Category Archives: News

Thank You for Your Service: How One Company Sues Soldiers Worldwide

from Alternet http://bit.ly/1ptTQBS

http://bit.ly/1tfc94e

This company sues service members based anywhere in the world, no matter how much inconvenience or expense they incur.

Army Spc. Angel Aguirre needed a washer and dryer.

Money was tight, and neither Aguirre, 21, nor his wife had much credit history as they settled into life at Fort Carson in Colorado in 2010.

That’s when he saw an ad for USA Discounters, guaranteeing loan approval for service members. In military newspapers and magazines, on the radio, and on TV, the Virginia-based company’s ads shout, "NO CREDIT? NEED CREDIT? NO PROBLEM!" The store was only a few miles from Fort Carson.

"We ended up getting a computer, a TV, a ring, and a washer and dryer," Aguirre said. "The only thing I really wanted was a washer and dryer."

Aguirre later learned that USA Discounters’ easy lending has a flip side. Should customers fall behind, the company transforms into an efficient collection operation. And this part of its business takes place not where customers bought their appliances, but in two local courthouses just a short drive from the company’s Virginia Beach headquarters.

From there, USA Discounters files lawsuits against service members based anywhere in the world, no matter how much inconvenience or expense they would incur to attend a Virginia court date. Since 2006, the company has filed more than 13,470 suits and almost always wins, records show.

"They’re basically ruthless," said Army Staff Sgt. David Ray, who was sued in Virginia while based in Germany over purchases he made at a store in Georgia.

Timothy Dorsey, vice president of USA Discounters, said the company provides credit to service members who would not otherwise qualify and sues only after other attempts to resolve debts have failed.

As for the company’s choice of court, he said it was "for the customer’s benefit." In Virginia, the company isn’t required to use a lawyer to file suit. USA Discounters’ savings on legal fees are passed on to the customer, he said.

"This company is committed to ensuring that the men and women who serve and sacrifice for our country are always treated with the honor and respect they deserve," Dorsey said.

The federal Servicemembers Civil Relief Act, or SCRA, was designed to give active-duty members of the armed forces every opportunity to defend themselves against lawsuits. But the law has a loophole; it doesn’t address where plaintiffs can sue. That’s allowed USA Discounters to sue out-of-state borrowers in Virginia, where companies can file suit as long as some aspect of the business was transacted in the state.

The company routinely argues that it meets that requirement through contract clauses that state any lawsuit will take place in Virginia. Judges have agreed.

"This looks like somebody who has really, really researched the best way to get around the entire intent of the SCRA," said John Odom, a retired Air Force judge advocate and expert on the SCRA.

Once a judge awards USA Discounters a judgment, the company can begin the process of garnishing the service member’s pay. USA Discounters seizes the pay of more active-duty military than any company in the country, according to Department of Defense payroll data obtained by ProPublica.

Consumer advocates say the strategy cheats service members who may have valid defenses. It’s "designed to obtain default judgments against consumers without giving them any real opportunity to defend themselves," said Carolyn Carter of the National Consumer Law Center.

To investigate USA Discounters’ practices, ProPublica reviewed 70 of the company’s contracts for service members and non-military borrowers, all of which had been filed in court. A reporter also identified 11 recent court cases against active-duty service members to examine their treatment.

The same courts in Norfolk and Virginia Beach are favored by two similar companies headquartered in the area – Freedom Furniture and Electronics and Military Credit Services – that offer high-priced credit to military clientele. Together with USA Discounters, the three companies have filed more than 35,000 suits since 2006.

Officials with Freedom and Military Credit Services did not respond to repeated phone calls and e-mails.

USA Discounters opened its first store in 1991 in the Hampton Roads metropolitan area, where more than 70,000 military personnel are stationed.

Many sailors start their careers at the sprawling Naval Station Norfolk, "bringing their pay and their naiveté," said Dwain Alexander, a senior civilian attorney with the Navy in Norfolk.

USA Discounters, which is privately owned, now has 31 locations, including seven free-standing jewelry stores that go by the name Fletcher’s Jewelers.

While the company does not exclusively lend to service members, it has a location just a short drive from each of the country’s 11 largest military bases.

The company’s showrooms are packed with bedroom sets, TVs and tire rims, but that’s not the main draw. "You’re not selling the furniture. You’re not selling the appliances," said one former sales employee. "You’re selling our financing program." The former employee, and others quoted in the story, spoke on condition of anonymity because they feared USA Discounters could adversely affect future employment.

Younger soldiers such as Aguirre are drawn in by the guaranteed credit – something not offered by cheaper big-box stores. "A lot of the time, this would be the first time they get a paycheck over $1,000," said a former store manager.

The company can confidently extend credit to such customers, former employees said, because the loans are almost always repaid through the military’s allotment system. Part of the service member’s paycheck automatically goes to the company every month.

Despite the company’s name, USA Discounters’ items sometimes come at a substantial markup. An iPad Mini, for example, last year sold at USA Discounters for $699 when Apple’s retail price was $329.

On top of these costs, the loans typically are layered with fees for a warranty and a program that cancels the debt under certain circumstances. The plans are optional, but are included on the vast majority of loans, former employees said.

Dorsey, the USA Discounters executive, said the company’s cost of purchasing goods was higher than big-box retailers with greater buying power. As for the add-ons, he said they are clearly disclosed as optional. The company’s typical interest rate is "less than 20 percent," he said.

The final tally on the loans can be staggering for some young service members. In 2009, Army Pvt. Jeramie Mays, then 26, walked into the USA Discounters near Fort Bliss in Texas to buy a laptop before being deployed to Iraq. He chose a model that typically retailed for $650. At USA Discounters, it sold for $1,799. On top of that came $458 in add-ons. After another $561 in interest charges, Mays walked out owing $2,993 in payments over 23 months, according to a copy of his contract.

For Aguirre, it was only later, when he and his wife tried to get their finances under control, that he realized just how much he owed. The total loan amount is clearly listed on all USA Discounters’ contracts, but customers often don’t grasp how long they’ll be paying, said a financial counselor who advises soldiers and sailors.

The military generally provides credit counseling for young service members. But for some, the allure is too great, particularly when the companies bill themselves as military friendly. "After the horse is out of the barn, there’s not a lot you can do about it," said Lynn Olavarria, the financial readiness program manager at Fort Bragg in North Carolina.

Aguirre said he was told by his superiors that his struggles with debt have kept him from being promoted.

Late last year, after he had fallen far behind on his loan, he got a notice in the mail. USA Discounters was suing him in a Virginia court, more than 1,500 miles away. When he didn’t show up, the company won a judgment of $8,626.

On every active-duty service member’s contract ProPublica examined, just below various disclosures, it says the buyer "is subject to the jurisdiction of the state courts of the COMMONWEALTH OF VIRGINIA." To receive financing, customers must agree.

Such a demand is "abusive" and is not typically found in contracts involving consumers, said Carter of the National Consumer Law Center. The Federal Debt Collection Practices Act prohibits such suits if they are filed by a third party, such as a law firm. Because USA Discounters uses a company employee to file its debt collection suits, the law doesn’t apply.

Dorsey said if customers ask to be sued elsewhere, the company will honor their requests, despite the contract. The clause is only included in the contracts of service members, according to ProPublica’s review.

Gene Woolard, the chief judge of Virginia Beach General District Court, said under state law, the terms of a contract are binding.

If a defendant can’t afford to travel to Virginia to contest a suit, "you can’t do much about that," he said. And while he’s sympathetic to debtors, Woolard said, "That’s not a legal defense." Norfolk Chief Judge S. Clark Daugherty declined to respond to questions.

Court records show USA Discounters has obtained judgments in 89 percent of the suits it has filed in Norfolk’s and Virginia Beach’s courts since 2006.

Dorsey said the high success rate is to be expected – the customers owed money they hadn’t paid. "[I]t is not surprising that they do not appear in collections proceedings in court – in any state in which we file," he said.

As for the federal law protecting active-duty service members, its requirements are easily met by USA Discounters. If a service member can’t be located, the law requires a 90-day delay. Once that passes, the way is clear to obtain a judgment. If a service member doesn’t appear in court, an attorney is appointed to represent the defendant. But the law does not specify what that lawyer must do.

In Virginia courts, the creditor can suggest the attorney to be appointed. USA Discounters appears to request the same lawyer for all its cases involving service members. In each of the 11 cases ProPublica examined, the court appointed Tariq Louka of Virginia Beach.

In response to written questions, Louka said that he represents "in the range of 300-400" service members each year. His primary duty, he said, is to inform his clients they have a right to request a delay, which he does by mail. "MY ONLY OBLIGATION IS TO REVIEW YOUR RESPONSE AND REQUEST AN ADDITIONAL STAY OR CONTINUANCE IF I FEEL IT IS APPROPRIATE GIVEN YOUR ANSWERS," his letters say in capital letters.

USA Discounters said that it had no business relationship with Louka or his firm.

Armed with judgments, creditors can attempt to garnish borrowers’ wages or bank accounts. As of January 2014, 230 service members were involuntarily paying USA Discounters a portion of their pay, Department of Defense data shows. Altogether, those service members have paid more than $1.4 million to the company.

Next on the list of most active creditors were the two other local companies, Military Credit Services and Freedom, which together had seized the pay of 92 service members for a total of $289,000 as of January, according to the data.

USA Discounters also aggressively pursues funds in service members’ bank accounts. Mays, the Army private who signed the nearly $3,000 contract for a laptop, said he initially stopped payment after the computer broke in Iraq. But other financial pressures, mainly costs associated with the care of his disabled mother, eventually made him decide to file for bankruptcy, he said.

Before he could, he was deployed to Germany and Afghanistan.

USA Discounters brought suit against him while he was in Germany. After winning a judgment, he said, the company sought to seize both his pay and funds in his credit union account. The action froze his account for several weeks, Mays said.

Mays, currently based at Joint Base Lewis-McChord in Washington state, said that for most of last January, he could not withdraw funds. "Trying to take care of two kids and my mother and myself on nothing doesn’t help," he said. Around the same time, he finally filed for bankruptcy. His debt with USA Discounters was discharged last March, protecting any assets from seizure.

Dorsey of USA Discounters declined to respond without written, signed waivers from customers. Reached recently, Mays said he was in training and would not have an opportunity to provide a waiver. Other USA Discounters’ customers either had their waiver rejected as incomplete by the company or could not provide one because of personal circumstances.

In Virginia, court judgments on debts can remain in force for decades. Court records show USA Discounters pursues debts for years, regardless of whether a service member has retired, or where he or she might live.

While in the Army, Sgt. LaShonda Bickford and her then-husband racked up an enormous debt with the company. After they fell behind, USA Discounters won a judgment in Virginia for $15,747. The 2011 judgment has continued to grow at the contract’s interest rate of 18 percent, as Virginia law allows, and by late 2013, the debt stood at $21,291.

Every two weeks, USA Discounters gets about a quarter of her paycheck from a medical transport company, which pays Bickford about $27,000 a year. What’s left barely supports Bickford, now divorced, and her 6-year-old son.

"It’s a stretch to do everything I need to do every month," she said. Assuming the garnishment continues, Bickford has at least three more years of stretching ahead of her. "It’s hard, it really is."

Have you been sued over a debt? You can help our reporting by filling out our questionnaire or email paul.kiel@propublica.org


Feds: Vast majority of Newark police pedestrian stops are unconstitutional

from Salon.com > Politics http://bit.ly/X1aWAj
http://ift.tt/1j9pyq3 A three-year investigation by the DOJ find than in 75 percent of incidents, cops ignored basic civil liberties


NYPD internal memo on death of Eric Garner neglects to mention officer’s chokehold

from Salon.com > Politics http://bit.ly/X1aQZr
http://ift.tt/1j9pyq3 Garner died after being put in an illegal chokehold, a salient fact officers on the scene seemingly forgot


Hightower: Is Citigroup’s $7 Billion Fine Bogus?

from Alternet http://bit.ly/X1aNgj

http://bit.ly/X1aNgk

It may be seen as a victory, but the fine doesn’t make up for the damage inflicted by the banking giant.

Media outlets across the country trumpeted the stunning news with headlines like this: "Citigroup Punished."

At last, went the storyline, the Justice Department brought down the hammer on one of the greed-headed Wall Street giants that are guilty of massive mortgage frauds that crashed our economy six years ago. While millions of ordinary Americans lost homes, jobs, and businesses — and still haven’t recovered — the finagling bankers were promptly bailed out by Washington and continue to get multimillion-dollar bonuses. So, hitting Citigroup with $7 billion in penalties for its role in the calamitous scandal is a real blow for justice!

Well, sort of. Actually … not so much. While seven billion bucks is more than a slap on the wrist, it pales in contrast to the egregious nature of Citigroup’s crime and the extent of the horrendous damage done by the bankers. In fact, when it announced the settlement, the Justice Department itself pointed out that Citigroup’s fraudulent acts "shattered lives."

For most of us, paying billions is impossible to imagine, much less do. But this is a Wall Street colossus with $76 billion in revenue last year alone. It rakes in enough profit in six months to more than cover this "punishment." Also, the bank will get to deduct 40 percent of the penalty from its income tax. Then there’s this little number that the prosecutors failed to mention when they announced the settlement: Citigroup’s taxpayer bailout in 2008 was $45 billion — six times more than it is now having to pay back!

Even by Wall Street standards, pulling a 600 percent profit from grand larceny is a pretty sweet deal. One clear indicator that this "punishment" is way too light is that on the same day it was announced, jubilant Wall Street investors jacked up Citigroup’s stock price by 3.6 percent.

So it was no surprise then, when Wall Street wrongdoer Citigroup accepted what the media hailed as a whopping $7-billion penalty for defrauding its own investors and wrecking our economy, that the bank’s CEO just shrugged, saying: "We believe that this settlement is in the best interest of our shareholders and allows us to move forward and to focus on the future."

Note the lack of any regret, apology or shame for the bankers’ wrongdoings that’ll cost Citigroup shareholders a sizeable chunk of change. And note especially the total absence of any pledge that the bankers won’t do it again. So much for a $7 billion penalty being a deterrent to Wall Street finagling.

One reason he could be so blase is that our Justice Department’s prosecutors filed no criminal charges in Citigroup’s blatant, gargantuan theft — not against the bank itself, nor against any of the bankers who plotted, executed and profited from the theft. They certainly had evidence of criminal fraud — in one internal email, a Citigroup executive essentially admitted that the package of loans sold to investors as solid, were in fact crap: "(I) think we should start praying," he wrote to his higher ups, "I would not be surprised if half of these loans went down." But the bank peddled the packages anyway.

Another reason the chief wasn’t fazed by the government’s big fine is that neither he — nor any Citigrouper — would personally pay a penny of it. Rather, the tab would be handed to the bank’s shareholders.

Justice Department honchos proudly held a press conference announcing their "punishment" of Citigroup. Missing entirely from this public display, however, was the aforementioned Citigroup CEO or any of the bank’s executives who participated in the fraud. If they don’t go to jail and don’t pay a dime — shouldn’t they at least have to show up and have their pictures in the paper and on TV? At minimum, let’s start publicly shaming these Wall Street thieves.


McCain Calls Botched Arizona Execution ‘Torture’

via TPM News

Sen. John McCain (R-AZ) on Thursday called Wednesday’s botched execution in Arizona “torture.”

“I believe in the death penalty for certain crimes. But that is not an acceptable way of carrying it out. And people who were responsible should be held responsible,” he told Politico. “The lethal injection needs to be an indeed lethal injection and not the bollocks-upped situation that just prevailed. That’s torture.”

Read More →


Florida Town Makes It a Jailable Offense to Wear Saggy Pants

from Alternet http://bit.ly/1o50i0G

http://bit.ly/X1aK3U

Anyone caught wearing low-hanging pants in Ocala faces a six-month jail sentence and $500 fine

This week, Ocala Florida City Council approved an ordinance prohibiting anyone on city property from wearing their trousers two inches below their waist, Channel 9’s WFTV reported.

The “sagging pants” regulation is enforceable on sidewalks, streets, parks, sports, recreation and public transportation facilities and parking lots. 

Police are expected to issue warnings at first, however failure to comply after being cautioned may lead to a $500 fine or up to six months in jail time.

Councilwoman Mary Rich, who pushed for the ordinance that was originally rejected in 2009 because no one would back the motion, said she expects the new rules will tidy up the city’s image.

"I just think it’s disgraceful to show your underwear.  We try to be a nice, clean city.  I think it’ll help clean it up some,” she said.

Yet, critics of the ordinance expressed concern that such laws could lead to racial profiling with young, black men, the number one target.

"I think this is a form of harassment. It gets you pulled to the side, (so they can) harass you, search you and have a right to do whatever they want to,” resident Curt Brown told the station.

What’s more, while Rich has compared the ordinance to the Marion County school system dress code, residents say school rules regulations are very different to enforcing an ordinance classified as a second-degree misdemeanor in which failure to comply can land you in jail.

"It just makes no sense whatsoever. It’s another way to lock people up and put them in jail so the city can make money off of that,” resident Adia Crumley said.

Still, Rich insists that targeting specific groups is not her intention:  “It doesn’t matter what color they are, they all wear their pants down.”

Ocala city attorney Patrick Gilligan said that while authorities are not looking to charge people, it would not be tough to enforce.

"If they don’t comply, I think the chief will tell police officers to take your phone out and take a picture,” he told Ocala Star Banner.

Ocala is not the first town to ban sagging pants. Other cities across the country, including New Jersey, New Orleans, Chicago, Atlanta, Detroit and Miami have also enforced various ordinances to cut down on the saggy pants problem, according to the Washington Post.


Half of All New Energy Capacity in the US This Year Is Renewable

from Alternet http://bit.ly/1o50gGf

http://bit.ly/X1aEJM

Solar and wind lead the way.

Renewable energy continues growing its share of new electricity generation in the U.S.

According to the latest Energy Infrastructure Update from the Federal Energy Regulatory Commission, solar and wind energy constituted more than half of the new generating capacity in the country for the first half of 2014. Solar and wind energy combined for 1.83 gigawatts (GW) of the total 3.53 GW installed from January to June.

newcapacity
New generation in-service (new build and expansion). Graphic credit: FERC

Natural gas constituted much of the remainder of installed capacity with about 1.56 GW. Coal and nuclear energy came to a complete half with zero projects and zero capacity. Last year, coal had two new units during the same time period. Since then, the Obama Administration issued a proposal for U.S. power plants to reduce carbon emissions by 30 percent compared to 2005 level. Coal plants account for nearly half of the country’s carbon emissions.

Solar and wind combined for 120 of the 180 projects in the first half of the year. That figure is slightly down from the 137 projects during this period last year. Installed capacity was also higher by this point last year at about 2.16 GW.

Still, natural gas suffered a much larger fall from the 41 units for nearly 4.5 GW during the first six months of 2013.

In 2013, renewable energy projects tripled the amount of new coal, oil and nuclear projects. Natural gas accounted for more than half the installed capacity for all of last year.

Here are a few renewable energy highlights from the first half of the year:

  • First Wind’s 14 MW Warren Solar project in Worcester County, MA is online. The power generated is sold to National Grid USA under long-term contract.
  • NRG Solar Community I LLC’s 6 MW Community Solar 1 project in Imperial County, CA is online. The power generated is sold to Imperial Irrigation District under a long-term contract.
  • Two Dot Wind Farm LLC’s 9.7 MW Two Dot Wind Farm project in Wheatland County, MT is online. The power generated is sold to Northwestern Energy Montana under a long term contract.

Paul Krugman slams discredited “deficit scolds” for pushing a phony debt crisis

from Salon.com > Politics http://bit.ly/X1aEt9
http://ift.tt/1j9pyq3 The award-winning economist says the budget hysteria of Obama’s first term looks sillier than ever


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

from Alternet http://bit.ly/1o50ey9

http://bit.ly/X1aDWi

Walgreens and Medtronic are among those renouncing or trying to renounce their U.S. corporate citizenship

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.

In return, we the people of the United States ask corporations to pitch in to help pay for the roads and courts and schools and scientific research and government contracts and the rest of the things that have helped make them the prosperous entities they are. But a number of American corporations are so fed up with the idea that should pay their taxes that they are actually renouncing their US citizenship. These corporations are "leaving" the US to dodge taxes—but their executives, employees, offices, stores, customers etc. are still here. The only thing that is really leaving the country is the requirement to pay US taxes.

These corporations are able to “leave” the US by engaging in something called inversion. Explaining an inversion is a bit complicated. A US company buys or merges with a non-US company, and the result is that the US company can be considered to be a company from the other country. But at the same time the company keeps most of its operations, etc. inside the US. The result is that it might still owe taxes on income reported as made in the US, but it owes no taxes on income elsewhere.

Here are five companies—only a handful of the total — that have or are trying to renounce their US citizenship to avoid paying taxes to help cover the benefits they receive.

1. Walgreens

Walgreens is the US’ largest pharmacy retailer with 8,200 stores and locations in all 50 states, and the company is currently deciding whether to renounce its U.S. corporate status and instead claim on paper to be a Swiss company. According to Americans for Tax Fairness, this move would mean Walgreens avoids paying $4 billion in US taxes in the next five years.

Americans for Tax Fairness points out that “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.” (See Is Walgreens Trying To Leave The U.S.?)

2. Medtronic

Medtronic Inc., a medical device maker with $17 billion in annual sales, is in the middle of purchasing Ireland’s Covidien for $42.9 billion as a tax-avoidance scheme.

One reason Medtronic is doing this, from the NY Times’ Dealbook:

Both companies are in the medical device business, but analysts and investors have said the deal makes sense largely because Medtronic can tap its $12 billion in overseas cash without paying United States taxes.

Medtronic has been keeping its non-US profits “out of the country” to avoid the taxes it owes on that money. Now it is using the funds to buy itself out of the US for good. Of course, it will still have the same offices, employees and customers here. Our tax laws let it get away with this.

Usually a company claims it is doing this "for the shareholders." But in this case it is going to cost Medtronics’ shareholders big-time. The IRS is going to declare this counts as shareholders selling their Medtronics stock, and will hit them with a tax bill for the gains. However, Medtronics executives will have their tax bills covered by the company.

3. Perrigo

Perrigo is, according to Fortune Magazine’s report, Top American corporate tax avoiders, “the world’s largest seller of over-the-counter store-brand drugs.” It is “headquartered in Michigan but incorporated in low-tax Ireland.” Perrigo is suing the Food and Drug Administration "(for which the company doesn’t pay its fair share) for allegedly not moving quickly enough to allow its testosterone gel to be sold without a prescription.”

4. Ingersoll-Rand

Ingersoll-Rand renounced its citizenship just one month after 9/11, claiming it really was headquartered in Bermuda. Later it moved to Ireland. Even though it is not an American company anymore, Fortune Magazine’s report points out that doesn’t mean it doesn’t receive the benefits of being American. “CEO Michael Lamach says one place Ingersoll Rand gets its engineering and technical talent is “our U.S. military veteran recruiting program.” 

Bloomberg News took a comprehensive look at how Ingersoll-Rand “left” the country and was still able to receive lucrative government contracts from the US government, in its report, How to Win Billions in Federal Contracts on a Permanent Tax Holiday. According to Bloomberg:

American manufacturer Ingersoll-Rand Co. (IR) forged the tools that carved the Panama Canal and shaped Mount Rushmore. When it shifted its legal address to Bermuda in 2001 to reduce taxes, the maneuver sparked bipartisan outrage in Congress.

… Ingersoll-Rand continues to score federal work worth hundreds of millions of dollars, touting projects for the Army and Navy in sales brochures. The company’s strategies have even included trying to piggyback on the eligibility of other companies, according to two former Ingersoll-Rand employees.

One of several examples of the company getting contracts from the government,

In March 2010, an Ingersoll-Rand unit received a contract to maintain equipment at supermarkets on military bases from Texas to Hawaii. Funded by a 5 percent surcharge on purchases at the stores, the contract has already paid more than $100 million, according to data compiled by Bloomberg.

5. Eaton Corp

Here is one with a lot of gall. Eaton took $90 million in taxpayer-financed subsidies to build a headquarters in Cleveland, then moved itself to Ireland to avoid paying US taxes. But Eaton and its CEO are part of the notorious Fix the Debt campaign, a campaign to persuade Congress to cut Social Security and impose austerity on 99% of us — because the US doesn’t collect enough in taxes!

That’s right, a company that claims to be Irish to avoid paying US taxes is lecturing Americans on how we need to cut back on the things government does for us. Fix the Debt says we have to do this because of a shortfall in tax collections… from companies like Eaton!

We Can’t and Shouldn’t Stomach This

These are just five of so many examples of companies scamming us to avoid their taxes. This chart from the Congressional Research Service shows the companies as well as the accelerating pace of inversions. (Click for full size.)

So who is paying the taxes as corporations shirk their responsibility to help fund the benefits corporations receive? Michael Hiltzik at the LA Times explains in Corporate tax scam watch: The ‘inversion’ craze,

In 1952, about 32% of federal revenues came from the corporate tax, 42.2% from the individual income tax, and 9.7% from the payroll tax. Today, the individual income tax still accounts for nearly the same percentage, but the corporate tax has declined to 8.9% of tax revenue and the payroll tax is up to 40%. Seen in that light, payroll taxpayers–that is, America’s working men and women–have financed the decline in the corporate tax burden (which benefits mostly wealthy shareholders).

Isiah Poole, in Corporate Tax Behavior So Bad Even Fortune Magazine Can’t Stomach It, writes,

One thing we should do is push for passage of legislation introduced by Sen. Carl Levin and Rep. Sandy Levin (both Michigan Democrats) that would make it harder for American corporations to merge with foreign corporations in a way that enables them to operate as if they are American corporations while claiming to be foreign for tax purposes.

Solutions

In early July 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 it make itself 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. The Joint Committee on Taxation estimates that the legislation would save $19.5 billion over 10 years.

This would be a start toward fixing this problem. A small start, admittedly, but a start.


Iraq Parliament Elects New President

via TPM News

Massoum, 76, is one of the founders of current President Jalal Talabani’s Patriotic Union of Kurdistan party. He is considered a soft-spoken moderate, known for keeping good relations with Sunni and Shiite Arab politicians.

The vote for president — a largely ceremonial post — was delayed for a day when the Kurdish bloc requested more time to select a candidate. They named Massoum as their pick late Wednesday.

Under an unofficial agreement dating back to the 2003 U.S.-led invasion, Iraq’s presidency is held by a Kurd while the prime minister is Shiite and the parliamentary speaker is Sunni.