Thursday, July 31, 2014

Elizabeth Warren: "The Time For Free-Loading Is Over"


Just a week ago we warned about how conservatives were eager to prevent progressives to end a tax loophole that allows corporations to do "inversions" that allow them to pay no taxes. Yesterday, the Senate failed to break a Republican filibuster lead by Wisconsin corporate whore Ron Johnson. Breaking the filibuster requires 60 votes and the Democrats only mustered 54, so it failed 54-42, all but one Republican joining the filibuster this time.

Elizabeth Warren was up on the floor of the Senate (as you can see in the video above), denouncing the corporations that are taking advantage of this country. "These companies," she told her fellow senators, "are renouncing their American citizenship, turning their backs on this country, simply to boost their profits. They are taking advantage of all the good things that our government helps provide-- educated workers, roads and bridges, a dependable court system, patent and copyright protections-- and then running out on the bill. If a person did that, we'd call them a freeloader. For a person who doesn't want to pay a fair share, our message is clear: you can renounce your citizenship, but don't come back and expect the rest of us to pick up your tab. But we don't do that for corporations. Corporations can renounce their American citizenship-- and make absolutely clear in legal documents that they're doing so to avoid their US tax obligations-- and not suffer any consequences. In this corner of the tax code, we've gone way past treating corporations like people. In this corner of the tax code, we treat corporations better than people."

Robert Cyran tried explaining to NY Times what exactly had happened a few minutes after the vote.
Inversions are starting to spin out of control. A quest for tax savings has made digestible overseas targets attractive to United States buyers. Hospira’s potential $5 billion deal for a Danone unit highlights a fresh supply, for “spinversions.” The odd combination also reflects the perverse incentives distorting corporate decisions.

Health care companies lead the way trying to move domiciles. In just the past six months, there were $319 billion of announced deals in the sector, a figure that already exceeds the record volume in 2007. Companies with Irish headquarters like Covidien, Elan and Warner Chilcott have already been devoured. Pfizer tried unsuccessfully to do the same with AstraZeneca for nearly $120 billion. Certain post codes now carry premium valuations.

There’s a clever new twist on the situation, though. Big companies can spin off a suitably sized division in a favorable jurisdiction, and if an American company acquires it using shares, the acquirer can advantageously change its address. When Pennsylvania-based Mylan acquired a division of Abbott Laboratories, for example, it suddenly became Dutch for tax purposes.

Buying Danone’s medical nutrition business would accomplish something similar for $9 billion Hospira. Other European companies are also getting the idea they might fetch top dollar for unwanted divisions. Consumer goods giant Reckitt Benckiser said this week that it plans to separate its pharmaceutical division. GlaxoSmithKline is also studying disposals. Even United States conglomerates could do the same by spinning off unwanted divisions to investors and then having them merge with overseas businesses.

The trouble is that tax motives are increasingly trumping strategic logic. Hospira itself was spun off from Abbott a decade ago, leaving Abbott with a sizable and profitable medical nutrition business. While there might be competition concerns, Abbott is nevertheless a far more natural home for Danone’s competing operation than is Hospira, which specializes in drugs that are injected. To justify these otherwise implausible sorts of deals will require a whole different kind of spin.
Michael Wager is the Blue America-endorsed candidate running in the most winnable Republican-held seat in Ohio, OH-14, a swing district just east of Cleveland where clueless backbencher David Joyce is spending gigantically-- $1,190,471 already-- to hold the seat. But Joyce isn't saying anything to the working families of Ashtabula, Cuyahoga, Lake, Portage, Summit and Trumbull counties, all of which were won in 2012 by Sherrod Brown. (The only county in the district won by Republican Josh Mandel was Geauga). This morning Wager explained why this is a real issue for people in northeast Ohio:
As some of the largest, most profitable American companies have "moved" their tax residence to off-shore tax havens to avoid paying their fair share under U.S. tax law, the Congress has failed again to address this corporate tax abuse and close the loopholes. Don’t expect too much of an outcry from Republicans; they’re too busy accepting millions in PAC contributions from the very companies engaged in this  tax dodge. For example, Ohio-based Eaton Corporation moved its tax residence to Ireland, but my  opponent, Congressman David Joyce, has failed to speak out on behalf of American taxpayers. Why?  Well, perhaps it’s because he’s the single largest recipient of PAC contributions from Eaton’s PAC as well as generous contributions from its CEO.

It’s time to amend our rigged and deformed tax code and put an end to tax avoidance by the corporations. Today’s filibuster by Senate Republicans is disgraceful.
Open Secrets shows that Eaton CEO Alexander Cutler has spent 6 pages worth of his own cash on making sure Republicans don't close any corporate loopholes that will disadvantage Eaton after his decision to leave Ohio and move to Ireland. He's given thousands and thousands of dollars to Joyce but also to Republican candidates and committees all over America, including ole filibustering' Rob Portman. And the Eaton corporate PAC gives large sums to candidates and incumbents as well. So far the biggest recipient of their largesse this cycle has been… David Joyce ($4,600).

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At 1:00 PM, Anonymous Anonymous said...

Even beyond the aggrandizing selfishness of corporate shape-shifting and tax dodging, which in themselves should be criminally prosecutable is this.

They are actively attempting to complete the transformation of the United States from a middle-class free-enough thinking and free-enough acting nation into a population of desperate subservient military recruits with no choice but to enforce an increasingly authoritarian international corporate order, with little to no recourse for progressive change at home or abroad.

They are trying, successfully so far, to foreshorten our pursuit of happiness, including extorting us to further perverse corporate goals at the expense of our own well-being. In short, they're trying to make the United States the Corporate Praetorian Guard of the financial elite against the best interests of everybody else.


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