, like Switzerland. The technical word for what they are doing is an “inversion.” It involves buying or merging with a company in the new country while actually keeping the same employees, operations, sales outlets and other assets right here.

Lately Walgreens – the nation’s largest pharmacy retailer with 8,200 stores and locations in all 50 states – is in the news because they are considering an “inversion.” The company is deciding whether to renounce its U.S. corporate status and instead claim on paper to be a Swiss company. To do this it will merge with a Swiss company, Alliance Boots. This would let them dodge billions in U.S. taxes. According to Americans for Tax Fairness, this move would mean Walgreens avoids paying $4 billion of taxes they would otherwise owe to the U.S. government in the next five years.

Walgreens is doing this even though, as Americans for Tax Fairness points out:

  • Walgreens receives nearly a quarter of its income from taxpayers through government programs. Of its $72 billion in 2013 sales, an estimated $16.7 billion, or 23 percent, came from Medicare and Medicaid.
  • U.S. taxpayers have spent $11 million subsidizing executive bonuses at Walgreens over the last five years. A table showing the Walgreens executives getting subsidies is available here.

Repeat: Walgreens receives a quarter of its revenue from programs like Medicare and Medicaid that are funded by U.S. taxpayers, but is renouncing its U.S. “citizenship” to avoid paying taxes for the U.S. services it uses and customers it gets. (How long will it be before we’ll be hearing another round of “we’re broke” and have to cut Medicare and Medicaid?)

But wait, there’s even more. Andrew Ross Sorkin at The New York Times’ Dealbook points out:

[Illinois] gave Walgreen $46 million in corporate income tax credits over 10 years in exchange for a pledge to create 500 jobs and invest in upgrading its offices. The state also provided $625,000 in training money and $875,000 in other tax incentives.

Walgreens, collector of gobs of tax dollars, is preparing to renounce citizenship and stop paying taxes. But they’ll still be benefitting from the roads and schools and courts and military those tax dollars pay for – and will still be collecting those tax dollars from government programs like Medicare and Medicaid.

But wait, there’s even more. Not being a U.S. company does not mean they won’t still be getting money from and bribing influencing the U.S. government! Robert Reich points out, in “Walgreens shouldn’t have a say about how the U.S. government does anything,” that the “Swiss” company should not be lobbying the U.S. government.

By treaty, the U.S. government can’t (and shouldn’t) discriminate against foreign corporations offering as good if not better deals than American companies offer. So if [the Walgreen Company] as a Swiss company continues to fill Medicaid and Medicare payments as well as, say, CVS, it’s likely that Walgreen will continue to earn almost a quarter of its $72 billion annual revenues directly from the U.S. government.

… In 2010 it lobbied for and got a special provision in the Dodd-Frank Act, limiting the fees banks are allowed to charge merchants for credit-card transactions — resulting in a huge saving for Walgreen. If it becomes a Swiss citizen, the days of special provisions should be over.

… Since the 2010 election cycle, Walgreen’s Political Action Committee has spent $991,030 on federal elections. If it becomes a Swiss corporation, it shouldn’t be able to spend a penny more.

One more thing. If Walgreens does this “inversion” it avoids $4 billion in U.S. taxes over the next five years. Here is what $4 billion could pay for:

Why Inversions?

Companies that invert are trying to dodge U.S. taxes. They say taxes are too high in the country that provides them with educated employees, good courts, police and military protection, infrastructure (admittedly deteriorating since the Reagan tax/budget cuts…), and other resources. If they “move” to Switzerland, Ireland, the Cayman Islands, whatever, they will still be able to get all of those things, still get fat government contracts, still get what’s left of our middle class as customers, etc.

The top U.S. corporate tax rate is higher than other countries, but there is a story behind that. First, this isn’t the “effective tax rate” – the rate they actually pay after all the tax-avoidance schemes and various breaks are taken into account. The effective rate for the companies that pay any taxes at all (several don’t) is currently 13 percent on worldwide income.

But there’s a more important reason at work. Our corporate tax rate used to be much higher than it is now. Companies complained that it was higher than other countries, so Congress danced with the ones that brung ‘em and lowered the rate. Then these companies went from country to country complaining that the U.S. rate was much lower, they were not “competitive” and had to lower their rate, too. (Alliance Boots, the company Walgreens might merge with, moved from Britain to Switzerland in 2008 to avoid “high” British taxes.) And now that the giant corporations have made the circuit, playing one country against another, extorting lower taxes in country after country, they’re back here. It’s called a downward spiral, a race to the bottom.

A Bill In Congress

The House passed an amendment by a vote of 221-200 denying federal contracts to American companies that have reincorporated in Bermuda or the Cayman Islands. This is not yet law, but is attached to the Energy/Water appropriations bill. It is a beginning, but only lists these two tax haven countries and won’t affect Walgreens, should they make themselves appear to be a Swiss company.

The “Stop Corporate Inversions Act of 2014” is a more comprehensive effort that “increases the needed percentage change in stock ownership from 20 percent to 50 percent and provides that the merged company will nevertheless continue to be treated as a domestic U.S. company for tax purposes if management and control of the merged company remains in the U.S. and either 25 percent of its employees or sales or assets are located in the U.S.” Republicans will obstruct the bill.

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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.