Out of State Corporations Fighting to Keep Tax Loophole Are Top U.S. Tax Dodgers, Says Consumer Watchdog

Companies With Major Sales in California Can Game Current System to Pay Lower Taxes Than Many In-State Businesses

Three of the five global corporations behind a coalition aimed at protecting $1 billion a year in California tax loopholes are among the nation’s top tax evaders, said Consumer Watchdog. They are:



• International Paper Co., whose outlandish deductions and credits gained through Congressional earmarks left it with less-than-zero federal taxes on $198 million dollars in 2010 profit. The company’s refund of $249 million exceeded its profits.
• Procter and Gamble, described by Fortune Magazine as in a class with GE when it comes to tax manipulation. It structured more than $6 billion in sell-offs since 2002 to avoid billions in federal tax and hundreds of millions in state taxes.
• GM, which is still partly owned by taxpayers and paid only $570 million in federal taxes on a net profit of $9 billion-a 6% corporate tax rate. That made it one of the lowest-taxed among high-profit corporations, according to Forbes Magazine.

The other two members of the deceptively named “California Employers Against Higher Taxes” are bailout recipient Chrysler and Kimberly Clark, which Wisconsin researchers found was evading state taxes. (See details on all members below)

“The real business of this coalition is to protect global corporations’ unfair and lucrative tax loopholes that deprive Californians of good schools and services,” said Judy Dugan, research director of Consumer Watchdog. “It’s especially galling coming from tax evaders or automakers that abandoned their plants and employees in California, took billions in taxpayer bailout money and in Chrysler’s case, kept $4 billion of it as a gift.”

The out-of-state coalition was recently organized to fight proposed legislation that would eliminate a two-tiered system in California, passed in 2009 over consumer objections, that allows national corporations to pick which California tax calculation they use. By picking one or the other based on how much profit they made in California, companies can evade millions of dollars in state corporate taxes. A 2009 study by the state legislative analysts’ office found the system unfair to many in-state companies, confusing and subject to corporate gaming.

LAO report

“It’s like letting children pick which parent they’ll obey, or companies to pick which regulator will oversee them,” said Dugan. “Obviously they’ll go for the most lenient.”

The current legislative plan (Perez, AB1500) would shift California to the system used in all major states–a single tax calculation that is primarily dependent on the amount of sales a company made in California. Consumer Watchdog said it does not support any particular proposal to fix the loophole, as long as it stops the gaming of the state tax code.

The aim of the “California Employers” is obvious in their corporate histories:

International Paper: A study by the Institute for Policy Studies found that in 2010 the company paid zero taxes on $198 million in profits, and in fact ended up with a $249 million credit. At the same time, CEO John Faraci got a 75% pay hike to $12.3 million. The company’s tax deductions came from two subsidiaries in tax havens and from large deductions and credits for its longtime use of a waste byproduct at paper mills, known as “black liquor,” for fuel. The company lobbied heavily for this boondoggle, even though it did not reduce International Paper’s use of fossil fuels. Conservationist and environmental groups cried foul, but the company prevailed. While the company has several locations in California, they are mostly low-paid box-making facilities and warehouses. It is trying to sell but could also close a pulp plant with higher-paying industrial jobs in Port Hueneme.

Bloomberg on “black liquor” earmark

IPS study

Chrysler: The automaker took $13 billion in federal taxpayer bailout money in 2009. It kept $4 billion as a gift in its Chapter 11 bankruptcy proceedings. Another $3.5 billion that was counted as Chrysler payback was actually a loan to the Italian company Fiat in a complicated deal. Most galling, Chrysler’s bankruptcy deal gave it a free pass on liability for defects in pre-2009 vehicles. For instance, a California family badly injured in fire that destroyed their Jeep vehicle was banned from seeking any accountability for or damages from Chrysler. Chrysler’s only significant presence in California is its franchise auto dealers, many of which were shut down by the company in its bankruptcy. Chrysler’s auto assembly plant in Los Angeles, which once made 40,000 vehicles a year, closed in 1971.

Liability cancellation

Fiat loan

Procter and Gamble: The global corporation is also a giant in tax avoidance. It evaded $2 billion in U.S. federal taxes and hundreds of millions in state taxes since 2002 through complex manipulation of its more than $6 billion in sell-offs of brands. The buyers also evaded taxes at least temporarily and perhaps permanently. Procter and Gamble has subsidiaries and some plants in California, but its U.S. jobs are concentrated near its Ohio corporate headquarters.

Tax evasion:

GM: Taxpayers shoveled nearly $60 billion into bailing out General Motors, and are still on the hook for up to $27 million, depending on the future price of GM stock. And in 2011, GM paid only $570 million in federal taxes on a net profit of $9 billion-a 6% corporate tax rate. Taxpayers also still own at least a quarter of the company, which puts its opposition to fair taxation in California in a darker light. As for being a “California Employer,” GM exited its last auto plant in the state, a joint venture with Toyota in Fremont, in 2009.

Kimberly Clark: State researchers in Wisconsin found that Dallas-based Kimberly Clark paid Wisconsin state taxes in only three of the 10 years from 2000 through 2009, despite a large corporate presence in the state. At the same time, its CEO pay soared 339%, from $2.6 million to $12.4 million. The current tax system makes it easier for the Kleenex giant to do the same in California.

Wisconsin

By Maggie Crosby, ACLU of Northern California

Across the country we’re seeing ongoing attacks on access to reproductive health care. Massive attacks. The Guttmacher Institute released data last week detailing that, just a few months into 2012, hundreds of provisions to restrict abortion access have been introduced in state legislatures around the country. Several have already been enacted. Now, more than ever, it’s vitally important that California move in the opposite direction and continue its role as a national leader in ensuring that women have access to reproductive health care.

State Senator Christine Kehoe introduced SB 1338, which would remove barriers to care by allowing nurse practitioners, certified nurse midwives, and physician assistants to perform early abortions after completing thorough training. (An extensive study conducted by the University of California San Francisco showed that these trained medical professionals provide this care as safely as doctors.)

SB 1338, the Safe and Early Access bill, will be heard in Senate Business, Professions and Economic Development Committee next week on Monday, April 23.

Roughly half of California’s counties lack an accessible abortion provider. As a result, many women delay treatment because they have to travel long distances or raise money for transportation and services. Consider the story of Jane, a single mom living near Lake Tahoe. She was not able to obtain an abortion at her local provider. Instead she had to take Amtrak to San Francisco to have an abortion. Because of the train schedule, she arrived the day before her appointment and had no place to stay. She spent her first night in the hospital’s bathroom, saving her money for food. No one should face these kinds of hurdles to access a safe and legal medical procedure.

The Safe and Early Access bill would remove these barriers to care by allowing specially trained health professionals to provide early, safe abortion services in the communities they serve. It would also help overcome other barriers such as long wait times for appointments that woman in urban areas face when seeking health care services.

Most women already receive basic reproductive health care from clinicians like nurse practitioners. And these clinicians currently provide medication abortions as well as services like vasectomy and colonoscopy.

Passing this bill would allow women in every part of our state to receive early, safe abortion care from providers they already know and trust, in their own communities.

Affirming the importance Californians place on protecting women’s reproductive health and rights, March 2012 polling by the Public Policy Institute of California showed overwhelming public support for legal abortion. It’s time to take the next step, California. Let’s make these rights a reality for all women in our state.

If the SCOTUS rules against the ACA, the Single Payer movement will get a lot of visibility.  It’s the talk of the town now;

http://news.google.com/news/st…

Getting Single Payer in DC will be much more possible if in November we get true Democrats in the Senate and Congress but it will be still uphill.

Getting it passed state by state as in Canada will be much easier.  

If California goes Single Payer, I believe the whole country will pay attention and the Single Payer will make progerss everywhere.

There are two ways of getting this done; an initiative (proposition) or via the legislation.

The initiative strategy is supported by many groups in California but I think (an many others do) that it may not get in the ballot until 2018.

The legislative strategy was given a setback when 6 Democratic Senators did not vote for SB 810 on January 31;

http://www.dailykos.com/story/…

All we needed was 2 votes.  But 6 Democratic Senators did not vote for SB 810.

One of the 6 Senators is up for reelection in 2012. Rod Wright in the newly formed 35th district.

Wouldn’t it be great if we could teach these blue dogs a lesson by defeating them when they are up for reelection?

That would send a clear message that taking money from insurance companies and voting against Single Payer is a big non no, even if you support Obama’s ACA.

We have a unique opportunity to do this in California in the next 2 months.

We can all pull together and help elect Paul Butterfield, a Single Payer supporter and a much better Democrat.

The California primary election will be held on June 5.

On June 6 we can be on the way to a legislative process for Single Payer in California (and to Netroots Nation.)

An invitation to a blogger event in Butterfield’s campaign HQ below.

I have met Paul Butterfield in person and in my opinion he is an outstanding human being.  We need better Democrats like him in Sacramento and everywhere.

The things that I like about Paul are his character, his  optimism, his intellect and his drive.

He is a teacher!

Obviously his stand on issues is important.

And he is getting endorsements;

GARDENA, CA, March 20 – The Gardena Valley Democratic Club unanimously endorsed Paul Butterfield for State Senate (35th District).

The club is the oldest chartered Democratic organization in Los Angeles County, this year celebrating 80 years of Democratic activism from Franklin D. Roosevelt to Barack Obama.

“Paul Butterfield was endorsed unanimously Monday night at the Gardena Valley Democratic Club’s general meeting.  His endorsement of SB 810 (the single-payer health care bill) was a deciding factor in winning the club’s endorsement and was in sharp contrast to his opponent’s failure to vote for SB 810, which contributed to the bill’s defeat,” said Gardena Valley Democratic Club President Richard Vaughn.

Los Angeles City Council Member Joe Buscaino Endorses Paul Butterfield for State Senate

“Paul Butterfield has proved his commitment to serving our community, and has been recognized for his work mentoring students and young athletes.  He cares deeply about the issues that concern San Pedro and the Harbor Gateway Area.  That’s why I’m endorsing Paul Butterfield for State Senate,” said Buscaino.

Rod Wright has a lot of baggage (a lot more than not supporting Single Payer) and this makes him vulnerable if he gets to November even in this traditional blue area of Los Angeles.

Paul’s campaign just got started but I believe that if we can get the word out he has a chance.  And if he wins, the Single Payer movement has a chance to get SB 810 passed in early 2013.

So donate if you can.  Even $5 will help.

If you live in Greater Los Angeles, help us door knocking, getting the word out to the media or staging events.  Contact the campaign.

If you can get the word out somehow it would be great.

The 35th Senate district has become the front lines of the Single Payer movement.  If Paul wins the message to all Dems will be clear; support Single Payer or face a tough primary when you are up next time.  

We can get a Single Payer bill on Jerry Brown’s desk next year.  And when he signs it, Single Payer movements everywher else will be energized.

And isn’t one of our objectives to get better Democrats elected?



Finally, we are inviting SoCal progressive bloggers to meet Paul Butterfield at campaign HQ in San Pedro on Thursday April 26th at 7PM.  I hope you can make it.

Also posted at DailyKos

You’d think the USDA would see the flaw of logic in letting the people who make the food inspect the food and decide if it is actually safe to eat.

The USDA has decided in its infinite wisdom, despite pink slime and a few other debacles of the food industry, to test a program allowing chicken companies to check their own livestock and decide whether or not the chickens are safe to eat.

The USDA claims this will save them tens of millions of dollars.

Well, USDA, I can save you even more. If you’re going to let the chicken companies inspect their own chickens, just trash the whole program, because I guarantee you they will decide “ALL of our chickens are safe!”

At some point, you would hope someone at the USDA (and I looked it up, there are over 100,000 employees there) would have raised their hand and pointed out the glaringly obvious: “Uh, since these guys are selling us chicken/beef/fish/whatever, don’t you think they are going to say that everything they’re selling is safe?”

Ideally, another person (we’re up to 2 out of 100,000–a push perhaps, but I woke up optimistic this morning) would have seconded the first person’s statement and then, just maybe, we could have our food actually inspected before we eat it.

Which, I will point out to the USDA and its 100,000 employees, is generally considered to be their core job.

And it gets worse.

Right now, the USDA inspectors (who are independent, don’t work for the chicken companies, and aren’t driven by chicken company profits for holiday bonuses) inspect 35 chickens a minute for lovely things like bile, feces and random spare parts that got through processing.

That’s a chicken every two seconds.

Should you so desire, take two seconds to inspect the next chicken you see at the store. It’s really not a lot of time, but with some practice you could get pretty good at it–which is a nice thought because you are essentially performing the task that stands between me eating a relatively clean chicken or a feces- and bile-covered chicken. (There is a difference, Mr. USDA, trust me on this one.)

Well, under this new program, the chicken companies will rubber stamp–er, I mean inspect 175 chickens a minute. 175! That’s just under three chickens a second.

Are you thinking, “Wait a minute, 175 chickens a minute? That’s impossible!” Well congratulations–you are now ahead of 100,000 USDA employees in the class on food safety.

I have a little test for you and the USDA: if you can even count to 175 in sixty seconds, I might reconsider my opposition.

If you can’t, you need to sign this petition, share it with the world, put it up on Facebook.

Even better, if you know anyone at the USDA, send it to them and ask them to see what they can do for you, for me, and for everyone who prefers their chickens to be properly inspected, let alone inspected at all.

This post originally appeared at HandPicked Nation.

Ever wonder if your water is contaminated with toxic runoff from local industry? What about if your kids are safe playing in the dirt at home or at school?  California regulators should be able to eliminate that fear.  We’re at the confirmation hearing for the new director of the CA Dept. of Toxic Control to make sure she answers the tough questions and outlines her plans to hold companies accountable if their hazardous waste and manufacturing facilities are spewing toxins into our air and water.

And just this morning, the Sacramento Bee published an opinion piece that further illustrated the need for regulations that have teeth and for regulators who are strong enough to stand up to industry power brokers.

The underbelly of industry in California is toxic waste, from the arcane chemicals used to manufacture computers to contaminated engine oil left behind after an an oil change at a service station. The state has strict rules and regulations on how such waste can be disposed of or recycled – governing storage, transportation and reprocessing to protect air, soil and water…Yet too many middle- and working-class families in this position are plagued by odors, toxic dust, fiery accidents and worries about their drinking water.” -Judy Dugan & Doug Heller, Special to the Sacramento Bee 4/11/2012

Read more of the Sacramento Bee opinion piece here

Money would be directed towards carbon emissions

by Brian Leubitz

AB 32, our landmark climate change legislation, will have some enormous impacts on the state’s economy and the government. However, there’s this:

The amounts are potentially enormous: from $1 billion to $3 billion a year in 2012 and 2013, jumping to as high as $14 billion a year by 2015, according to the nonpartisan state Legislative Analyst’s Office. By comparison, the state’s current budget deficit is $9 billion.

But like thirsty castaways on an island surrounded by ocean water they can’t drink, Gov. Jerry Brown and state legislators face strict constraints on how they can spend the money. More than 30 years of court rulings and ballot measures — dating to Proposition 13 in 1978 — limit its use, probably only to projects that reduce greenhouse gas emissions.(Media News)

The state already has some spending lined up, including helping to pay for cleaner burning trucks for the ports. There is likely to be some benefit for the budget, as spending for climate change programs are shifted away from the general fund. However, unless the legislation is changed, it isn’t the solution for the deficit.

Small Businesses Stuck With Unjustifiable 8% Rate Hike, 30% Increase Over Last 24 Months Says Department of Insurance

The California Department of Insurance has announced that Aetna is imposing an 8% annual health insurance rate hike on its small business customers despite state actuaries’ findings that the increase is “unreasonable” and not supported by data.  Consumer Watchdog Campaign says this demonstrates the urgency of voters passing its proposed ballot measure to make health insurance companies justify their rate hikes and get permission before raising rates.  The initiative, which is currently being circulated for signatures to place it on the November 2012 ballot at grocery stores and online at JustifyRates.org, would allow the Insurance Commissioner to reject a rate hike such as Aetna’s if state experts find it unreasonable.

“Until the Commissioner is allowed to say no to unjustified and excessive rate hikes, small businesses and families in California will continue to pay more than they should for health insurance,” said Jamie Court, proponent of the proposed allot measure and a director of Consumer Watchdog Campaign.  “Aetna’s rate hike is the poster child for why health insurance should be required to get approval before rate hikes take effect.”

According to the Department of Insurance, the Aetna subsidiary that sells health insurance in California earned huge profits in 2011 and paid a $1.7 billion dividend to its parent company last year.  Additionally, while the insurance company claims that it needs the rate increase to cover increasing medical costs, Aetna’s own data and documents don’t support that claim, which also conflicts with national data about medical cost inflation.

The ballot initiative being circulated by Consumer Watchdog Campaign would require insurance company CEOs to justify under penalty of perjury that rate hikes are necessary and allow the Insurance Commissioner to reject any hike determined to be excessive.  Similar rules have applied to auto and home insurance in California and have saved motorists in California over $62 billion since 1988 when that law took effect.  The initiative also prohibits the use of unfair rating factors in health, home and auto insurance.

“Insurance companies like to say that there is already regulation of health insurance in California, because insurers are required to make their rate increase plans public.  But if a company can ignore official findings that a rate hike is unreasonable and jack up rates whenever they want, then the law needs to change,” said Court.

The petition to place the initiative on the ballot can be signed outside supermarkets or by going to www.JustifyRates.org and downloading the one-page petition.