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.

Today’s Housing Bubble Post

The SF Bay Area is in another housing bubble. In fact prices are higher than they were in the last one, which didn’t end well. 3br, 1-or-2ba houses in bad neighborhoods are selling for $800,000. People are “bidding up” houses to one or two hundred thousand over the asking price.

Here’s a clue to what’s coming eventually (not right away): I heard an ad on the radio telling people to “take money out of your house” saying you could get $100,000 to spend.

That’s right, home equity loans are back, telling people to “take money out of your house.”

Bay Area home prices soar

Is Bay Area housing bubble back?

Real Estate Expert Says China Cash Is Driving Soaring San Francisco House Prices

What the Court’s “Harris v Quinn” Union Decision Means

In case you were wondering why it is so hard for regular working people to get ahead in our economy, look no further than today’s Harris v. Quinn Supreme Court decision. In the usual 5-4 pattern, the corporate-conservatives on the Supreme Court struck another blow against the rights of working people to organize and try to get ahead.

Home care workers (mostly women) in Illinois (like elsewhere) were on their own, working long hours for very low pay. They were treated poorly and did not have any job security. So they organized and a majority voted to join a union, Service Employees International Union (SEIU) Health Care Illinois-Indiana (SEIU-HCII). The union then worked with the state of Illinois to forge a contract to deliver services to elderly and disabled state residents. Since they formed the union, they were able almost double their hourly wages and they get health insurance, regular professional training and representation from the union.

An anti-union organization, the National Right to Work Legal Defense Foundation (NRTWLDF) – funded by the Koch and Walton families and others – brought filed the Harris v. Quinn suit against the union. This suit wound its way through the courts and finally the Supreme Court decided to rule on it.

The Court decided that a contract between the state of Illinois and Medicaid-funded home care workers cannot require the covered workers to pay a “fair-share fee” that covers the costs of benefits they receive from union representation. This “fair-share fee” (union dues) covers the costs of the union’s activities – collecting bargaining, implementing and enforcing the contract including making sure people are paid the right amounts, representing employees at grievance hearings, etc.

Continue reading

The Democrat’s Agenda Should Be: Fix The Trade Deficit

There is no way around it: There are three issues on people’s minds as we go into the midterm elections: jobs, jobs and jobs.

Since the 2008 financial crash – actually since Reagan was elected – most of the gains from our economy have gone to the 1 percent and many of the jobs have been shipped out of the country. And everyone knows it. What they don’t know is the direct relationship between the two. That relationship is the trade deficit.

The trade deficit is a direct measure of jobs leaving the country. The trade deficit is factories closing. The trade deficit is American dollars going to other countries so people there can spend them. The trade deficit is our standard of living leaking away. And the trade deficit is a major factor driving what remains of the budget deficit.

The trade deficit is our economy’s problem. Democrats need to get on board with that message. It doesn’t hurt that it’s also true.

Democrats Don’t Get That Republican Propaganda Works

Democrats in Washington are surrounded by D.C.’s daily events and don’t get it that the public doesn’t see what they think they see. They are immersed in the news and fighting daily battles and tend to think the public is informed and doing that, too. They tend to put reasons on things the public does that line up with what they experience in D.C.: “The reason voters in district 5 of the county special election in Colorado voted for Kranitz was because the sub-amendment to our section 5 jurisdictional funding retroparticle was blocked in committee on the third markup. Because it was on C-SPAN.”

But the public isn’t seeing it that way. The public is seeing “Democrats have been in charge” since 2008 and the economy is still bad. Period, end of story. (Not 2009, by the way; the election was in 2008 so they think the 2009 $1.4 trillion budget deficit was caused by Obama and the stimulus.)

Democrats Need A Simple And Clear Economic Agenda

If Democrats can’t come up with a counter to the Republican message that the economy is bad because Democrats are “in charge” and spend too much, they are going to lose badly. (P.S.: The answer is not to say “OK, so we’ll spend less.” That’s just feeds the lies and – as we have seen – just makes the economy even worse.)

At The New Republic, Danny Vinik writes in “Hillary Clinton’s Biggest Vulnerability: Her Economic Agenda” that “as we enter the latter half of Barack Obama’s second term, the public increasingly blames him and his party for the weak recovery.”

Vinik explains that there are Democratic proposals that would really help fix the economy, but they are from “left-leaning economists” and “they have little political support.” One proposal is in a paper from (“left-leaning”?) Larry Summers, who argues that we have entered into “secular stagnation” and the “solution to secular stagnation is significant rounds of fiscal stimulus to fill the still-large hole in consumer demand for goods and services, known as aggregate demand.” In other words, more “stimulus” that Republicans will obstruct.

Another proposal is to fix the trade deficit:

A separate paper, from left-leaning economist Dean Baker, argues that the trade deficit is a significant impediment to full employment. U.S. imports exceeded exports by $500 billion in 2013—that is, $500 billion of American demand for goods and services supported jobs overseas. In response, Baker proposes lowering the value of the dollar and cracking down on currency manipulators like China who artificially lower the value of their currency so that their goods and services are cheaper, boosting exports. Yet, trade policy is not an exciting or accessible issue to most voters. A candidate could include it as part of their economic platform, but it cannot form the backbone of it.

Yet another proposal is a change in monetary policy to promote full employment. This brings up a political problem, according to Vinik. The public doesn’t understand monetary policy and has been propagandized to be against further stimulus. (The public thinks “government spending” causes unemployment.)

Vinik writes “Democrats will have to convince voters that much of the Obama agenda is still the right prescription for the economy, despite the weak results over the past five-plus years. That’s not easy.”

What Went Wrong: Filibusters And Austerity

President Obama and Democrats have made significant proposals that would have made a tremendous difference in the economy we experience today, but they also contributed to the mess we are in.

It’s a fact that Senate Republicans filibustered literally everything Democrats offered that might have helped the economy. That’s their strategy and it’s working: Block anything that could help the economy and blame Democrats because they were “in charge” while the economy continued to stagnate.

Here’s the thing: Democrats let them do it. They did not end the filibuster. For whatever reasons – tradition, attempting to remain “bipartisan” and “civil” against uncivil partisan opponents, whatever – the end result was they did not deliver for their constituents, the American people.

The other thing that Democrats let Republicans do to the country was austerity. In fact, most Democrats bought into it, went along with it, pushed it, reinforced it, messaged it and gladly fell into the Republican trap.

So, with an election coming, Democrats haven’t delivered for their constituents – the 99 percent – and the public is not happy with that.

The Problem Is The Trade Deficit, Not The Budget Deficit

Here is a path for Democrats: Talk about the trade deficit.

Our trade deficit is literally a measure of how many jobs we ship out of the country. And our trade deficit is huge. It is humongous. It is enormous. It is larger than any trade deficit in the history of the world, and the parts of it that most affect jobs continues and continues and gets worse and worse. Last year’s trade deficit with China was a record.

The trade deficit is also a traditional Democratic issue. It is about jobs, blue-collar workers, jobs, factories, jobs, manufacturing, good wages and jobs. It is about seeing “Made in America” in stores again.

Everyone knows where the jobs went and continue to go: out of the country, mostly to China.

Everyone knows that the reason their pay is stagnant of falling is because people are afraid their job will be sent out of the country, too.

Everyone knows that something has been going on with these trade deals that let companies move out of the country to places where people and the environment are exploited and then bring the same goods back to the U.S. and sell them in the same stores for the same prices. OF COURSE that means jobs leave the country!

Ask almost anyone what they think of “NAFTA” – shorthand for all trade deals – and you will discover what is certainly one of the most salient, activating issues in politics today. Democrats, Republicans, Tea Party members, they all get it that jobs are being shipped out of the country (because they are), they all get it is making a few people really, really rich (because it is), and they all get that it is causing the rest of us to feel pain (because that is the result).

Economist tell us that the trade deficit represents “demand” that is leaving our country and is fueling jobs elsewhere. This means that people here are buying stuff – “demand” – but that the stuff they are buying is made somewhere else so we don’t get the benefit of those people all buying stuff. And the fact that there is a “deficit” means that the “somewhere else” is not reciprocating by buying stuff from us. They are not “trading” with us, they are selling to us but not buying from us. They are cheating and playing tricks to drain our country of those jobs and factories that would come back if they were buying the same amount from us as we are buying from them.

If Democrats want a simple jobs plan, this is it: Fix the trade deficit. Explain to people what balanced trade means and demand that trade be balanced. Come up with a clear plan to BALANCE trade and explain how this will bring back the jobs.

Do your part. Ask every candidate for Congress if they understand what the trade deficit is, how bad it is and what their plan is to fix it.

Virtually Speaking Tonite 6PT / 9ET

6p pt/9pm et – Avedon Carol & Dave Johnson

Shortsighted centrism empowers republicans while implementing bad policy. Triangulation backfires, as with immigration or misses opportunities, as with the ACA, SS benefit cuts, gay marriage. Policy and political concerns would be much more successful if widely popular, effective polices were adopted. Instead, we get Rahm’s memo. Plus political satire from @Bobblespeak

Follow @Avedon_Says @DCJohnson @JayAckroyd

Listen live or later at http://www.blogtalkradio.com/virtuallyspeaking/2014/06/23/avedon-carol-dave-johnson-virtually-speaking-sundays

The 2014 Virtually Speaking Media Panel: Avedon Carol, Cliff Schecter, David Dayen, Dave Johnson, David Waldman, digby, Gaius Publius, Joan McCarter, Marcy Wheeler, RJ Eskow, Stuart Zechman

A Different View On Cantor’s Surprising Loss

Last week Republican House Majority Leader Eric Cantor was defeated in a primary. He not only won’t be Majority Leader anymore, he won’t even be in Congress. This was an absolutely unexpected and shocking upset that has reversed the narrative that the Republican “establishment” has taken back momentum from the Tea Party.

The reason there as a fight over control between the Republican establishment and Tea Party was that the Tea Party uprising has threatened not only Republican electability nationally, but the domination of the Republican Party by Wall Street and the giant multinationals — the Chamber of Commerce types. The real grassroots-based core of the Tea Party is actually quite upset by the “crony capitalism” corruption that is rampant in Washington, DC and rampant in both political parties. (This is one thing the Tea Party types have in common with progressives.) The Tea Party types are anti-Wall Street and are very, very aware that the giant multinational corporations have been profiting from closing factories and moving jobs out of the country. This awareness threatens the Republican “establishment” because the Republican establishment is Wall Street and giant, multinational corporations. Hence the fight for control.

So there are lots of opinions talking about how the Republican Party establishment and the party’s Wall Street/corporate funders have “created a monster” with the Tea Party, and now the monster is turning on them. …

My Take: 12%

Here is my take on Cantor’s loss. Turnout was 12%. That’s what you need to understand about what happened.

You can’t tell anything about the electorate from a 12% turnout. You can’t learn about what the district wants. You can’t even learn what “the Republican base” wants. You can’t tell if immigration (or any other issue) is or is not a driving force and is or is not a candidate killer. You can’t really tell anything from this except that turnout was exceptionally low.

Here is the real reason this is bad for the Republican “establishment.” For decades the Republican Party has been engaged in efforts to drive down election turnout and this is the result.

Higher Turnout Favors Democrats

Here is a political truth: High turnout favors Democrats. So to elect Republicans they have to keep turnout low. Then Republicans use whatever it takes to get “their” voters to show up. For decades this has meant a combination of fundamentalist Christianity, racism, nativism, whatever.

The game is clear and cynical: Create apathy so people don’t vote. Make people hate government in general so they don’t vote. Make people feel like voting won’t change anything so people don’t vote. Use negative ads to turn people off from the process so they don’t vote. Create division and despair and so people don’t vote. Do what it takes to convince people not to bother to vote.

For the ones who will still bother to vote make it hard for them to vote — “suppression.” Make it hard to register to vote. Purge the voter roles. Enact restrictive ID laws hopefully requiring actual birth certificates. Only let the polls open for one day — a workday. Keep voting machines out of Democratic-oriented districts.

Then, after you have done everything possible to keep most people from voting stir up the activists and rubes — your activists and rubes — with distractions and fear to get them to the polls. This is why you see so many “Democrats secretly plan to ban the Bible” and “black mobs attack white women” and similar headlines at the right’s paid outlets.

Once Elected Pass Capital Gains And Corporate Tax Cuts

Once your people are elected they vote for capital gains tax cuts, corporate tax cuts and deregulation. Ignore the distractions that you used to get your activists and rubes to the polls. If you actually give them what they want you can’t offer it to them next time.

After decades of driving down turnout this is the result. Only the farthest-right talk show listeners are turning out now and the Republican establishment can’t control them. And they actually remember that they were promised something last time. Maybe it was abortion, maybe it was immigration … they remember and want it, not capital gains tax cuts and lower corporate taxes.

This bit Eric Cantor in the ass and it is finally biting the Republican Party establishment in the ass. And there is nothing Republicans can do about it, because higher turnout always favors Democrats. To keep turnout low Republicans have driven the morale of the voters down and down and down. They have driven the economy down and down and down. They have driven the process down and down and down. They have driven everything we value down and down and down.

Now they have literally hit bottom.

No Prosecution For Obvious Bribery?

A Virginia state senator took a bribe to resign, thereby throwing control of the state Senate to the other party. In exchange for this scheme he got a nice job and his daughter received a judgeship.

This was big news last week.

So … will he be prosecuted for taking a bribe, or not? What is the public to think if he is not prosecuted?

After all, it’s not like the guy is a banker or anything.

8 Reasons Some CEOs Make 331 Times As Much As Their Employees

I have this up over at AlterNet: 8 Reasons Some CEOs Make 331 Times As Much As Their Employees
We all know income inequality is a major problem, but the reasons for it rarely break into the mainstream media.

Here are some depressing statistics: In 2013, CEOs of S&P 500 companies made 331 times as much as their employees. Your average American worker not in a supervisory role made $35,239, while the average CEO made $11.7 million, according to the AFL-CIO Executive Paywatch website. CEO pay has increased a whopping 937 percent since 1978, according to a new report by the Economic Policy Institute.

So while CEOs are making a killing, more and more people find themselves with stagnant-at-best pay. People laid off from good-paying jobs (the result of rigged trade deals) are forced into jobs at half their former pay and no benefits, if they can find a job at all. Weak wage growth predates the Great Recession. Between 2000 and 2007, the median worker saw wage growth of just 2.6 percent, despite productivity growth of 16.0 percent, while the 20th percentile worker saw wage growth of just 1.0 percent and the 80th percentile worker saw wage growth of just 4.6 percent.

Read the rest at AlterNet.

Will We Let Congress Hand Billion$ More To Big Corporations?

This one is simply outrageous. Corporations currently owe up to $700 billion in unpaid, “deferred” taxes. The country needs the money – partly because these companies owe so much in taxes. Which of the following choices should the country make?

1. Tell the companies to pay up what they owe, bringing us hundreds of billions to use now and tens of billions a year more from now on.

2. Let them off the hook from ever paying most what they owe, if only they please would let us have a little bit of it now.

Who Is The Boss Of Whom?

The choice depends on who you think is supposed to be the boss of whom. If you believe that We the People are in charge of this country, then obviously you’d say these corporations should just pay the taxes they owe. But if the corporations are in charge of us they’ll tell us they aren’t going to pay these taxes unless we give them something.

Not surprisingly, Congress appears to be working toward option ’2.’ It’s called a “repatriation tax holiday.” They are proposing to tell the companies that moved jobs, factories and profit centers out of the country that it was the right thing to do. Unfortunately that will tell companies that didn’t do these things that they were chumps.

What Is A Tax Holiday?

Here is what’s going on. Giant, multinational U.S. corporations owe our government up to $700 billion in taxes on about $2 trillion in profits they have made (or made it look like they made) outside of the country. But there is a loophole that lets them hold off on paying those taxes owed until they “bring the money home.” So of course, many corporations have been engaged in all kinds of schemes to make it look like they make their money elsewhere – and/or move jobs, factories and profit centers out of the country.

Why is this important right now? In a New York Times “politics” story Tuesday, “Plan to Refill Highway Fund Stokes Conflict in Congress,” this nugget:

[Sen. Harry] Reid and [Sen. Ron] Paul are quietly pressing for a one-time tax “holiday” — a special and lucrative tax deduction — to lure multinational corporations to bring profits home from overseas, producing a sudden windfall.

Instead of telling these corporations that it’s time to pay up, it looks like Congress is preparing to just let them keep much (85 percent) of the money. It’s called a “tax holiday.”

What is the “conflict” the headline talks about? It isn’t a conflict between those who want to hand corporations hundreds of billions of dollars and those who do not want to. The conflict is over how to hand them the money!

Senator Ron Wyden, Democrat of Oregon, the Finance Committee chairman, and Senator Orrin G. Hatch of Utah, the ranking Republican, want that money to help smooth passage of a broad rewrite of the tax code.

So if Senator Reid is on board for a tax holiday and Senator Wyden is on board for a tax holiday, it looks like the idea of giving this huge amount of cash to these corporations is baked in to the thinking in the Senate. And we’re talking about Democrats here. One side wants (Reid) to give them a tax holiday and get a little bit to use to pay for infrastructure, the other side (Wyden) wants to use it as a bribe to get these giant corporations to let the U.S. government “reform” the tax laws. Both sides are conceding that they’ll accept a tax holiday.

But no one in this discussion is just saying, “Hey, we’d get up to $700 billion and tens of billions every year from now on if we just told these companies to pay the taxes they owe.”

The cost: At Least $95.8 Billion

The idea is to give these companies an 85 percent deduction – the “tax holiday” – on their foreign profits and only taxing 15 percent of the profits. In other words, instead of taxing $2 trillion of profits being held out of the country they’ll only tax $300 billion. If these corporations “bring the money home.”

Bloomberg News looks at the cost of this, in “Repatriation Tax Holiday Would Cost U.S. $95.8 Billion.” The “holiday” would bring in a quick $19.6 billion, but would cost $95.8 billion of tax revenue that would come in anyway over the next decade with no changes – not even making these companies just pay up. (Note: This calculation assumes Congress won’t just tell these companies to just pay their taxes. That would bring in up to $700 billion at the top tax rate of 35 percent and tens of billions a year from now on. Companies can deduct any taxes already paid elsewhere, so “up to” means $700 billion minus taxes paid elsewhere.)

An Engineered “Crisis”

That’s right, after all these years of propaganda about budget deficits and the hostage-taking and the “fiscal cliff” and the “debt ceiling” and the sequester and all the resulting budget cuts in essential services and “austerity” and how this has held back the recovery … it looks like Congress is going to just let companies off from paying hundreds of billions of taxes they already owe. This is not about passing another tax break/subsidy, etc. These are taxes that are due and payable on profits that have already been made but that these companies are keeping outside of the country (and away from their shareholders).

Why would Congress even consider letting these corporations off from paying the taxes they owe? Because of rules about not increasing the deficit Congress “needs” the money. This is a “realpolitik” deal, recognizing that the companies have enough power to keep Congress from just making them pay up what they owe. The thinking is they can appease the corporations with an 85 percent tax holiday to get them to pay at least 15 percent of that they owe.

This is another engineered “crisis” where the country is made to believe that deficits are keeping us from doing things we need to do. We need to fund transportation infrastructure, we can’t borrow the money to invest in things like this that make our economy more efficient, hence the need to “incentivize” the corporations to please bring home some of the money they owe us.

They Did This In 2004 And It Made Things Worse

In 2004 corporations ran the same scam on Congress, except that time they promised to use the money they brought back to “create jobs.” So what happened?

In 2011 the Institute for Policy Studies (IPS) looked at the results of the 2004 tax holiday and found that “their holiday didn’t just fail to create the promised jobs. Their holiday enriched corporations that actually destroyed jobs in the months right after they received their tax windfall.” IPS found that 58 multinationals who used the “American Job Creation Act of 2004″ tax holiday not only immediately laid off tens of thousands, they continued laying off, and laid off close to 600,000 workers between 2004 and now. From the IPS summary of the study,

One government study looking at the first two years after the repatriation windfall found that 12 of the top recipients laid off more than 67,000 American workers. These firms collectively brought back home more than $100 billion …

According to IPS, the companies that gained the most from the tax holiday actually cut jobs, on top of that they used the tax gift money to buy back their own stock, increasing its value, and pay out dividends, both thereby enriching executives and shareholders.

(This is from 2011. Another half a trillion of profits have been shifted offshore since then.)

From the Times story,

In 2004, when Congress approved a similar holiday, lawmakers vowed never to do it again. If it became a habit, they reasoned, companies would keep their profits overseas waiting for the next tax holiday. That, the bipartisan Joint Committee on Taxation explained, is the idea’s “moral hazard problem.”

The 2004 tax holiday only made things worse because companies realized they could get out of paying taxes entirely if they moved profits offshore and held out until the next holiday season. If we do it again, every company will be compelled to move jobs, factories and profit centers out of the country to stay competitive.

They are going to try to sneak this through under the radar. Maybe We the People can stop it if we make enough noise.

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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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5 Companies Ripping Off America and the Simple Tax Change That Could Make Them Pay Up

I have this over at AlterNet: 5 Companies Ripping Off America and the Simple Tax Change That Could Make Them Pay Up,

Believe it or not, all four of the statements below are currently being made in Congress and in the hallowed halls of elite opinion:

  • “We’re broke” and we have to cut the budget. – House Speaker John Boehner.
  • America just can’t afford more government spending like hiring teachers or repairing bridges.
  • We have to cut entitlements like Social Security and Medicare or the country will go bankrupt.
  • Corporations and multinational giants don’t have to pay up to $700 billion in overdue taxes.

We’re broke. We have to cut back on all the things government does to make our lives better. Yet let’s let the giant corporations off the hook for hundreds of billions of dollars of taxes they already owe.

Read the rest at AlterNet.