Possibly the Most Important Video You Will Ever See — Just Say NO!

Pre-NAFTA trade deficits, 1962-1992

NAFTA related trade deficits, 1993-2012Read More:

Stop Shopping Tax Dodgers!

Some Corporations Are Moving Addresses Overseas To Dodge Paying Fair Share Of U.S. Taxes

walgreens

We talk a lot about the grave problem of inequality and how our economy is not working for most Americans. One of the causes of this big problem is that corporations and the wealthiest are taking advantage of the system, exploiting tax loopholes, and rigging the game to benefit themselves, often at the expense of everyone else. The latest tax-dodging tactic that some corporations are considering using is a perfect example of this rigged system–and demonstrates why we need our legislators to take decisive action to stop it.

What Is The Problem?
A loophole in the tax code essentially allows a corporation to renounce its corporate citizenship in the United States, move its address overseas by merging with a foreign company, and dodge its U.S tax obligations by paying most of its taxes to a foreign government with lower tax rates than the U.S. The process takes place primarily on paper — most corporate operations remain here. The corporations that do this want all the benefits of being an American company without paying their fair share of taxes. That makes the rest of us pick up the tab.

The practice has become known as “inversion.” But what it really amounts to is desertion. And it could cost Americans tens of billions of dollars.

Who Is Taking Advantage?
There are 47 firms in the last decade that have exploited this loophole, according to new data compiled by the nonpartisan Congressional Research Service. But it’s a hot topic again because at least a dozen U.S. firms are currently considering taking advantage of it.

One of those corporations is Walgreen. The company has always prided itself on being America’s go-to pharmacy: from 1993 to 2006, it had the slogans “The Pharmacy America Trusts” and “The Brand America Trusts.” A biography of the company is entitled, “America’s Corner Store: Walgreen’s Prescription For Success.” Walgreen chief executive Gregory D. Wasson has said the company is “proud of our Illinois heritage.”

At the same time, Walgreen is currently considering merging with European drugstore chain Alliance Boots and move to Switzerland as part of a plan to dodge up to $4 billion in U.S taxes. The company that gets almost a quarter of its $72 billion in revenue directly from the government through Medicare and Medicaid is trying to reap even more profits while leaving taxpayers holding the bag.

Walgreen isn’t the only one. Pfizer, the pharmaceutical company, tried merging with the smaller U.K.-based AstraZeneca earlier this year and switch its address, where the tax rate is lower. It was estimated the move would save them at least $1 billion a year in tax obligations to the U.S. (the deal ultimately didn’t go through). Medtronic, a medical device company, plans to move its corporate address to Ireland, a tax haven, to avoid paying U.S. taxes on $14 billion. Chiquita, the banana distributor, is also heading to Ireland after acquiring Fyffes. These tax dodges, as Fortune magazine calls them in this week’s issue, are “positively un-American.”

What Can Be Done?
President Barack Obama’s 2015 budget proposes making these corporate desertions more difficult by raising the minimum levels of foreign ownership required to 50 percent (currently it is just 20 percent), which means that U.S. corporations could not move their address abroad unless they actually ceded a controlling interest to foreign owners. Congressional Democrats have made similar proposals. Treasury Secretary Jack Lew recently called for more “economic patriotism” and urged Congress to “enact legislation immediately” to close the loophole. Leaders on both sides of the aisle want comprehensive tax reform, but finding common ground in the current Congress could take a while. The simple fact is that as more and more companies exploit this loophole, a solution for this problem is needed right away–and Congress has the power the solve it.

BOTTOM LINE: More and more corporations are taking advantage of a tax loophole that helps their bottom line while costing American taxpayers billions every year. These companies want to continue to take advantage of the things that make the U.S. the best place in the world to do business, while at the same time pay less than their fair share by moving their corporate addresses overseas. That desertion is unfair, unpatriotic, and has got to change.

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This material [the article above] was created by the Center for American Progress Action Fund. It was created for the Progress Report, the daily e-mail publication of the Center for American Progress Action Fund. Click here to subscribe.

TPP: OF and FOR the sole benefit of Corporations—Definitely a Violation of the Public’s Trust

The Trans-Pacific Partnership (TPP)  is facing increasing scrutiny for the extreme secrecy surrounding negotiations around this sweeping new trade deal that could rewrite OUR nation’s laws on everything from healthcare and internet freedom, to food safety and the financial markets. The latest negotiations over the TPP were recently held behind closed doors in Lima, Peru, but the Obama administration has rejected calls to release the current text. Even members of Congress have complained about being shut out of the negotiation process.  Regardless of all the Congressional whining about not having sufficient time to read and understand what’s in a bill, let along a treaty, a bill to “fast-track” approval of  TPP.  Fast-tracking would allow President Obama to sign the treaty (which is massively worse than NAFTA on some seriously wicked steroids) and once signed, Congress would have limited opportunity for debate and would be required to hold an up/down vote within 90 days of the president signing the treaty.  Are you kidding me?  What are they smokin’ on the Hill?

Last year, a leaked chapter from the draft agreement outlined how the TPP would allow foreign corporations operating in the United States to appeal key regulations to an international tribunal. The body would have the power to override U.S. law and issue penalties for failure to comply with its rulings. We discuss the TPP with two guests: Celeste Drake, a trade policy specialist with the AFL-CIO; and Jim Shultz, executive director of the Democracy Center, which has just released a new report on how corporations use trade rules to seize resources and undermine democracy. “What is the biggest threat to the ability of corporations to go into a country and suck out the natural resources without any regard for the environment or labor standards? The threat is democracy,” Shultz says. “The threat is that citizens will be annoying and get in the way and demand that their governments take action. So what corporations need is to become more powerful than sovereign states. And the way they become more powerful is by tangling sovereign states in a web of these trade agreements.”

Drake adds: “We question the wisdom of pursuing the TPP in the first place. We do have, for better or for worse, the World Trade Organization which has lowered tariffs around the world and has allowed us to increase our exports as Mr. Froman was explaining in his speech. So what the TPP is about is all these other things around the tariffs, so it is about the investor state, dispute tribunals, it’s about harmonizing rules for food safety, it’s about harmonizing rules for intellectual property, a lot of rules that if citizens aren’t really participating in the formation of those rules, they’re not necessarily going to work out to the benefit of working people and American citizens. So we’re very active in following the negotiations and advocating for better rules that will help workers, real farmers, small businesses, because our past trade agreements starting with NAFTA and on down the line have basically been big packages that benefit the 1 percent and if anybody else benefits it’s really only by accident and not really by design.”

You will not see a more honest assessment of the threat to democracy posed by TPP than on DemocracyNow:

Fact Sheet: The President’s Plan to Make America a Magnet for Jobs by Investing in Manufacturing

President Obama is committed to making America a magnet for jobs and manufacturing so we continue to build things the rest of the world buys. After shedding jobs for more than 10 years, our manufacturers have added about 500,000 over the past three. Manufacturing production has grown since the end of the recession at its fastest pace in over a decade.

The President’s plan builds on that momentum by investing in American manufacturing. The President has outlined a concrete agenda to train American workers for high-tech manufacturing jobs, end tax breaks to ship jobs overseas and make the U.S. more competitive, bring jobs back, and level the playing field for our workers by opening new markets for American-made products.

  • Partnering with businesses and communities to invest in American-made technologies and American workers through a network of new Manufacturing Innovation Institutes: The President has proposed a one-time $1 billion investment to create a network of 15 manufacturing innovation institutes across the country, and urges Congress to act on this proposal. But to make progress right away, he is also acting through executive authority to launch three new institutes, which are partnerships among business, universities and community colleges, and government, to develop and build manufacturing technologies and capabilities that will help U.S.-based manufacturers and workers create good jobs.
  • Ending tax breaks to ship jobs overseas and making the U.S. more competitive: To support our manufacturers and encourage companies to invest in the U.S., the President has proposed to reform our business tax code, lowering the rate for manufacturers to 25 percent, expanding and making permanent the research and development tax credit, and putting in place a global minimum tax to prevent a race to the bottom in corporate tax rates.
  • Bringing Jobs Back: The President has proposed a new partnership with communities to attract manufacturers and their supply chains, especially to hard hit manufacturing towns. The President is also proposing to expand SelectUSA, a program designed to partner with our governors and mayors to bring in business investment from around the world, ensuring that America can compete globally and bring jobs and investment to our shores.
  • Leveling the playing field and opening markets for American-made products: In addition to the President’s efforts to double exports, including through new steps to open markets in Asia and Europe to American-made goods, the President will continue to enforce trade laws to protect American workers from unfair trade practices and strengthen the Interagency Trade Enforcement Center launched last year.

The President’s Commitment to Revitalize American Manufacturing and Bring Jobs Back

In his State of the Union, the President outlined a comprehensive agenda to attract more jobs to our shores. As part of this effort, he is committed to investing in U.S. manufacturing:

Partnering with businesses and communities to invest in American-made technologies and American workers

  • Transforming communities across the country into global centers of advanced manufacturing: To support investment in U.S. manufacturers’ competitiveness and accelerate innovation in manufacturing, the President is proposing a one-time, $1 billion investment to launch a network of 15 manufacturing innovation institutes across the country. Leveraging the strengths of a particular region, each institute will bring together companies, universities and community colleges, and government to co-invest in the development of world-leading manufacturing technologies and capabilities that U.S.-based manufacturers can apply in production. In August 2012, the Administration launched a pilot institute in Youngstown, Ohio with a $45 million funding commitment from five Federal agencies, led by the Department of Defense. The winning partnership of firms and universities from Ohio, Pennsylvania, and West Virginia was one of twelve teams that applied.
    • While the President will continue to push Congress to act on his broader proposal, he will take executive action to launch three new manufacturing innovation institutes in 2013: To build on the success of a pilot institute, the President announced a plan to launch three new manufacturing innovation institutes this year, a co-investment between Federal agencies, led by the Departments of Defense and Energy, and the private sector, with an initial focus on manufacturing technologies that also address critical national security and energy needs.
  • Creating a Community College to Career Fund: Co-administered by the Department of Labor and the Department of Education, this Fund will help forge new partnerships between community colleges and businesses to train two million workers for good-paying jobs in high-growth and high-demand industries, including advanced manufacturing. These investments will give more community colleges the resources they need to become community career centers where people learn skills that local manufacturers are looking for now, and ensure that employers can find the skilled workers they need and workers are gaining credentials to build strong careers.

Ending Tax Breaks to Ship Jobs Overseas and Making the U.S. more competitive

  • Making the U.S. more competitive for manufacturing by reforming our tax code: To encourage innovation and investment in the U.S. as part of the President’s broader commitment to business tax reform, the President is proposing to lower tax rates for manufacturers to 25 percent, expand and make permanent the research and development tax credit, put in place an “offshoring tax” that would set a minimum tax on offshore earnings to prevent a race to the bottom in corporate tax rates, and extend and enhance key incentives to invest in U.S. clean energy through a permanent, refundable production tax credit and a reauthorization of the Advanced Energy Manufacturing Tax Credit that provides an incentive for clean energy manufacturing at home.
  • Strengthening manufacturing supply chains through the Manufacturing Extension Partnership: The Department of Commerce’s Manufacturing Extension Partnership (MEP) provides a range of business services to small manufacturers and is enhancing the program to help companies focus on technology transition which requires deep supply chain expertise. The President’s Budget will propose a $25 million increase to launch Manufacturing Technology Acceleration Centers (MTACs), which will be industry-specific centers that can serve as a coordination point within key supply chains. The Administration is also announcing plans to pilot two new centers in 2013 using existing resources.

Bringing Jobs Back

  • Investing in manufacturing communities and bringing jobs back: Today, we are better positioned to attract new manufacturing investment in the U.S. and bring jobs back. But some communities are still hard-hit by the recession, particularly after closure of factories in places like Detroit, Michigan and Rochester, New York. The President is announcing new steps to partner with and help strengthen communities, including:
    • Launching an “Investing in Manufacturing Communities Partnership”: The President is directing Federal agencies to provide coordinated assistance to manufacturing communities through a new partnership designed to strengthen communities’ ability to attract investment. To support the Partnership, the President’s Budget will propose $113 million to provide targeted financial assistance for about five manufacturing communities while leveraging non-Federal funds on a 2 to 1 matching basis to co-invest in state of the art infrastructure projects and research facilities. These efforts will aim to attract manufacturers and their supply chain of local parts innovators, producers, and distributors, creating new jobs and strengthening the local economy. In addition, the Partnership, through multiple Federal agencies, will provide technical support to redevelop manufacturing communities that have had major plant closings, in partnership with local leaders, workers, and businesses.
    • Expanding Federal efforts to attract investment to the U.S.: In 2011, the President launched SelectUSA at the Department of Commerce, creating the first Federal effort to actively attract business investment in the United States. To help our governors and mayors compete with foreign countries, the President will propose in his Budget to significantly expand SelectUSA. The Administration will host a SelectUSA Investment Summit this year, matching businesses from around the world with local leaders to attract jobs and investment to our shores.
    • Proposing a Manufacturing Communities Tax Credit: The President is proposing incentives for communities facing concentrated job losses – particularly hard-hit manufacturing communities – to help attract new investment and jobs. The incentives will help prevent the downward spiral that can occur following mass layoff events.

Leveling the playing field and opening markets for American-made products

  • Boosting U.S. exports: The President is committed to doubling American exports and has taken steps to expand market access for American-made products through trade agreements with South Korea, Columbia, and Panama. To boost exports, the President will launch talks on a comprehensive trade agreement with the European Union with the goal of promoting free and fair trade across the Atlantic to support millions of good-paying American jobs, and will complete the Trans-Pacific Partnership.
  • Strengthening our capabilities to enforce trade laws and support American workers: The President has aggressively enforced trade rules to ensure that American workers are competing on a level playing field with firms from around the world, doubling the rate of WTO challenges against China compared to the previous Administration, and applying the “Section 421” against China to address a surge in Chinese tires. Last year, the President launched an Interagency Trade Enforcement Center (ITEC) with resources devoted exclusively to ensuring our trading partners are playing by the rules, and he is calling for dedicated funds beyond existing resources to provide the support needed by ITEC to ensure American workers are competing on a level playing field .
  • Ensuring U.S. leadership in clean energy and advanced vehicle manufacturing: Building on the President’s historic investments in clean energy and the fuel efficiency standards put in place through 2025, the Obama Administration has proposed a comprehensive approach to advanced vehicle manufacturing, including incentives for consumers and businesses to lower the cost of advanced vehicles, investments in partnership with communities to address the local barriers to deployment of advanced vehicles at critical mass, and increased investments in advanced vehicle technologies through the Department of Energy’s EV Everywhere grand challenge. The President will also continue to call on Congress to reauthorize the successful and oversubscribed 48C Advanced Energy Manufacturing Tax Credit.
  • Supporting innovative, advanced manufacturing technologies through increased Federal R&D: The President’s Budget will propose increases in key advanced manufacturing R&D programs across Federal agencies. Investments include supporting innovative manufacturing processes that dramatically reduce energy use and strengthening investments in platform technologies like nano-manufacturing, bio-manufacturing, robotics through the National Robotics Initiative, advanced materials through the Materials Genome Initiative, and defense technologies to fundamentally change the way we build things and dramatically reduce the time from design to production.

Mining Gold, Undermining Democracy

Neither foreign investors nor unelected tribunals deserve the power to trump democratically elected leaders.

By Robin Broad and John Cavanagh

John CavanaghRobin BroadA tribunal in Washington, D.C. that nobody elected recently issued a verdict that potentially hinders the democratic rights of millions of people. Its three members ruled that a foreign company may continue to sue El Salvador for not letting the company mine gold there. The impoverished Central American country could potentially be forced to pay a Canadian mining company called Pacific Rim $77 million or more in damages. This anti-democratic ruling has ominous implications for all of us.

We visited El Salvador last year to learn more about this landmark case. A wide vein of gold lies alongside the northern portions of a large river that flows down the country’s middle. This river provides water for more than half its population. The gold remained relatively undisturbed until about a decade ago, when foreign companies began to apply for mining permits.

Farmers and others told us that they were initially open to gold mining, thinking it would bring jobs to ease the area’s deep poverty. But as they learned more about the toxic chemicals used to separate gold from the surrounding ore and about the massive amounts of water used in the process, they began to organize a movement that opposed mining. Their simple cry: “We can live without gold, but we can’t live without water.”

By 2007, polls showed that close to two-thirds of Salvadorans opposed gold mining. In 2009, Salvadorans elected a president who promised he wouldn’t issue any new mining permits during his five-year term. He has kept this pledge.

But Pacific Rim didn’t sit idly by as democracy worked its way from El Salvador’s northern communities to its national government. The company sought a mining license. When the government didn’t approve its environmental impact assessment, the Canadian company resorted to lobbying Salvadoran officials. And, when its lobbying failed, Pacific Rim lodged a complaint against El Salvador at the International Center for the Settlement of Investment Disputes in Washington under a U.S.-initiated trade agreement and a little-known investment law in El Salvador.

Laws and trade agreements like these grant corporations the right to sue governments over actions — including health, safety, and environmental regulations — that reduce the value of the corporation’s investment.

To the surprise of many observers, the tribunal ruled on June 1 that Pacific Rim can proceed with the lawsuit against El Salvador. Even if the cash-strapped Salvadoran government wins in the end, it will likely have to shell out millions on legal fees to defend an action taken after lengthy democratic deliberations. If it loses in the tribunal’s next ruling, it will cost even more.

Laws and trade agreements that allow corporations to sue governments should worry us all. No international tribunal should have the right to punish countries for laws or measures approved through a democratic process, be it in the United States, El Salvador, or anywhere else. President Barack Obama said this himself in 2008 when he promised to limit the ability of corporations to use trade agreements to sue over public-interest regulations.

Alison McKellar/Flickr

Yet the Obama administration is currently negotiating a Trans-Pacific Partnership with several countries. And it’s pushing for provisions that would allow companies to sue governments under this trade pact. But an expanding coalition of labor, environmental, religious, and other groups opposes giving Big Business this privilege. A similar coalition in Australia, another country negotiating this trade deal, has convinced its government to oppose such corporate “rights.” The Trans-Pacific Partnership may well prove an opportunity for this outrageous assault on democracy to be defeated.

Democracy belongs to the people. Those of us standing up to defend democracy and counter corporate abuse should strongly oppose any new “rights” for corporations being written into new trade pacts as we try to overturn the existing ones.

El Salvador’s government has the right to act upon the will of its people — and should be expected to do so. Neither foreign investors nor unelected tribunals deserve the power to trump democratically elected leaders.


Distributed via OtherWords (OtherWords.org)


Robin Broad is a professor at American University’s School of International Service, and John Cavanagh directs the Institute for Policy Studies. www.ips-dc.org