California Eye » Corporate Greed

Corporations vs You

Featheriver — Mon, 28 Mar 2011 18:23:52 +0000

Leslie Stahl of CBS reports how U.S. corporations are cutting their tax bills by moving business overseas.

“That bundle is tax money not coming in to the IRS from American corporations. One major way they avoid paying the tax man is by parking their profits overseas. They’ll tell you they’re forced to do that because the corporate 35 percent tax rate is high in relation to other countries, and indeed it seems the tax code actually encourages companies to move their businesses out of the country.”

One of those corporate tax havens is Zug, Switzerland. The population of Zug is 26,000. Smaller than Pahrump, Nevada. There the tax rate on corporations is between 15 and 16%. In the US the tax rate is 35%.

“The number of companies in the area is 30,000 and growing at an average rate of 800 a year. But many are no more than mailboxes.” One of those companies is Transocean, who owned the drilling rig involved in the BP oil spill. They moved to Zug two years ago. Transocean has 1,300 employees in the Houston, Texas area. They have 12 or 13 employees in Zug, Switzerland, their “headquarters.”

Stahl visited the Transocean office in Zug. She was told the Transocean boss wasn’t there, he was in Houston, Texas.

“Another Texas company that moved to Zug is Weatherford, a $10 billion oil field services firm. It still has 2,800 workers in Houston. But according to official documents, they are incorporated in Zug, in a small building. But there was no Weatherford on the sign outside.” Weatherford International in Switzerland is represented by a mailbox.

Texas Democratic Congressman Lloyd Doggett told Stahl "They (Transocean and Weatherford) claim they’re Swiss. And they claim they’re Swiss for tax purposes. And by doing that, by renouncing their American citizenship, they’ve saved about $2 billion in taxes."

“We found that faced with the mere threat of Doggett’s legislation, Transocean and Weatherford both recently packed up their top brass and shipped them to Geneva.

“We were told Transocean’s top ten executives live in the Geneva area, and work on the top two floors of a Geneva office building – everyone from the CEO to the chief financial officer, to the vice president of taxes.

“They wouldn’t talk to us on camera, and neither would Weatherford. They also moved their CEO and CFO to Geneva. And so now we’re beginning to see a jobs exodus from the U.S. of top management,” reported CBS.

"You’re in Congress. Why did Congress write these laws that allowed this to happen?" Stahl asked Doggett.

"There’s been a lot of arm twisting, a lot of effective lobbying here, and some really smart tax lawyers figuring out how to game the system with one shenanigan after the other," the congressman replied.

Stahl also talked with John Chambers, CEO of Cisco, a technology company headquartered in San Jose, California.

"Every other government in the world has realized that the U.S. has it wrong. They’re saying, ‘I’m going to have lower taxes, period.’ That’s what you see all across Western Europe, that’s what you see in Asia in the developed countries," Chambers said.

Chambers has been expanding Cisco overseas because of growing demand abroad, but also to lower the company’s taxes: their average rate over the last three years was just 20 percent.

An economist Martin Sullivan says it’s standard operating procedure for companies like Cisco. "U.S. multinationals are shifting their research facilities, shifting their manufacturing facilities, and shifting some regional headquarters into Switzerland and into Ireland. And those are massive numbers of jobs," he told Stahl.

“Well, if you have a 35 percent rate in the United States and, for example, a 12.5 percent rate in Ireland, there’s a incentive to move your factory to Ireland," Sullivan explained.

“Six hundred American companies are in Ireland and they employ 100,000 people," Stahl pointed out. "Those are jobs that aren’t here. And they moved to Ireland because of taxes."

"The U.S. Treasury in effect is subsidizing investment in Ireland," Sullivan said.

"Why isn’t everybody in Ireland if it’s that great?" Stahl asked.

"Almost everybody is in Ireland," Sullivan said. "All the pharmaceutical companies, all the high tech companies. You’re stupid if you’re not in Ireland," he replied.

Cisco has eight companies in Ireland. "We do what makes sense to the shareholders," Chambers said. "We go where there are incentives in countries that say, ‘We want you here, we’re going to give you tax advantages, and we want you to add jobs here, etc.’ We can no longer in America say, ‘This is how we do it, therefore you must do it.’ We’ve gotta change, or we’re going to be left behind.”

An increasingly popular way, particularly pharmaceutical and hi-tech companies like Google avoid paying the 35 percent is to shift their patents, computer code, pill formulas, even logos from their U.S. bases to their outposts in low-tax countries. Coca Cola puts it’s formula for coke in a Swiss vault and becomes Swiss, even though most of the sales are in the U.S.

If they bring the money home, it’s taxed the full 35 percent. If they leave it overseas, the IRS can’t touch it. In other words, the tax law all but forces companies to keep their money out of the country, indefinitely.

"We leave the money over there. I create jobs overseas; I acquire companies overseas; I build plants overseas; and I badly want to bring that money back," John Chambers told Stahl.

Chambers told Stahl Cisco has almost $40 billion overseas that could be brought back to the U.S.

The total amount of money U.S. companies have trapped overseas is $1.2 trillion. Chambers is advocating for a one-time tax break to allow them to bring that money home at a rate of, say five percent. That would, he says, stimulate the economy and create jobs.

When you think of it all you have to come to the conclusion we Americans, you know, the ones that demonstrate, that wave the flag, the ones paying the full brunt of the tax burden, aren’t very bright. Remember Michael Moore’s Capitalism: A Love Story.Consider the thousands of dollars spent by corporate lobbyists on Senators and Congress people to assist corporations, in return for their re-election bank accounts. I think of Benjamin Franklin’s answer to the man who asked him what kind of government did the Constitutional Convention create. He said, “A Republic, if you can keep it.”

We ordinary mortals haven’t done very well in keeping the Republic. No wonder that the class war of the rich vs. the poor is being lost by the poor. That there is such a shortage of jobs, that the states of the Union and the federal government are broke and deeply in debt, that the economy continues to hover just above a depression level. We, the people, don’t do a very good job in electing our representatives, who allow this corporate rape to continue. We don’t do a very good job because we choose to remain ignorant and ignore what is going on around us.

The greatest threat to our national security is not terrorists, it is us, as the Roman Empire learned centuries ago.

GOP Rep. Joe Barton apologizes to BP

Featheriver — Fri, 18 Jun 2010 16:00:57 +0000

Joe Barton (R-TX) was on the House Energy and Commerce subcommittee yesterday when BP officials appeared in Congress.

Barton made the following remarks to the BP company.

I think it is a tragedy of the first proportion that a private corporation can be subjected to what I would characterize as a shakedown, in this case a $20 billion shakedown.

Good old Joe. He is steadfastly sticking to the Republican plan to criticize President Obama at every opportunity. Barton added “I’m ashamed of what happened in the White House yesterday.”

…it is a tragedy of the first proportion that a private corporation can be subjected to what I would characterize as a shakedown…

[Source: Talking Points Memo]

What is wrong with some of these republicans? They don’t want corporations regulated. They side with corporate businesses ignoring the people of the gulf coast who are having to endure the damage caused by the oil spill.

Barton was born in Waco, Texas. He is a graduate of Texas A&M holding a B.S. degree in industrial engineering. He was also a consultant for Atlantic Richfield Oil and Gas Company before being elected to Congress in 1984. He represents the 6th congressional district in Texas.

Barton has taken $1.4 million in campaign contributions from the Oil industry since 1989, according to the Center for Responsive Politics. He Barton has consistently opposed proposals to reduce the nation’s dependence on oil.

That he doesn’t care about ordinary people was shown by Barton’s opposition to the Combating Autism Act of 2006. But he takes care of his family. He paid his wife, Terri, $57,759 in salary and bonuses from his campaign funds in the 2006 election cycle. He also paid his daughter, Kristin, $12,622 in salary and bonuses. Additionally he paid his mother, Nell Barton, $7,000 for a car.

Makes one wonder what is wrong with Texas voters in the 6th District.

He established the Barton Family Foundation to support charities in his congressional district. His daughter-in-law, Amy Barton, is the Foundations Executive Director. Major energy corporations, such as the Chicago-based nuclear energy producer, Exelon Corporation, make major gifts to the Foundation. In June 2008, at a time when Barton had introduced legislation to assist corporations with the recycling of spent nuclear fuel, the corporation donated $25,000 to the Foundation. Exelon has also donated $80,000 to Barton’s campaign funds.

Barton voted against the Emergency Economic Stabilization Act of 2008. He also voted against the Affordable Health Care for America Act. Barton has received almost $2.2 million from the Healthcare industry, $1.5 million of that coming from PACs. [Wikipedia]

Jack Abramoff Out of the Joint

Featheriver — Fri, 11 Jun 2010 17:51:31 +0000

Jack Abramoff, disgraced former lobbyist, was transferred Tuesday from prison to a Maryland halfway house to serve out the remainder of his sentence. [CREW] He is scheduled for release on December 4.

Abramoff, once a high-rolling Republican lobbyist, pleaded guilty to a raft of federal corruption charges in 2006. He admitted illegally showering gifts on officials who provided favors for his clients and agreed to cooperate with prosecutors. Among other things, the inquiry led to prison time for a former congressman, Ohio Republican Bob Ney; for Stephen Griles, once the Bush administration’s deputy interior secretary; and for several former congressional staffers.

Abramoff is one of the symbols of money corruption in Congress. He was one of the lobbyists who carried bags of money to some members of Congress buying their influence to gain advantages for his clients and himself.

Drill, Baby, Drill

Featheriver — Mon, 31 May 2010 15:14:40 +0000

Photo: A view of the oil slick from space by NASA on May 24, 2010.

The Deepwater Horizon BP oil spill is the biggest environmental disaster in U.S. history. It is an oil gusher from the sea floor of the Gulf of Mexico that started April 20, 2010 about 40 miles southeast of the Louisiana coast in the Macondo Prospect oil field.

The explosion killed 11 platform workers and injured 17 others. Ninety-eight workers survived.

The gusher originates 5,000 feet below the ocean surface. British Petroleum estimates over 5,000 barrels to 100,000 barrels of crude oil is being infused into the Gulf of Mexico. Additionally an unknown amount of natural gas is in the mixture.

The oil slick covers 2,500 square miles. Immense underwater plumes of oil, not visible, lie below the water’s surface.

From 12,000 to 19,000 barrels of oil continue to flow into the gulf per day. As of May 27 it is estimated between 440,000 and 700,000 barrels as of that date have poured into the gulf.

It is predicted the oil will be picked up by the Gulf Stream and carried around Florida and up the eastern coastline of the United States.

How long will the oil spill last?

Nobody knows. Samantha Joye of the University of Georgia has said it could take the ecosystem years, possibly decades, to recover from the infusion of oil and gas. CNN reports that BP is not expected to contain the spill until August, if then.

The fishing industry along the gulf has been closed down. Losses from tourism have been estimated at $3 billion. Five corporations connected to the spill have lost $21 billion in market capitalization since the explosion.

BP argued against new, stricter safety rules proposed last September by Minerals Management Service saying additional regulation of the oil industry was unnecessary; that the voluntary system of safety procedures was adequate, according to the Wall Street Journal.

Hurricanes

The hurricane season officially started June 2 causing the worry that “a hurricane might turn the millions of gallons of floating crude into a crashing back surf,” according to the Associated Press. It is feared that the combination of damaging winds and large waves will push the oil deeper into the Louisiana estuaries and wetlands leaving miles of debris-littered coastline. The furthering damage to the coast line will weaken as future tropical storms and hurricanes arrive in the years ahead.

Regulate, Baby, Regulate

Over the years the federal government has been deregulating corporate industry. You’ve heard the arguments about big government’s intrusion into private enterprise.

Around 80 “oil spills” have occurred across the globe since 1937, according to Wikipedia. The most recent occurred in the Singapore Strait resulting from a collision of two marine vessels.

We Must Get Off Oil

T. Boone Pickens says the United States today imports 65% of the oil we use. That is up from 24% in 1970. “Every day 85 million barrels of oil are produced around the world. And 21 million of those are used here in the United States.” That’s 25% of the world’s oil demand. Used by just 4% of the world’s population. America imports 12 million barrels a day, and Saudi Arabia only produces 9 million a day.

Pickens adds, “In additional to putting our security in the hands of potentially unfriendly and unstable foreign nations, we spent $475 billion on foreign oil in 2008 alone. That’s money taken out of our economy and sent to foreign nations, and it will continue to drain the life from our economy for as long as we fail to stop the bleeding.”

Giant Plumes of Oil Forming Under the Gulf

Deregulation of Oil Drilling

Featheriver — Thu, 13 May 2010 19:00:17 +0000

From a number of perspectives the governmental approach of deregulation of industries doesn’t work.

The oil industry is supposed to be regulated by Minerals Management Service (MMS). Last Wednesday a Coast Guard Captain asked a regional supervisor, federal regulator:

It’s my understanding that [a blowout preventer is] designed to industry standard…manufactured by the industry, installed by the industry, with no government witnessing or oversight of the construction or installation. Is that correct?

The regional supervisor, federal regulator MMS answered:

That is correct…

Senator Bill Nelson stated it this way in the Wall Street Journal:

If MMS wasn’t asleep at the wheel, it sure was letting Big Oil do most of the driving.”

Critics say MMS was too close to the industry and had an inherent conflict of interest.

This story lays bare the far-reaching (and largely unnoticed) emasculation of government regulatory power, as it has succumbed to corporate agendas over the past several decades. Janines examines this, and other disturbing trends, in her book Shadow Elite, writes Linda Keenan and Janine R. Wedel in The Huffington Post.

And it’s imperative that we dissect the modus operandi of BP, its elite hired guns, assorted patrons, and compromised, enfeebled regulators, to better spot their tactics being used across government, corporate America, and Wall Street. This pernicious M.O. could be detected in both the recent Upper Big Branch Mine disaster, the bank industry collapse and the bailout that followed. So we should ask ourselves not just “how did these catastrophes happen?” but also, “how do we spot the next one waiting to happen?”

This deregulation trend had it’s etiology in the Reagan era.

[T]he push for “small government”, and often deregulation. Ironically, this drive led them to create a bigger, far less transparent “shadow government” — by steadily passing government work, cache — and, crucially, power — over to business interests. One result: the lines between business and government have blurred, making it hard to figure out who’s in charge, or what an agency even is. Case in point: the MMS. Was MMS a government regulator or an arm of the industry? You be the judge of this description, from the Wall Street Journal.

It is supposed to be a watchdog that halts drilling when it spots unsafe behavior. But it is also supposed …. to generate government revenue from drilling on government lands…..Of MMS’s fiscal 2010 budget of $342 million, nearly half comes from the oil industry….

The idea that industries can regulate themselves has proven to be a fallacy. It simply doesn’t work.

Gulf Coast Oil Spill

Featheriver — Fri, 07 May 2010 16:31:25 +0000

Is off-shore drilling for oil worth it? I have my doubts.

The oil from the BP spill is now onshore leaving much devastation in it’s wake. Wildlife killed indiscriminately. Nature’s food chain broken, perhaps irrevocably.

The fishing industry along the gulf coast decimated.

The oil spill keeps flowing—and has for the past three weeks. Take a look at at the photos on Huffington Post. Makes the Drill Baby Drill cry sound so empty.

President Obama has put a hold on offshore drilling. Governor Schwarzenegger has withdrawn his support for offshore drilling along the California coast.

Mankind is destroying the earth we live on.

We just never seem to learn.

Free showing of Capitalism: A Love Story in Pahrump

Featheriver — Mon, 22 Mar 2010 15:29:27 +0000

Citizens of Pahrump will be treated to a free showing of Michael Moore’s new documentary Capitalism: A Love Story.

Capitalism: A Love Story is a 2009 American documentary film directed, written by and starring Michael Moore. The film centers on the financial crisis of 2007–2010 and the recovery stimulus, while putting forward an indictment of the current economic order in the United States and capitalism in general.

Topics covered include Wall Street‘s “casino mentality”, for-profit prisons, Goldman Sachs‘ influence in Washington, DC, the poverty-level wages of many airline pilots, the large wave of home foreclosures, and the consequences of “runaway greed.”

The film also features a religious component where Moore examines whether or not capitalism is a sin and if Jesus would be a capitalist.

When and where is it showing for free in Pahrump?

When: Sunday, March 28, 2010
Time: 2:00 p.m.
Where: Salvation Army, 721 S. Buol Road, Pahrump, NV
Admission: Free
RSVP: Val Von Holt at (775) 751-1776

The Moore film has won awards at the Venice Film Festival, the “Leoncino d’Oro” (“Little Golden Lion”) award for his documentary, and he also received the festival’s Open Prize. The documentary was also nominated for the festival’s Golden Lion award.

The film runs for 127 minutes. I’ve seen it twice. I can tell you that if you are into politics at all you will find the film enlightening and it will hold your undivided attention. Be sure to go to the bathroom before the film starts.

A tip of my hat to Val Von Holt and Margery Kay Hanson for putting all this together.

Capitalism and Greed

Featheriver — Fri, 12 Mar 2010 15:21:22 +0000

Wall Street Greed

Yesterday I watched Capitalism: A Love Story again. It is the production of Michael Moore, the acclaimed conservative film maker. (Yes, I know he is not really an “acclaimed conservative film maker.”) I had watched the movie/documentary when it first came out at a movie theater in Las Vegas. (We don’t have a movie theater here in Pahrump.) I got the DVD of it from NetFlix.

Capitalism: A Love Story is a 2009 American documentary film directed, written by and starring Michael Moore. The film centers on the financial crisis of 2007–2010 and the recovery stimulus, while putting forward an indictment of the current economic order in the United States and capitalism in general.

Topics covered include Wall Street‘s “casino mentality”, for-profit prisons, Goldman Sachs‘ influence in Washington, DC, the poverty-level wages of many airline pilots, the large wave of home foreclosures, and the consequences of “runaway greed”.^[2] The film also features a religious component where Moore examines whether or not capitalism is a sin and if Jesus would be a capitalist.^[3] The film was widely released to the public in the United States and Canada on October 2, 2009. It was released on DVD and Blu-ray on March 9th, 2010. [Wikipedia]

The Moore documentary is two hours and seven minutes long. It is fast moving. Funny in places, heart rendering in others.

Some “nuggets” in the film keep sticking in my mind:

The top 1% of the population controls more financial wealth than the bottom 95% combined.
The financial meltdown began with Ronald Reagan and the policies of Don Regan which “turned the bull loose” for free enterprises, corporations gained more political power, unions were weakened and socioeconomic gaps widened.
Exposing “dead peasant insurance” life insurance policies used by corporations such as Wal-Mart to profit upon the death of their employees.
“Plutonomy” where economic growth is powered by and largely consumed by the wealthy few.

Overall Moore characterizes the capitalistic economic system as greed gone berserk. Even Catholic priests denounces it as “evil.”

Then this morning The Dailey Beast has the following:

A new report offers new insight into how Lehman Brothers fell into mortal peril at the start of the financial crisis, and the details aren’t pretty. The 2,200 page report by a court-appointed examiner describes an accounting trick known as “Repo 105″ that the company used to hide some $50 billion in assets from its balance sheet for two quarters. According to the examiner, the creative accounting could open up Lehman’s executives to lawsuits as shareholders can use them to show they were deceived by the company. Lehman’s collapse is widely credited with helping trigger the financial meltdown in the Fall of 2008 when it declared for bankruptcy.

See Marketwatch for more detail. You might want to read about the bankruptcy of Lehman Brothers here. Even so, Richard Fuld, head of Lehman Brothers, said that he had in fact taken about $300 million in pay and bonuses over the past eight years.Lehman Brothers executive pay was reported to have increased significantly before filing for bankruptcy.

Greed.

Bank of America to end debit overdraft fees

Featheriver — Wed, 10 Mar 2010 19:47:44 +0000

Bank of America announced it will end overdraft fees on debit cards this summer, a move that will cost the bank a large amount of revenue and pressure others to follow suit.

Customers who don’t have enough cash in their accounts to make a purchase will simply be declined.

More than 60% of overdraft fees charged by Bank of America come from debit cards.

A new federal law is forcing banks to get permission from customers before allowing overdrafts on debit purchases and ATM withdrawals, fees that earned banks $20 billion last year.

Regulators became concerned by reports of people paying as much as $40 for a cup of coffee thanks to overdraft fees, and Congress is considering even more restrictive rules.

A 2008 study by the FDIC found that while 75% of customers are never charged overdraft fees, a small group—14% of cardholders—generates 93% of the fees.

[Source: New York Times via Daily Beast]

Notice that B of A didn’t end these fees voluntarily. It happened because of the new federal law passed in Congress.

Health Insurance Industry push back on attacks

Featheriver — Tue, 09 Mar 2010 15:36:10 +0000

Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, said insurance industry workers “do not deserve to be vilified for political purposes. … For every dollar spent on health care in America, less than one penny goes toward health plan profits. The focus needs to be on the other 99 cents.” AHIP plans to spend more than $1 million to run television ads on cable stations nationwide beginning in the next few days to push back on the attacks on insurers.

As “President Obama makes his final push to get health care reform through Congress, he is “seizing on a report showing that market concentration for health insurance is so monopolized that insurance companies are willing to raise prices and lose customers in an effort to help their bottom line,” HuffPost’s Sam Stein reported.”

[Source: Huffington Post]