Tag Archives: Deregulation

Corporate Greed, Political, Union

Wal-Mart has $76 billion in overseas tax havens

Bloomberg
By Jesse Drucker
7 hours ago

Wal-Mart Stores Inc. owns more than $76 billion of assets through a web of units in offshore tax havens around the world, though you wouldn’t know it from reading the giant retailer’s annual report.
A new study has found Wal-Mart has at least 78 offshore subsidiaries and branches, more than 30 created since 2009 and none mentioned in U.S. securities filings. Overseas operations have helped the company cut more than $3.5 billion off its income tax bills in the past six years, its annual reports show.
The study, researched by the United Food & Commercial Workers International Union and published Wednesday in a report by Americans for Tax Fairness, found 90 percent of Wal-Mart’s overseas assets are owned by subsidiaries in Luxembourg and the Netherlands, two of the most popular corporate tax havens.
Units in Luxembourg — where the company has no stores — reported $1.3 billion in profits between 2010 and 2013 and paid tax at a rate of less than 1 percent, according to the report.
All of Wal-Mart’s roughly 3,500 stores in China, Central America, the U.K., Brazil, Japan, South Africa and Chile appear to be owned through units in tax havens such as the British Virgin Islands, Curacao and Luxembourg, according to the report from the advocacy group. The union conducted its research using publicly available documents filed in various countries by Wal-Mart and its subsidiaries.
Randy Hargrove, a Wal-Mart spokesman, called the report incomplete and “designed to mislead” by its union authors. He said the company has “processes in place to comply with applicable SEC and IRS rules, as well as the tax laws of each country where we operate.”
Mailbox Subsidiaries
The union behind the study backs the Organization United for Respect at Wal-Mart, a group that campaigns for wage increases and more predictable schedules. Wal-Mart has historically resisted unions and discourages employees from joining them.
The report comes a week after the Group of Twenty nations unveiled its latest effort to combat multinational corporate tax avoidance. The body wants companies to disclose to regulators where they book profits, employees and sales, so tax authorities can be aware of discrepancies between where corporations report income and where they have operations.
Hargrove, the Wal-Mart spokesman, pointed to guidance issued by the SEC that permits companies to avoid disclosure of subsidiaries with significant “intercompany transactions.” He said Wal-Mart’s tax savings overseas was driven by lower rates in markets including Canada and the U.K.
‘Continuing Evidence’
Companies such as Google Inc., Apple Inc. and Starbucks Corp. have come under fire for avoiding billions of dollars of income taxes by attributing profits to mailbox subsidiaries in low-tax jurisdictions like Bermuda. The Group of Twenty has directed the Organization for Economic Cooperation and Development to develop plans to crack down on such strategies.
The new Wal-Mart disclosures could expand the scope of international tax reform, which has often focused on technology companies that move profits offshore by assigning valuable patent rights to mailbox units. Bloomberg News reported last year that Inditex SA, the parent of Zara, the world’s biggest fashion retailer, cut its taxes by shifting billions of dollars of profits to a tiny Dutch unit.
“This report is continuing evidence that everybody has been engaging in cross-border tax avoidance,” said Stephen E. Shay, a professor at Harvard Law School and former deputy assistant secretary for international tax affairs for the Obama Treasury Department.
Hybrid-Loan Strategy
Nearly a decade ago, Wal-Mart ran into trouble over strategies to avoid U.S. state income taxes. It used a real estate investment trust to effectively pay rent to itself, generating big tax deductions, even though the rent payments never left the company. At least six states changed their tax laws after publicity about the tactics.
Since then, Wal-Mart has stepped up its use of offshore tax havens. It has created 20 new subsidiaries in Luxembourg alone since 2009, according to the report.
Wal-Mart employs a popular legal strategy in that country called a hybrid loan. It permits companies’ offshore units to take tax deductions for interest paid — typically on paper only — to their parents in the U.S. The parent, however, doesn’t include that interest as taxable income in the U.S.
The OECD has called for an end to the tax benefits of such loans. Luxembourg generated headlines last year after the International Consortium of Investigative Journalists revealed its role in cutting the tax bills of hundreds of multinationals.
Union Funding
U.S. companies owe tax at a rate of 35 percent but can defer indefinitely the income taxes on profits attributed to overseas units. In 2011, Wal-Mart’s then-chief executive officer, Mike Duke, called in testimony before Congress for a system that would exempt from U.S. income tax the earnings that multinationals generate overseas.
Wal-Mart’s accumulated offshore earnings have doubled to $23.3 billion in 2015 from $10.7 billion 2008. The company operates about 6,300 stores in 27 countries outside the U.S. and last fiscal year reported 28 percent of its sales abroad, or about $137 billion.
Wal-Mart paid $6.2 billion in U.S. income tax last year, Hargrove, the company spokesman, said, or “nearly 2 percent of all corporate income tax collected by the U.S. Treasury.”
Americans for Tax Fairness called on the European Union to open investigations into whether the Luxembourg tax benefits constitute illegal state aid. The EU has issued preliminary findings that this was indeed the case with companies using similar strategies in various countries, including as Starbucks in the Netherlands, Apple in Ireland and Fiat SpA in Luxembourg.
The tax group receives most of its funding from foundations, including the Ford Foundation, Open Society Foundations, Bauman Foundations and Stoneman Family Foundation. It’s also funded by public-sector unions, including the American Federation of State, County and Municipal Employees and the National Education Association.

Action, Corporate Greed, Political

Scott Walker Promises To Finish Off Unions With National “Right-To-Work” Law If Elected President

The withering power of American unions and worker’s rights will hear its death knell should Scott Walker ever see the Oval Office. After crushing organized labor in Wisconsin and whatever hopes the people might have had of escaping the miserly yoke of the Koch Brothers and their corporate allies, Walker has now declared that he would pass a “right-to work” law on a national level, effectively gelding American labor’s bargaining power and killing the union off for good.

In a show of hypocrisy that we have come to expect from the Republican agenda, the “limited government” advocate would use federal power to interfere with the balance of power between employers and employees, saying that “[what he did in Wisconsin] was fight the stranglehold that big government special interests had on state and local governments. I think in Washington we need that even more.”

Of course, in reality, he’s tightening the stranglehold that Republican special interests have on the wallets and rights of the American middle class. The “right to work” law is a misnomer- it forces unions to represent workers who don’t pay dues, depriving them of needed funds and their negotiating power, leaving workers at the mercy of corporate greed and shattering one of our nation’s most sacred covenants. The International Monetary Fund published a study last month proving that unions help keep too much money from flowing to the top 10% of earners and plays an important role in keeping income inequality honest.
To put it in perspective, consider this: “Last year, 11.1 percent of workers belonged to a union, down from 20.1 percent in 1983. In that same time period, income inequality has been skyrocketing, and in 2012 the top 10 percent of earners took home more than half of all income, the highest amount ever recorded since 1917.”

It’s a sad day for the American worker and a sign of more danger on the horizon. Walker’s blatant pandering to big corporations and big business with his right-to-work law so enraged Wisconsin that a recall election was organized. As a thank you for Walker’s slavish devotion to their interests, corporate backers hooked him up an astonishing $31 million dollars- $8 million from the Koch Brothers alone- and funded a massive misinformation and propaganda campaign that kept him his job.

He’s now under federal investigation for violating finance fairness laws during that election, but that hasn’t stopped the preening schmo from embarking on the campaign trail, trumpeting lies about his economic prowess (Wisconsin has a $2 billion deficit and one of the lowest job creation rates in the country) and neglecting his home state in the meantime.

One only has to look at states like Wisconsin or Kansas to see the fruits of the Republican agenda. The working families of America suffer while millionaires make out like bandits. The union has been a proud bastion of worker’s rights in America for too long to see it crumble like this. Scott Walker, Tea Party darling and thrall of the 1%, would serve this country to his masters on a silver platter if given the chance. Our nation and our people deserve so much better.

Political, Union

Finally Some Positive Labor News

Beginning tomorrow a new Obama administration rule that will speed up the process for workers to unionize will take effect, and it could have a big impact on unionization.

The Hill reported:

An Obama administration rule that speeds up the process by which employees can unionize will take effect Tuesday after Republicans last month failed to block the measure.

Under the new National Labor Relations Board rules, employees could potentially organize a union in less than two weeks, compared to the previous average of 38 days between the time a petition is filed and the election is held.

Labor groups say this will prevent management from needlessly delaying union elections. But Republicans and business groups contend it will not give companies enough time to prepare for union elections.

Outraged Republicans and business groups are accusing the Obama administration of promoting ambush union organization, but the reality is that the new NLRB rule was put into place to address a serious problem. Anti-union businesses have used the period between elections to foot drag, delay, and mount campaigns filled with thinly veiled threats of job loss in order to discourage unionization.

According to Bureau of Labor Statistics, unionized workers earn $200 a week more than non-union workers. When benefits are included unionized employees earn $425 a week more than non-union employees. Increasing private sector unionization rates is an essential component to any plan to grow the middle-class. Any change that makes it easier for workers to unionize is a positive development.

Over the last three decades, the deck has been stacked by Republicans against unions. President Obama’s new rule is an important step towards unions finally being able to fight back.

Action, Corporate Greed, Political, Retirement

Your New Congress at Work for YOU!

What Retirees Need to Know about the New Federal Pension Rules
Mark Miller / Reuters
Dec. 18, 2014
     Only a small percentage of retirees are directly affected by the new rule.
But future legislation may lead to more pension cutbacks.
The last-minute deal to allow retiree pension benefit cuts as part of the federal spending bill for 2015 passed by Congress last week has set off shock waves in the U.S. retirement
Buried in the $1.1 trillion “Cromnibus” legislation signed this week by President Barack Obama was a provision that aims to head off a looming implosion of multiemployer pension plans—traditional defined benefit plans jointly funded by groups of employers. The pension reforms affect only retirees in struggling multiemployer pension plans, but any retiree living on a defined benefit pension could rightly wonder: Am I next
“Even people who aren’t impacted directly by this would have to ask themselves: If they’re doing that, what’s to stop them from doing it to me?” says Jeff Snyder, vice president of Cammack Retirement Group, a consulting and investment advisory firm that works with retirement plans.
The answer: plenty. Private sector pensions are governed by the Employee Retirement Income Security Act (ERISA), which prevents cuts for retirees in most cases. The new legislation doesn’t affect private sector workers in single-employer plans. Workers and retirees in public sector pension plans also are not affected by the law.
Here are answers to some of the key questions workers and retirees should be asking in the legislation’s wake.
Q: Cutting benefits for people who already are retired seems unfair. Why was this done?
A: Proponents argue it was better to preserve some pension benefit for workers in the most troubled plans rather than letting plans collapse. The multiemployer plans are backstopped by the Pension Benefit Guaranty Corp (PBGC), the federally sponsored agency that insures private sector pensions. The multiemployer fund was on track to run out of money within 10 years—a date that could be hastened if healthy companies withdraw from their plans. If the multiemployer backup system had been allowed to collapse, pensioners would have been left with no benefit.
Opponents, including AARP and the Pension Rights Center, argued that cutting benefits for current retirees was draconian and established a bad precedent.
Q: Who will be affected by the new law? If I have a traditional pension, should I worry?
A: Only pensioners in multiemployer plans are at risk, and even there, the risk is limited to retirees in “red zone” plans—those that are severely underfunded. Of the 10 million participants in multiemployer plans, perhaps 1 million will see some cuts. The new law also prohibits any cuts for beneficiaries over age 80, or who receive a disability pension.
Q: What will be the size of the cuts?
A: That is up to plan trustees. However, the maximum cuts permitted under the law are dramatic. Many retirees in these troubled plans were well-paid union workers who receive substantial pension benefits. For a retiree with 25 years of service and a $25,000 annual benefit, the maximum annual cut permitted under the law is $13,200, according to a cutback calculator at the Pension Rights Center’s website.
The cuts must be approved by a majority of all the active and retired workers in a plan (not just a majority of those who vote).
Q: How do I determine if I’m at risk?
A: Plan sponsors are required to send out an annual funding notice indicating the funding status of your program. Plans in the red zone must send workers a “critical status alert.” If you’re in doubt, Snyder suggests, “just call your retirement plan administrator,” Snyder says. “Simply ask, if you have cause for concern. Is your plan underfunded?”
The U.S. Department of Labor’s website maintains a list of plans on the critical list.
Q: How quickly would the cuts be made?
A: If a plan’s trustees decide to make cuts, a notice would be sent to workers. Snyder says implementation would take at least six months, and might require “a year or more.”
Q: Am I safe if I am in a single employer pension plan?
A: When the PBGC takes over a private sector single employer plan, about 85% of beneficiaries receive the full amount of their promised benefit. The maximum benefit paid by PBGC this year is $59,320.
Q: Does this law make it more likely that we’ll see efforts to cut other retiree benefits?
A: That will depend on the political climate in Washington, and in statehouses across the country. In a previous column I argued that the midterm elections results boost the odds of attacks on public sector pensions, Social Security and Medicare.
Sadly, the Cromnibus deal should serve as a warning that full pension benefits aren’t a sure thing anymore. So having a Plan B makes sense. “If you have a defined benefit pension, great,” Snyder says. “But you should still be putting money away to make sure you have something to rely on in the future.”

Action, Corporate Greed, Political

Thom Says It All

If ever you aren’t sure why elections matter, just take a look at our court system. Earlier this week, three judges – all appointed by Democrats – stood up for voting rights in North Carolina. Only days earlier, the most conservative members of the Supreme Court issued a stay to slash early voting in Ohio.
The three-judge panel on the Fourth Circuit Court of Appeals reviewed North Carolina’s new voting laws, and put a stop to two of the provisions that would have disenfranchised many voters in the upcoming election. While the democratic appointees declared “the right to vote is fundamental,” the right-wing justices on the Supreme Court allowed Ohio’s restrictive voting laws to stay in effect this November.
To make matters worse, our nation’s highest court didn’t even hear arguments in the Ohio case, or provide any justification for their ruling. The distinction is clear. Judges appointed by Democrats understand that voting is a fundamental right in our nation. Judges who were appointed by Republicans see no problem with limiting our ability to participate in the democratic process.
Elections matter for many reasons, but the effect they have on our judicial system may be the most important reason why we have to get out and vote this November.
-Thom