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Inversions

[ 35 ] August 5, 2014 |

Michael Hiltzik on one of the most insidious American corporate activities of the New Gilded Age–moving their official operations abroad to nations with lower corporate tax rates while keeping all actual operations in the U.S. This is called an inversion and it is nothing more than rich people stealing money from the federal government.

Here, for example, is Heather Bresch, chief executive of the generic drug maker Mylan (and daughter of Sen. Joe Manchin III (D-W.V.), telling the New York Times, “You can’t maintain competitiveness by staying at a competitive disadvantage. I mean you just can’t.” The credulous Times quotes her as saying she entered into her inversion deal (by acquiring a European firm and moving the tax base to Holland) “reluctantly, and she genuinely seems to mean it.”

Uh-huh. Is Mylan uncompetitive? Over the last two years its sales have increased 12.7% and profits 16%; among its big competitors paying putatively lower taxes, British-based GlaxoSmithKline gained 3.14% in sales and 11.23% in profits, and Israel-based Teva’s sales gained 11% and its profits declined 54%. Israel’s top corporate tax rate is 26.5%, the equivalent top U.S. federal rate is 35%.

The use of inversions to avoid U.S. corporate taxes has moved onto the front burner in Washington in recent months. The wave seems to be picking up, and some of the candidates are very high-profile, including Walgreens and Pfizer. The Congressional Research Service recently identified 47 such deals in the last decade, many of them in the pharmaceutical industry. In the previous 20 years there were only 29. Conservatives use the trend as an argument for cutting or eliminating the U.S. corporate tax: If ours were as low as those of other countries, no one would have to flee, they say.

Well, we all know how impoverished the pharmaceutical industry is so one can understand why these 99%ers would make such a move. President Obama is trying to crack down on this. There is much that could be done, including creating separate and very high tax brackets for executives living in the United States or with American citizenship that hold stock or executive positions in companies that engage in such practices. You don’t have to take radical action. You just have to hit the executives where it hurts–their own personal pocketbooks and pride. Of course, that doesn’t mean it’s easy to do in this political climate.

Here is another, and probably more realistic, set of solutions:

Kleinbard proposes a three-pronged approach. First is to close a loophole allowing an American firm to declare itself foreign-owned if at least 20% of its post-merger shareholders are foreign. The threshold should be 50%, which would require inversions to be genuine foreign acquisitions. This would put the kibosh on many, if not most, pending deals. This change has been proposed by the Obama administration and introduced in Congress by Rep. Sander M. Levin (D-Mich.).

Kleinbard also advocates tightening up rules against earnings-stripping, largely by lowering the limit on how heavily a company can saddle its U.S. operations with debt. Finally, he suggests ending “hopscotch” maneuvers, through which an inverted company bypasses U.S. tax rules by advancing its offshore cash stockpile directly to the new foreign company.

The appeal to corporate morality is eye-catching enough. But rhetoric like this has limited effectiveness. The proper way to deal with corporate immorality is to wipe it out through the law.

“There is a breach of moral obligation and fiduciary duty here,” Kleinbard says. “The moral failing is the refusal of Congress to do the most fundamental kind of loophole-closing.”

In other words, the most effective comeback to “it’s legal” is this: “It was legal. But not anymore.”

Vultures

[ 61 ] August 4, 2014 |

At the same time that U.S. courts are limiting the ability of foreign citizens to sue American corporations for their malfeasance abroad, they are facilitating U.S. banking companies to collect debts from poor developing world nations, as Saskia Sassen explores. Elliott Associates essentially goes after poor nations and their debt, taking a no holds barred approach to collect that debt with no concern for long term economic growth in those countries, the poverty it creates, or international relations. Essentially, Elliott Associates is capitalism at its purest and least acceptable, a system that exists only for shareholders and to hell with the rest of the world. Obviously, this should be stopped and Elliott Associates’ assets expropriated and returned to the nations it has devoured.

Given all this, it makes sense that Argentina would just default on its debt. Good move.

Okay, that’s not entirely fair. After all, it’s been 13 years since the last time it did. That’s not bad for Argentina, which has now defaulted eight times in its 200-year history. But this latest one was certainly its strangest. Argentina didn’t default because it couldn’t pay its bondholders. It defaulted because a New York judge wouldn’t let it pay its bondholders—not unless it also paid the hedge funds that were holding out for a better deal on its old defaulted debt.

That’s where Elliott Associates comes in. I hope the company never receives a peso.

The Trip North

[ 15 ] August 4, 2014 |

Alfredo Corchado has a powerful story of the plight of Central American migrants trying to move through Mexico to get to the United States. Heartbreaking stories about people we should be welcoming into the United States.

The Wages of the Industrial Food System

[ 11 ] August 4, 2014 |

The obscene use of fertilizer and chemicals leads to algae blooms that make the water supply of Toledo undrinkable. The problem is exacerbated by the non-native zebra mussels that eliminate animals that eat the algae to create a perfect storm of 21st century environmental disaster.

Honduras

[ 88 ] August 3, 2014 |

When Republicans want to send children back to Central America, this is the horror they want to send them back to. In the 2010s, we often look at U.S. immigration policy toward Jews in 1930s Germany, refusing to allow them in even though it was clear their lives were on the line, as an immoral and horrible period in American history defined by racism and fear of a people not like “us.” I don’t see much difference between that and not allowing children to escape rape and murder in Central America because they are brown and speak Spanish and don’t have proper papers.

How Republican Judges Are Facilitating Corporate Exploitation Abroad

[ 27 ] August 3, 2014 |

Right-wing judges have consistently narrowed the use of American courts in recent years to crack down on corporations who engage in extremely egregious behavior abroad that violates human rights. Such is the case in the recent decision by a Reagan-appointed judge to throw out a lawsuit against Chiquita (formerly United Fruit) for paying Colombian paramilitary organizations. The company claims it was extorted by the paramilitaries, the Colombian people behind the lawsuit hold Chiquita responsible for the at least some of the deaths caused by the paramilitaries. In any case, it is quite clear that Chiquita knew it was violating U.S. anti-terrorism statutes in making these payments and didn’t care, which certainly makes one suspicious of its claims throughout not the case (not to mention its own history in violating the civil rights of millions of Latin American citizens over the decades).

The same principle of right-wing judges shielding American corporations from the consequences of their actions abroad also then applies to the violation of labor rights and environmental degradation. The American court system could and should be used to hold these corporations responsible for their global behavior, but for the judges of a political party that doesn’t want corporations held responsible for the domestic behavior, obviously that’s a non-starter, allowing the Thomas-Alito views to win.

Today in Rich Liberal NIMBY Hypocrisy

[ 79 ] August 3, 2014 |

Shorter residents of luxury Brooklyn Heights condos: “We love the idea of affordable housing, but if it affects our view, send them to Newark.

A Sunday Morning Quiz

[ 103 ] August 3, 2014 |

From the Ladies Home Journal, May 1957:

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After taking this quiz, act appropriately. Whatever that may be.

Today in Republican Minority Outreach

[ 65 ] August 3, 2014 |

Steve King threatens that if Obama delays deporting undocumented immigrants, Republicans will impeach him.

Oh please Rep. King, don’t do that. Combining impeachment with your war on brown people surely will destroy the Democratic Party, what with the rapidly shrinking percentage of white voters in this country. I am so, so scared.

It’s Hard Out There For the 1 Percent

[ 357 ] August 1, 2014 |

The Daily Capitalist urges us to understand the plight of the wealthy and how a visa glitch makes life so hard:

In Washington, D.C., Mira Edmonds said her au pair’s arrival from France, which was scheduled for last Sunday, has been indefinitely delayed. Ms. Edmonds, who is a lawyer, and her husband work full-time and depend on child care for their two children, ages 3 and 6. “I don’t know how we’re going to cope if she isn’t here soon,” Ms. Edmonds said.

Shed a tear, my friends, shed a tear.

And the Winner of Satan’s Favorite Earthling Is…..

[ 3 ] August 1, 2014 |

ALEC has an award for its favorite legislator. This is like, I don’t know, winning the award for the most horrible human being on the planet or something. Anyway, the winner, not surprisingly is an Art Pope lackey in North Carolina.

The King’s English

[ 239 ] July 31, 2014 |

I’m not sure Oak Ridge National Laboratory importing the ideas of Dr. Henry Higgins is such a good idea:

The rain in Spain won’t be falling mainly on the plain after all, at least not at Oak Ridge National Laboratory. The Tennessee-based research facility canceled what it had billed as a “Southern accent reduction” class amid employee backlash; for some staff, it came off as a little too “My Fair Lady: Appalachia.”

“Feel confident in a meeting when you need to speak with a more neu­tral Amer­i­can accent, and be remembered for what you say and not how you say it,” reads an email sent to thousands of staff members last week, advertising the new course. “In this course you will learn to recognize the pronunciation and grammar differences that make your speech sound Southern, and learn what to do so you can neutralize it through a technique called code-switching.”

The weekly course, set to run through mid-September, was offered on a voluntary basis only (with an $850 price tag). But some employees were insulted by the premise of the course and wording of the email, and complained. The lab subsequently called off the class.

David Keim, spokesman for Oak Ridge, which is the Energy Department’s biggest research facility and home to the Titan supercomputer, said the lab regularly offers accent modification classes for its many employees who are non-native English speakers. The lab employs some 4,400 people from 90 countries, as well as from across the U.S., and their work is highly technical. That makes professional development designed to help international researchers communicate more clearly and efficiently in high demand, he said.

Or Americans, especially the snotty elite classes not living in east Tennessee who are going to be interacting with ORNL employees, could just get over the idea of a proper accent and be OK with someone if their accent is from southern Appalachia, Rhode Island, Texas, or Minnesota. While obviously working with non-native speakers is a good idea that empowers the individual, embarrassing your employees because of where they are from and how they grew up makes the individual ashamed of themselves. Not everyone has to sound like they are on TV. This is real classism.

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