Tag Archives: corporations

WATCH: What If Regular People Tried Using Apple’s Tax Tricks? Fiore Cartoon

by y0afvun Posted on June 6, 2013

Mother Jones

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Mark Fiore is a Pulitzer Prize-winning editorial cartoonist and animator whose work has appeared in the Washington Post, the Los Angeles Times, the San Francisco Examiner, and dozens of other publications. He is an active member of the American Association of Editorial Cartoonists, and has a website featuring his work.

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WATCH: What If Regular People Tried Using Apple’s Tax Tricks? Fiore Cartoon

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New Report Shows How Walmart Forces Its Employees to Live on the Dole

by Christina Craig Posted on June 6, 2013

Mother Jones

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Walmart’s wages and benefits are so low that many of its employees are forced to turn to the government for aid, costing taxpayers between $900,000 and $1.75 million per store, according to a report released last week by congressional Democrats.

Walmart’s history of suppressing local wages and busting fledgling union efforts is common knowledge. But the Democrats’ new report used data from Wisconsin’s Medicaid program to quantify Walmart’s cost to taxpayers. The report cites a confluence of trends that have forced more workers to rely on safety-net programs: the depressed bargaining power of labor in a still struggling economy; a 97 year low in union enrollment; and the fact that the middle-wage jobs lost during the recession have been replaced by low-wage jobs. The problem of minimum-wage work isn’t confined to Walmart. But as the country’s largest low-wage employer, with about 1.4 million employees in the US—roughly 10 percent of the American retail workforce—Walmart’s policies are a driving force in keeping wages low. The company also happens to elegantly epitomize the divide between the top and bottom in America: the collective wealth of the six Waltons equals the combined wealth of 48.8 million families on the other end of the economic spectrum. The average Walmart worker making $8.81 per hour would have to work for 7 million years to acquire the Walton family’s current wealth.

Using data from Wisconsin, which has the most complete and recent state-level Medicaid data available, the Democrats’ report finds that 3,216 of Wisconsin’s 29,457 Walmart workers are enrolled in the state’s Medicaid program. That figure that balloons to 9,207 when Walmart employees’ children and adult dependents are taken into account. The study also looked at the costs of other taxpayer-funded programs that Walmart employees on state Medicaid could also use. Here’s the tab:

At least $251,706 for state Medicaid
Between $25,461 and $58,228 for reduced-price school lunches
Between $12,938 and $29,588 for reduced-price school breakfasts
Between $155,406 and $355,350 for subsidized Section 8 housing
Between $72,160 and $165,000 for the Earned Income Tax Credit, which gives money to low-income workers
Between $11,414 and $26,100 for assistance under the Low Income Home Energy Assistance Program (LIHEAP), which helps poor families pay for heating costs
Between $96,007 and $219,528 for Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps)
Between $279,450 an $639,090 for Wisconsin Shares Child Care Subsidy Program benefits, which helps low-income workers pay for child care

At a minimum, Walmart workers in Wisconsin known to be enrolled in Medicaid rely on at least $9.5 million a year in taxpayer funds. If the study’s low-end estimate of $900,000 per store in taxpayer-funded benefits is right, Walmart’s 300 Wisconsin stores could be forcing the state to provide as much as $67.5 million per year in benefits that employees of Walmart’s higher-wage competitors, such as Costco, don’t need.

House Democrats are pushing two pieces of legislation that would address the drag Walmart’s low wages place on the economy. One would raise the federal minimum wage from $7.25 to $10.10; another would allow employees to share salary information, bolstering their bargaining power. A study published last year found that raising average retail wage salaries from $21,000 to $25,000 a year would create 100,000 new jobs and give a $13.5 billion annual boost to the overall economy.

Walmart has pushed back against the Dems’ report. “Unfortunately there are some people who base their opinions on misconceptions rather than facts, and that is why we recently launched a campaign to show people the unlimited opportunities that exist at Walmart,” Brooke Buchanan, a spokeswoman for the company, told the Huffington Post. “We provide a range of jobs—from people starting out stocking shelves to Ph.D.’s in engineering and finance. We provide education assistance and skill training and, most of all, a chance to move up the ranks.”

Research suggests that Walmart could increase wages significantly and still turn a profit. But the company has worked for years to avoid doing that. An internal memo obtained by the Huffington Post in November, “Field Non-Exempt Associate Pay Plan Fiscal Year 2013,” outlined how Walmart capped raises for hourly workers, lowing costs and bolstering their bottom line profits. In 2012, the company’s net sales were higher than Norway’s entire economic output.

The ranks of near-poor households enrolled in Medicaid have been swelling in Wisconsin since the late 1990s. Although Walmart isn’t the only force driving this trend, it certainly isn’t helping.

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New Report Shows How Walmart Forces Its Employees to Live on the Dole

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British Columbia Kills West Coast Pipeline Plan

by Aale Harry Posted on May 31, 2013

Mother Jones

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While we’ve been having a big fight over the proposed Keystone XL pipeline down here in the US, Canada has also been debating a massive pipeline for exporting tar sands oil, the Northern Gateway. And on Friday, the government of British Columbia put the kibosh on that whole idea.

BC’s environment minister said Friday that Enbridge, the company seeking to build the pipeline, had not adequately answered the government’s questions about the project, and that there were still outstanding concerns about spill prevention and response. The CBC reports:

“British Columbia thoroughly reviewed all of the evidence and submissions made to the panel and asked substantive questions about the project, including its route, spill response capacity and financial structure to handle any incidents,” said Environment Minister Terry Lake.
“Our questions were not satisfactorily answered during these hearings.”

The Northern Gateway would have run from the heart of the tar sands in Alberta, through British Columbia, and to an export terminal in Kitimat. Anti-pipeline activists in the US are cheering BC’s Gateway decision as a win against tar sands development. 350.org founder Bill McKibben sent around a statement shortly after the announcement:

For years the tar sands promoters have said: ‘if we don’t build Keystone XL the tar sands will get out some other way.’ British Columbians just slammed the door on the most obvious other way, so now it’s up to President Obama. If he approves Keystone XL he bails out the Koch Brothers and other tar sands investors; if he rejects the pipeline, then an awful lot of that crude is going to stay in the ground where it belongs.

The BC government was quick to say, however, that this “is not a rejection of heavy-oil projects” in general—keeping open the possibility for another proposed pipeline, Kinder Morgan (which we also talked about here). Nevertheless, it certainly makes plans to export tar sands oil more complicated.

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British Columbia Kills West Coast Pipeline Plan

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British Columbia Rejects West Coast Pipeline Plan

by SherlynHa Posted on May 31, 2013

Mother Jones

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While we’ve been having a big fight over the proposed Keystone XL pipeline down here in the US, Canada has also been debating a massive pipeline for exporting tar sands oil, the Northern Gateway. And on Friday, the government of British Columbia put the kibosh on that whole idea.

BC’s environment minister said Friday that Enbridge, the company seeking to build the pipeline, had not adequately answered the government’s questions about the project, and that there were still outstanding concerns about spill prevention and response. The CBC reports:

“British Columbia thoroughly reviewed all of the evidence and submissions made to the panel and asked substantive questions about the project, including its route, spill response capacity and financial structure to handle any incidents,” said Environment Minister Terry Lake.
“Our questions were not satisfactorily answered during these hearings.”

The Northern Gateway would run from the heart of the tar sands in Alberta, through British Columbia, and to an export terminal in Kitimat. Anti-pipeline activists in the US are cheering BC’s Gateway decision as a win against tar sands development. 350.org founder Bill McKibben sent around a statement shortly after the announcement:

For years the tar sands promoters have said: ‘if we don’t build Keystone XL the tar sands will get out some other way.’ British Columbians just slammed the door on the most obvious other way, so now it’s up to President Obama. If he approves Keystone XL he bails out the Koch Brothers and other tar sands investors; if he rejects the pipeline, then an awful lot of that crude is going to stay in the ground where it belongs.

The BC government was quick to say, however, that this “is not a rejection of heavy-oil projects” in general—keeping open the possibility for another proposed pipeline, Kinder Morgan (which we also talked about here). Nevertheless, it certainly makes plans to export tar sands oil more complicated.

CLARIFICATION: As the Globe and Mail explains, British Columbia does not have ultimate authority on the pipeline decision; the Canadian government does. But this is expected to influence its decision:

It does not have veto power over what would be a federally regulated project but its opinions carry much weight in the Joint Review Panel’s deliberations, said Michal Moore, an economics professor at the University of Calgary and a former energy regulator.
“I would think that when they play a card like that, when they don’t have direct control over the decision, that card is meant to be a place marker that says, ‘This issue is really important to us and we want to make sure that you take it very seriously,'” Mr. Moore said. “It’s the moral equivalent of throwing down a gauntlet, ‘that you better address our concerns in your decision, no matter what the decision is.'”

The headline on this story has been changed to reflect this clarification.

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British Columbia Rejects West Coast Pipeline Plan

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Exploding Trains, Explained

by Larry Daichea Posted on May 30, 2013

Mother Jones

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A train and a garbage truck collided outside of Baltimore on Tuesday evening, resulting in a large explosion that released smoke that could be seen miles away. CSX, the train’s operator, confirmed that the train was carrying hazardous chemicals that caused the explosion. The Washington Post reports:

CSX spokesman Gary Sease said the sodium chlorate in a derailed car near the front of the train exploded, igniting terephthalic acid in another derailed car. Sodium chlorate is used mainly as a bleaching agent in paper production. Oklahoma State University chemist Nick Materer said it could make for a potentially explosive mixture when combined with an incompatible substance such as spilled fuel.
Another chemist, Darlene Lyudmirskiy, of Spectrum Chemical Manufacturing Corp. in Gardena, Calif., said such a mixture would be unstable and wouldn’t need even a spark to cause a reaction.
“If it’s not compatible, anything could set it off,” she said.

The incident could have been much worse if other chemicals had been involved—chemicals like chlorine gas or anhydrous ammonia. When a Norfolk Southern train derailed in Graniteville, SC in 2005 and released chlorine, nine people died and 5,000 had to be evacuated. While not nearly that bad, the Baltimore explosion has brought renewed attention to the hazardous chemicals that are transported by rail in the US.

In 2012, trains carried 189 million tons of chemicals. That only represents about 20 percent of all the chemicals shipped in the US. But trains carry 64 percent of a class of chemicals known as “toxic inhalation hazards” or TIH, like chlorine, that can be deadly if inhaled. Rail is the safest, most efficient way to transport those chemicals—one rail tank can carry as much as four trucks, and trains moving along a dedicated shipping line rather than on the highways, meaning that collisions are less likely, as researchers at Harvard’s Kennedy School of Government have pointed out.

Even if rail is safer than trucks, there are plenty of reasons to want to limit the amount of dangerous chemicals carried by rail. There’s always a chance of an accident, as Tuesday’s explosion demonstrated, and local governments and first responders don’t even know what’s traveling on those trains until an accident happens. Then there’s also the threat of a deliberate attack on either the rails or the chemical facilities where the tankers eventually end up. The best solution, says Greenpeace legislative director Rick Hind, is getting companies to shift from a “catastrophic chemical to a non-catastrophic substance or process”—that is, using chemicals that won’t explode or give off noxious fumes. These chemicals would be safer to transport, and safer to use when they reach their destinations.

Some companies and municipal water systems have already started phasing out the use of deadly chemicals like chlorine. But it would take a stronger regulatory push to make a larger switch happen. There was some effort to do so immediately after September 11, at the height of terrorism fears. But the Bush White House did not back it due to pressure from the chemical industry, recalls Bob Bostock, the homeland security adviser to the then-EPA administrator Christine Todd Whitman. “That effort died before it really got started,” he says.

Now Bostock hopes that the EPA will use its regulatory authority under the Clean Air Act to “to require facilities to at least evaluate safer technologies.” “It’s very feasible to do so,” he says. “A lot of facilities have done it. A lot have not.”

Railroad operators aren’t particularly jazzed about transporting hazardous chemicals, either. But because a few companies control the majority of major railroads, they are required under federal “common carrier” rules that say they can’t refuse to carry TIH or other hazardous chemicals. The Association of American Railroads, the industry trade group, has asked Congress to allow them to “decide for themselves whether to accept, and at what price they are willing to accept, such materials for transportation.” AAR has also called for safer alternatives to hazardous chemicals as a means of reducing their own risk as carriers.

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Exploding Trains, Explained

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Banks Are Doing Better Than Ever. The Middle Class, Not So Much.

by weask Posted on May 30, 2013

Mother Jones

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The nation’s banks are reporting record profits, according to new numbers out Wednesday from the Federal Deposit Insurance Corporation (FDIC). Most of the rest of us aren’t faring quite so well.

Bank profits topped $40.3 billion in the first three months of the year, according to the FDIC, attesting to a strong recovery… in the banking sector. “The banks are back,” Moody’s Analytics chief economist Mark Zandi told the Washington Post Wednesday. “Only four years after the banking system was literally looking into the abyss, it is highly profitable again.” The biggest banks, including Wells Fargo, Bank of America and Citigroup, accounted for most of the industry’s profits. Here’s what that looks like, via the Post:

The wider economy hasn’t shared the banking sector’s return to prosperity. Yes, the unemployment rate has dropped a little. Consumer confidence is up. The housing market is healthier. But the current share of the population that is employed is still well below what it was before the recession. Here is a chart from the Center on Budget and Policy Priorities:

The housing market hasn’t bounced back at the same pace as bank profits, either. As Derek Thompson pointed out at The Atlantic earlier this year, overall business investment is growing, but companies are still reluctant to invest in housing. Here is what that looks like—the red curve is residential housing investment; the blue curve is non-housing investment:

The new FDIC numbers also show that loan balances at banks shrunk in the first three months of the year. As Isaac Boltansky, a banking analyst with Compass Point Research and Trading, told the Post, that’s “a sign that the broader economy still has room for improvement.” Indeed.

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Banks Are Doing Better Than Ever. The Middle Class, Not So Much.

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Is the US About to Become One Big Factory Farm for China?

by KetaHeadraf Posted on May 29, 2013

Mother Jones

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The small number of companies that dominate global meat production is about to get smaller. The Chinese corporation Shuanghui International, already the majority shareholder of China’s largest meat producer, has just bought US giant Smthfield, the globe’s largest hog producer and pork packer, in a $4.7 billion cash deal. (It still has to get past Smithfield’s shareholders and the US Treasury Department’s Committee on Foreign Investment, which reviews takeovers of US companies.)

Now, I hope this merger of titans doesn’t provoke a xenophobic reaction. Shuanghui has strong ties to China’s central government, but it also counts Goldman Sachs among its major shareholders. And the US meat industry is already quite globalized. Back in 2009, a Brazilian giant called JBS had already barreled into the US market, and now holds huge positions in beef, pork, and chicken processing here. And true, as China has ramped up its food production—and rapidly reshaped hog production on the industrial US model—it has produced more than it share of food safety scandals, including recent ones involving hogs.

But as I have pointed out, the US pork industry is no prize either—it pollutes water as a matter of course, hollows out the rural areas on which it alights, relies heavily on routine antibiotic use, recently inspired a government watchdog group to lament “egregious” violations of food safety and animal welfare code in slaughterhouses, and uh, has an explosive manure foam problem.

So forget about where HQ is for the vast conglomerate that ultimately profits from running Smithfield’s factory-scale hog farms and slaughterhouses. The real question is: What does this deal telling us about the global food system and the future of food? Reuters offers a hint:

The thrust of the deal is to send the U.S. made pork to China, a factor that one person familiar with the matter said would help during Shuanghui’s CFIUS Committee on Foreign Investment review.

If Reuters is right that deal’s purpose is to grease the wheels of trade carrying US hogs to China and its enormous domestic pork market, then we’re looking at the further expansion of factory-scale swine farming here in the US: all of the festering troubles I listed above, intensified. For Smithfield itself, the deal is savvy, because Americans are eating less meat. In order to maintain endless profit growth, the company needs to conquer markets where per capita meat consumption is growing fast, and the China market itself represents the globe’s biggest prize in that regard.

As for China, the Institute for Agriculture and Trade Policy showed in a blockbuster 2011 report, the central government strived for years for self-sufficiency in pork, even as demand for it exploded, by rapidly industrializing production along the model pioneered by Smithfield. By essentially buying Smithfield, the government may be throwing in the towel—saying, essentially, let’s just offshore our hog production, or at least a huge part of it, to the US.

In an ironic twist, China appears to be taking advantage of lax environmental and labor standards in the US to supply its citizens with something it can’t get enough of. Industrial pork: the iPhone’s culinary mirror image.

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Is the US About to Become One Big Factory Farm for China?

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Anti-Defamation League, Mayor of Culver City Respond to JCPenney’s Hitler Teakettle Billboard

by John Graham Posted on May 29, 2013

Mother Jones

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It’s not quite summer, but the silly stories have started, and you may have heard about a certain JCPenney billboard located east of the 405 freeway in Culver City, California. It looks like this:

Bill Burman/Reddit

And it reminded a lot of people of…

Bill Burman/Reddit ; German Federal Archive

The kettle was designed by architect and New Jersey Hall of Famer Michael Graves, who has a long history of designing consumer products that do not resemble a saluting Hitler, including this teakettle from 1984. After the Hitler-kettle story went viral, JCPenney took to Twitter to reassure the public there was no intended connection between the product and the Nazi leader. Here’s one of JCPenney’s damage-controlling Tweets:

JCPenney/Twitter

JCPenney elected to stop selling the item on its website, and took down the billboard on Tuesday—but not before all the Hitler hoopla caused a sales spike in the now notorious kettles.

Still, Jeffrey Cooper, the Democratic mayor of Culver City, remains upset at JCPenney for not initially noticing the resemblance. “I am disappointed JCPenney actually put the billboard up in the first place and more outraged that they actually attempted to defend it,” he says in an email. “As a Jew, I am offended, and as an elected official, I am mad that the city I represent is linked to this.”

Others were more forgiving. “JCPenney did the right thing by responding to public concerns and removing the tea pot from their product line,” the Anti-Defamation League, one of the major groups that monitors anti-Semitism, says in a statement sent to Mother Jones. “We take JCPenney at their word that any resemblance to the Nazi dictator was completely unintended.”

Michael Graves did not respond to a request for comment.

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Anti-Defamation League, Mayor of Culver City Respond to JCPenney’s Hitler Teakettle Billboard

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See How Citigroup Wrote a Bill So It Could Get a Bailout

by Delores Crane Posted on May 24, 2013

Mother Jones

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On Friday, the New York Times reported on the front page that Citigroup drafted most of a House bill that would allow banks to engage in risky trades backed by a potential taxpayer-funded bailout. The Times notes that “Citigroup’s recommendations were reflected in more than 70 lines of the House committee’s 85-line bill.” Special-interest lobbyists often play a role in writing legislation on the Hill, but such sausage-making is rarely revealed to the public. In this instance, members of Congress and a band of lobbyists have been caught red-handed, and Mother Jones has obtained the Citigroup draft that is practically identical to the House bill. As you can see in the side-by-side comparison below, the lobbyists for Citigroup really earned their pay on this job.

The bill, called the Swaps Regulatory Improvement Act, was approved by the House financial services committee in May and is headed for a vote on the House floor soon. It would gut a section of the 2010 Dodd-Frank financial reform act called the “push-out rule.” Banks hate the push-out rule, which is scheduled to go into effect on July 13, because this provision will forbid them from trading certain derivatives (which are complicated financial instruments with values derived from underlying variables, such as crop prices or interest rates). Under this rule, banks will have to move these risky trades into separate non-bank affiliates that aren’t insured by the Federal Deposit Insurance Corporation (FDIC) and are less likely to receive government bailouts. The bill would smother the push-out rule in its crib by permitting banks to use government-insured deposits to bet on a wider range of these risky derivatives.

Here is the key section of the legislation that Citigroup cooked up compared to the same section of the final bill:

The bill is sponsored by Republican and Democratic members—Randy Hultgren (R-Ill.), Jim Himes (D-Conn.), Richard Hudson (R-NC), and Sean Patrick Mahoney (D-NY)—and its passage would be great news for Citi and other financial titans. Five banks—Citigroup, JPMorgan Chase, Goldman Sachs, Bank of America, and Wells Fargo—control more than 90 percent of the $700 trillion derivatives market. “The big banks support the bill because it means that they’ll get to keep the public subsidy”—FDIC insurance and the implicit promise of a taxpayer bailout—”to their derivatives-dealing business,” explains Marcus Stanley, the policy director at Americans for Financial Reform.

The origins of the Citigroup proposal date back to 2011, when several large banks fought to repeal the push-out rule entirely. When it became clear that full repeal couldn’t pass, Citigroup pitched an alternative: allow banks to use FDIC-insured money to bet on almost anything they wanted. It proposed letting banks keep most types of derivatives trading in-house, requiring only that derivatives based on certain pools of assets, such as mortgages, be moved into separate entities. Citigroup was not able to get the measure passed before the end of the last Congress, but its allies on Capitol Hill reintroduced it this year.

Citi’s move to expand the types of derivatives it can trade comes as banks have increasingly been shifting derivatives out of their investment banking divisions (which aren’t backed by FDIC insurance) and into taxpayer-backed entities. “The rule is needed more than ever,” says Mike Konczal, an expert on financial reform at the Roosevelt Institute. The financial services committee passed the Citi-written bill on a 53-to-6 vote; all the no votes came from Democrats.

This is certainly not the first time that the financial industry has shaped financial reform laws for Congress. Citigroup was a central player in the 1999 repeal of the Depression-era law called the Glass-Steagall Act that forced banks not to engage in investment activities. Its lobbyists flooded Capitol Hill for that fight. “Citigroup was of course the bank that administered the coup de grace to Glass-Steagall,” says Stanley.

Citigroup’s drafting of the anti-push-out measure fits into “a long history of things being written by industry—and that generally has not worked out very well,” says Konczal. “This is very bad news.”

See how the Citigroup proposal allows more risky dealings by taxpayer-backed banks:

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See How Citigroup Wrote a Bill So It Could Get a Bailout

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4 Ways Apple CEO Tim Cook Spins Tax Avoidance

by london Posted on May 21, 2013

Mother Jones

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“I’ve never seen anything like this and we don’t know anybody who has ever seen anything like this,” Senator Carl Levin (D-Mich.) said yesterday of Apple’s baroque tax avoidance strategies. Apple CEO Tim Cook, who will testify before the Senate Subcommittee on Investigations today, is aggressively spinning the company’s tax strategies as patriotic, commonsensical, and no big deal. Here are the most remarkable talking points from his pre-released Senate testimony:

1. Apple’s taxes are straightforward
Spin: “Apple does not use tax gimmicks.”
Reality: Yet somehow, according to an analysis by Citizens for Tax Justice, Apple has paid almost no income taxes to any country on its $102 billion in offshore holdings. Between 2009 and 2012, Apple avoided paying US taxes on some $74 billion in income, an amount equal to the entire budget of Florida.

2. Paying American salaries through a subsidiary based in Ireland saves American jobs
Spin: Apple and its Irish subsidiaries are engaged in a “cost sharing agreement” whereby the subsidiaries “partially fund R&D costs incurred by Apple Inc.” The agreements “play an important role in encouraging companies like Apple to keep R&D efforts—and the high-paying, income tax generating jobs associated with them—in the US.”
Reality: This is how Apple brings back money from overseas without having to pay federal taxes on it.

3. Apple is awesome because it runs huge data centers right here in the United States
Spin: “In 2010, Apple built one of the country’s largest data centers in North Carolina, and it is in the process of constructing two additional data centers in Oregon and Nevada.”
Reality: Apple only agreed to build the North Carolina data center after getting a $46-million state tax break, its local property taxes halved, and local taxes on its assets slashed by 85 percent—all for creating 50 jobs. To build its data center in deficit-plagued Nevada, it extracted an $88 million state tax break, the largest in state history. And Apple chose to build a data center in Prineville, Oregon because Oregon has no sales tax and Prineville is in a “rural enterprise zone” that offers a 15-year property tax exemption.

4. “Apple supports comprehensive corporate tax reform.”
Spin: “Apple recognizes that these and other improvements in the US corporate tax system may increase the company’s taxes.”
Reality: Cook wants to reduce the tax that corporations pay when they repatriate profits, which could save Apple a lot of money considering that 61 percent of its profits are earned overseas. But lowering the repatriation tax probably wouldn’t benefit most Americans. After Congress enacted a one-time repatriation holiday in 2004, a study by the National Bureau of Economic Research found that 92 percent of the repatriated cash was used to pay for dividends, share buybacks, or executive bonuses.

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4 Ways Apple CEO Tim Cook Spins Tax Avoidance

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