Feb 152012

As state governments wrestle with massive budget shortfalls, a Wall Street giant is offering a solution: cash in exchange for state property. Prisons, to be exact.

Chris Kirkham, Huffington Post

English: Daugavpils prison

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Support the privateers and this is what you get. It starts with rigged banking, trade and tax policy that bleeds the average citizen and starves the government­. Once they’ve sucked enough wealth out of the general population and have government on life support, the privateers strike, offering their poisoned transfusio­n to save the dying body. These corporatio­ns and the people who support them are counter-pa­triots. They will sacrifice the wellbeing of our nation in order to line their pockets with the spoils of economic war.

Privateering is a parasitical process that’s grown increasingly prominent since the economic collapse of 2008. Seeking hosts that can be tapped and drained, predator companies prey upon weakened public entities with which they can strike their Faustian bargain. Roads, bridges, ports . . . even parking meters are on the auction block; private prisons just happen to be one of the most lucrative and fast growing targets of those who seek to exploit the commons for personal gain.

But just like the proverbial poison apple, while these deals may seem to offer immediate relief for public budgets depleted of revenue in a stagnant economy, what they deliver is lethal venom for the public good.

Chicago residents learned this lesson the hard way, when their city officials made a pact with Morgan Stanley to lease rights to the city’s 36,000 parking meters. The deal that gave a largely foreign group of investors (a huge slice going to Abu Dhabi) control for 75 years, went for just over $1 billion. Surely a nice infusion of cash, but considering that the devil’s deal gave the new Chicago Parking Meters LLC complete control, including the ability to charge the city for any loss of revenue, the long term prospects for the city were far less rosy.

Indeed, the people of Chicago soon found parking rates previously set at $0.25 per hour were hiked to $1.00 and more. They also found that they were unable to close streets or perform maintenance without compensating the privateers who billed the city at rates that valued the billion-dollar lease at $5 billion. Late last year, the city received a $13 million invoice from CPM for “lost revenue from drivers who used disabled parking placards to get free parking at the city’s meters.

The reality is that private company profits and the “general Welfare” for which our nation and public entities are constituted are often mutually exclusive goals. Numerous studies, looking at everything from schools and healthcare to security and military, have shown how cost-ineffective privatization can be. One recent study completed by the Project on Government Oversight (POGO) concluded that “the government pays billions more annually in taxpayer dollars to hire contractors than it would to hire federal employees to perform comparable services.

Hard facts consistently belie the arguments used to support privatization, and nowhere are the myth and reality more contradictory than when it comes to private prisons. Not only was the U.S. Department of Justice forced to conclude that the cost savings promised by private prisons “have simply not materialized,” but risks regarding incarceration rates, recidivism, rehabilitation and safety are also often made worse.

The bottom line is that privatization most often benefits only the privateers. It doesn’t take a nuclear physicist to understand that misaligned interests tend to result in divergent outcomes. As a society, we should seek to establish a system that maximizes our human resources by putting people to work in the most productive manner possible. That goal is naturally at odds with those who seek to profit from increasingly incarceration — the least productive of human activities.

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Nov 252010
The United States Supreme Court.
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Article first published as American Corporations are all About Profits – Not People on Technorati.

Have you heard the news that corporate profits hit an all-time high this past quarter? That’s right, with unemployment stuck near double digits and the wages of American workers continuing to fall, American businesses racked up profits at an annualized rate of $1.66 trillion.

So, even though they themselves may be hurting, shouldn’t patriotic Americans cheer these profits? After all, we have a huge federal budget deficit, and at least the tax revenues from these huge profits will improve the shortfall, right?

Wrong. The sad truth is that American corporations aren’t all that American, and they’re certainly not patriotic. General Electric, fourth on the Fortune 500, had an excellent year in 2009, making profits of $10.3 billion. Their U.S. tax bill? Uncle Sam owed them $1.1 billion. How does that happen?

Well, somewhere in their 24,000 page tax return are the details of how they consistently manage to make serious profits overseas but lose money in the U.S..

A similar story applies to Exxon Mobile, our nation’s most profitable company. Their profits for tax year 2008 climbed to a record high of $42.5 billion — the most ever for an American company. They did wind up having to pay $15 billion in income taxes, but unfortunately for Americans, none of that money was paid to the IRS. Exxon’s U.S. tax bill was a whopping zero dollars.

Sadly, these companies are anything but alone in their ability to exploit tax loopholes and dodge paying U.S. taxes. In fact, a 2008 study prepared by the Government Accountability Office (GAO) reported that two out of three American corporations paid ZERO, zip, nada in federal income taxes from 1998 through 2005.

Unlike average Americans, corporations enjoy considerable flexibility in both operations and the resulting tax treatment. Exxon, for example, has several wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that allow them to legally shelter cash flow. Other corporations, like Google, who was recently able to reduce its effective tax rate to just 2.4%, accomplish their magic by shuffling income through foreign countries using well-known tax strategies like the “Double Irish” or “Dutch Sandwich.”

Google’s use of the “Double Irish” maneuver depends on shifting non-U.S. sales to its Dublin office — 88% of its $12.5 billion in 2009. This technique is also used by others, like Microsoft, and requires that they have two Irish companies (hence the “double”) where one pays royalties to the other which collects the proceeds in a tax haven, like Bermuda.

Make no mistake about it, the use of tax havens is commonplace in corporate America. Another GAO study reported that 83 of the 100 largest American companies have subsidiaries in tax havens. It’s estimated that through the use of such havens, corporations and wealthy individuals are able to evade more than $100 billion in U.S. taxes every year. ATT, GE, IBM, Chevron, they all participate in the dodge.

Even those companies with government contracts, like Boeing, and those who took government bailout money, like AIG, GM, Goldman Sachs and Citicorp play the game. The truth is that the evasion occurs on such a grand scale that 18,000 companies share a single address in the Cayman Islands, a popular haven because of its lack of any corporate or capital gains tax.

What should be done about all of this? Some people advocate the closing of loopholes to prevent such activities. Others suggest that completely eliminating corporate taxes and treating corporate profits as the individual income of its shareholders would be a superior remedy. But whatever the solution, the core truth of the situation remains evident — 21st  Century corporations have no nationality.

Like it or not, we now live in a global economy. Billions of dollars in U.S. tax revenue is being hidden in foreign banks, and millions of American jobs have been offshored to foreign workers. American corporate profits are at an all-time high even while huge numbers of Americans are suffering. The sad truth is that American corporations have but one loyalty, and it’s not to our nation, nor is it to the American people; they are singularly focused on profits, and their only loyalty is to their shareholders.

There’s nothing really wrong with this specific truth. Corporations are legal fictions created for the purpose of making money. They are rightfully focused solely on profits. But there is something seriously wrong with assigning to these artificial entities the rights associated with being a person.

This is exactly what the Supreme Court of the United States (SCOTUS) did in its decision on Citizens United versus the Federal Election Commission. In conferring personhood upon corporations and assigning full First Amendment protections for free speech, the SCOTUS not only made it perfectly legal for companies to lie but also opened a Pandora’s Box of election campaign abuse.

At a time when deep-pocketed corporations already control both political parties, and the cost of Campaign 2010 would hit nearly $4 billion — with Americans fighting to take their country back from the special interests, the Citizens United decision unleashed another $180 million in campaign ads, with $120 million coming from undisclosed sources.

Because of the SCOTUS decision, corporations, even those with significant foreign ownership, now have the power to directly influence American elections. How this can be a positive for our nation is a mystery. The Founding Fathers were certainly not advocates of such corporate power. They fully understood the truth expressed by Justice John Paul Stevens, in his dissenting opinion: “the corporation must engage the electoral process with the aim to enhance the profitability of the company, no matter how persuasive the argument for a broader or conflicting set of priorities.”

Corporations are not people, and what’s good for one is not necessarily good for the other. The Citizens United decision is an abomination upon the American system of government that runs counter to the ideal of one-person-one-vote. It virtually ensures that American corporations will continue to evade paying U.S. income tax while stoking profits with cheap foreign labor. It corrupts the very core of our founding and ensures that a “government of the people, by the people, for the people” will indeed perish from the Earth.

If you are a patriot, if you love your country and care about democracy, you’ll agree that, left or right, our government belongs to The People. Please raise your voice and say NO to the sale of our democracy — join your fellow Americans in ending corporate rule and Move to Amend.

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Aug 242010
Public views of the Citizens United v. Federal...
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President Obama spoke to the people of America on Saturday. With the campaign season for the fall election heating up, his message was focused on the insidious effects of the Supreme Court’s decision on the Citizens United case. The President cited the recent “flood of attack ads, run by shadowy groups with harmless sounding names.” He contended that the people deserve to know who’s behind these campaign ads, and argued that the Disclose Act, which is being blocked by Senate Republicans, is an effective device to accomplish that end.

Legislation that’s directed at greater disclosure by donors, the Disclose Act would require, “special interest group officials to physically appear at the end of campaign ads they sponsor, acknowledging their campaign contributions.” It would also prevent foreign run entities from interfering in our election process, undoing another detrimental side effect of Citizens United. The bill was already passed by the House, with 2 Republicans voting in favor, along with all but 30 Democrats. But the legislation has been stalled since it reached the Senate.

Falling into the prevalent pattern of Senate dysfunction, the Disclose Act is just another bill to find itself the victim of Republican obstruction. Needing one more vote to gain cloture and avoid filibuster, Americans will not gain knowledge of the people behind the campaign ads unless Democrats can get at least one Republican to break ranks and put The People above the Party.

Asked for comment on the legislation, Mitch “Tax cuts pay for themselves” McConnell offered more nonsensical blather. According to McConnell, “The president says this bill is about transparency. It’s transparent all right. It’s a transparent effort to rig the fall elections.” So, in the Senate Minority Leader’s own words, informing voters of who’s paying for campaign attack ads somehow amounts to rigging the election.

I’m sure that Senator McConnell had no intent of supporting the President’s position, but based on his own comments, it’s hard to refute what President Obama had to say regarding Republican opposition to the bill, “This can only mean that the leaders of the other party want to keep the public in the dark.” The President added that, “They don’t want you to know which interests are paying for the ads. The only people who don’t want to disclose the truth are people with something to hide.”

The November election will be laced with illegitimate attack ads of all sorts, and those ads will come from both sides. This has long been the case, and now the problem has been magnified by the Citizens United decision. The Disclose Act is essential legislation that can’t prevent the ads, but can at least inform the voters who’s behind them. It’s like truth in advertising 101, and the Republicans want no part of it. That fact alone should call their position into question.

Concerned voters need to speak out and make sure their representatives understand that We the People want to know. Voters want transparency. Big-Money has already hijacked the American government, and the Supreme Court, through Citizens United, has given them yet another avenue to exert their will. Corporations are not people, and in the long term, our nation needs reform to undo the damage of this decision. Such reform is already underway in the form of a constitutional amendment carrying 74 cosponsors in the House. People can also voice their support at Free Speech for People.

Like campaign finance reform, the Disclose Act should have nothing to do with partisan differences. The fact that it is being debated along party lines should be sufficient cause to make people stand up and take notice. Citizens United was anti-democracy at its very worst. To fight against its reform is un-American.

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