Apple – like hundreds of other high tech and pharmaceutical companies that enjoy enormous profits from royalties or licensing agreements – is able to attribute these profits to offshore subsidiaries located in low-tax havens like Bermuda or the Cayman Islands even when sales revenue and profits are earned primarily in the U.S.

Under current law, these companies continue to owe taxes to the U.S. Treasury on these overseas earnings, as technically, the taxes have only been deferred. But the taxes don’t come due until the profits are repatriated – that is, brought back to the U.S. parent company. A territorial tax system would let these companies repatriate profits without paying the U.S. taxes they owe.

Read more at US News.

Google, Amazon, Starbucks, every other major corporation, and every big Wall Street bank, are sheltering as much of their U.S. profits abroad as they can, while telling Washington that lower corporate taxes are necessary in order to keep the U.S. “competitive.”

Baloney. The fact is, global corporations have no allegiance to any country; their only objective is to make as much money as possible — and play off one country against another to keep their taxes down and subsidies up, thereby shifting more of the tax burden to ordinary people whose wages are already shrinking because companies are playing workers off against each other.

I’m in London for a few days, and all the talk here is about how Goldman Sachs just negotiated a sweetheart deal to settle a tax dispute with the British government; Google is manipulating its British sales to pay almost no taxes here by using its low-tax Ireland subsidiary (the chair of the Parliamentary committee investigating this has just called the do-no-evil firm “devious, calculating, and unethical”); Amazon has been found to route its British sales through a subsidiary in low-tax Luxembourg, and now receives more in subsidies from the British government than it pays here in taxes; Starbucks’ tax-avoidance strategy was so blatant British consumers began boycotting the firm until it reversed course.

Meanwhile, at a time when you’d expect nations to band together to gain bargaining power against global capital, the opposite is occurring: Xenophobia is breaking out all over.

Read more at Huffington Post

But it’s also a pretty good description of the current system of private regulation labeled “corporate social responsibility” that promises far more to factory workers around the world than it actually delivers.

In the wake of horrific workplace accidents, including a number of fires, in Bangladesh, attention turned to the behavior of brand-name companies, like celebrities being investigated after servants die at their mansion. No fingerprints on the murder weapon, just bits of paper documenting business connections that activists dug out of the rubble.

Next came much who-did-what-when analysis, including attention to local officials’ statements that Wal-Mart had worked to block a push for increased fire safety last year, in contrast to its more recent decision to increase safety inspections. Several European company commitments to push for improved safety standards could be counterposed with the Walt Disney Company’s decision to leave the country.

But while famous multinationals are vivid characters in the story, they aren’t determining the plot. Increasingly competitive globalization and increased emphasis on flexible, low-cost outsourcing limits their room for maneuver (though not their earnest efforts to improve their image).

Even companies with the best intentions can’t guarantee the well-being of workers in a slippery, writhing global supply chain, with layers of temporary subcontractors. As The Economist points out, the disaster in Dhaka makes it hard for any company to claim credibly that it can be sure that its products are “ethically sourced.”

Read more at New York Times

My organization, Citizens for Responsibility and Ethics in Washington, has regularly criticized the IRS for spending the past two elections sitting on its hands while dark-money groups, organized under Section 501(c)(4) of the tax code, spent millions of dollars contributed by anonymous donors to run vituperative, deceptive political ads. Under the law, 501(c)(4) status is reserved for groups promoting social welfare; it was never intended to apply to political groups.

Nevertheless, largely because of the disastrous 2010 Citizens United decision, the number of applications for 501(c)(4) status more than doubled from 2010 to 2012. The tea party became a political force during the same period. As a result, an overwhelming number of the new groups attempting to benefit from 501(c)(4) status supported Republican candidates and causes. While there are some 501(c)(4)s oriented toward Democrats, including Priorities USA, because of liberal opposition to dark-money groups, the vast majority are conservative.

Under these circumstances, it is understandable that IRS agents would have been concerned about whether many of these newly minted groups were in fact political parties and therefore not entitled to 501(c)(4) status. It is noteworthy that IRS officials made no effort to stymie the efforts of clearly conservative groups to register as 501(c)(4)s. One of the largest, the American Action Network, headed by former Republican Sen. Norm Coleman of Minnesota, sped through the approval process in less than six weeks, and the Commission on Hope, Growth and Opportunity — which had a strong presence in 2010 but is now defunct — had its application approved in less than a month.

Read more at Roll Call

Currently, the businesses best able to garner generous grants and tax incentives by promising to create jobs within specific political boundaries are large, mobile corporations that can pit communities against one another, demanding ever-higher subsidies.

Greg LeRoy wrote about the problem at length in “The Great American Jobs Scam.” In his 2010 book, “Investment Incentives and the Global Competition for Capital,” Kenneth Thomas estimated the total cost to American taxpayers at about $70 billion a year.

Read more at the New York Times.

To those outside the arcane world of intellectual-property rights, the answer seems obvious: No. You own your genes. A company might own, at most, the intellectual property underlying its genetic test; and, because the research and development needed to develop the test may have cost a considerable amount, the firm might rightly charge for administering it.

Comments But a Utah-based company, Myriad Genetics, claims more than that. It claims to own the rights to any test for the presence of the two critical genes associated with breast cancer – and has ruthlessly enforced that right, though their test is inferior to one that Yale University was willing to provide at much lower cost. The consequences have been tragic: Thorough, affordable testing that identifies high-risk patients saves lives. Blocking such testing costs lives. Myriad is a true example of an American corporation for which profit trumps all other values, including the value of human life itself.

Read more at Project Syndicate

Scientific measures of public attitudes toward business are hard to come by. But a survey conducted in 2010 by the Pew Research Center for the People survey found that 71 percent of Americans believed small business was a positive influence on the way things are going in the country, far higher than the 25 percent who believed the same of large corporations.

Indeed, small businesses enjoyed higher positive influence ratings than either churches and religious organizations (at 63 percent) or colleges and universities (at 61 percent), not to mention the federal government — which is tied with large corporations at 25 percent.

Small wonder that Republicans want to claim the small business mantle for their own. Senator Ted Cruz of Texas, a Tea Party enthusiast, insists that calling Republicans the party of big business is the “biggest lie in politics.”

Read more at New York Times

http://neweconomicperspectives.org/2013/04/what-if-george-akerlof-had-written-about-lethal-lemons.html#more-5309

http://neweconomicperspectives.org/2013/04/the-lethal-lemons-on-the-road-to-bangladesh.html

I have often explained that the most audacious CEOs running control frauds are able to change the external environment to increase their ability to defraud with impunity.  I noted in the first article in this series on the mass murder of Bangladeshi workers that when the CEOs directing the control frauds suborn politicians, regulators, and professionals the risk that these people will act improperly in other contexts rises.  I tied this to the loss of trust that George Akerlof discussed as one of the injuries that control fraud can cause in his article on a market for “lemons.”

I also stressed that many forms of control fraud are lethal.  White-collar criminologists have long warned that white-collar crimes sicken, maim, and kill more people than traditional blue-collar crimes.  (They also cause vast damage to the environment.)

Read more at The Real News

The technical term for the sort of power Walmart exercises is monopsony. This power is created when one company captures enough control over an entire market to dictate terms to its suppliers. The basic argument of these thinkers — which include columnist Thomas Friedman and the economist Jason Furman — is that Walmart’s immense “buying power” enables the company to drive down prices and impose efficiencies on the economy. Furman, now the Obama administration’s deputy director of the National Economic Council, once wrote that the benefits of Walmart’s power were “enormous.”

In his column for Foreign Policy (“Give Sam Walton the Nobel Prize,” May/June 2013), Charles Kenny not only joins this club, he does his comrades one better. According to Kenny, Walmart’s dictatorship over suppliers yields such grand benefits for the poor that we should export the company’s autocratic ways to the developing nations of the world. Kenny wraps his argument in lightness and cheek, even suggesting that Sam Walton, Walmart’s long dead founder, deserves a Nobel Prize. But given Walmart’s real and growing political sway in America and around the world, Kenny’s essay raises two interlinked questions that are deadly serious: Is such a radical departure from traditional market structures and market-based competition really the best way to develop the economies of poorer nations? And is such a model still the best way — if it ever was a good way — to run and develop the American economy? And, for that matter, our American democracy?

Read more at Foreign Policy.

But the argument that Obama made last night was not the traditional one. It was rather, an ambitious and strikingly brainy argument. It built on a growing body of economic evidence showing how a strong middle class and less income inequality aren’t just nice-sounding goals, but also the keystone for long-term economic growth in a developed economy.

Obama’s vision of how the economy works stands in stark opposition to Florida Sen. Mark Rubio, who argued that the opportunity to make it to the middle class comes from a free economy “where people can risk their own money to open a business,” he said. “And when they succeed, they hire more people, who in turn invest or spend the money they make, helping others start a business and create jobs.”

There is no question that a competitive economy needs an appetite for risk. But outside of the mantra of more tax cuts for those at the top and less “regulation” — a perennially vague enemy whose opponents rarely define it more specifically — he did not offer a strong argument on behalf of policies and rules that would make it more likely for people to identify and take risks that become thriving businesses. If business relies on customers above all, the primary concern for entrepreneurs should be the great stagnation of their most important customer base: the American middle class.

The president’s speech explicitly pointed to a variety of ways that government could encourage strong economic growth by supporting a strong middle class and how these investments would enable more risk-taking, support economic demand, and create profitable opportunities.

Let’s start with demand. The president argued that we should raise the minimum wage from $7.75 to $9.00 an hour because “for businesses across the country, it would mean customers with more money in their pockets.” There is a strong theoretical economic argument that higher minimum wages eliminate cheap work that might have been done below minimum wage. But the weight of economic evidence from decades of intensive study finds that raising the minimum wage doesn’t raise unemployment. Instead, the principle effect is to make low-income workers richer.

Read more at the Atlantic.

The world’s largest retail company (and second-largest business), having easily survived recent skirmishes with workers,shareholders and the law, just announced that it would virtually guarantee jobs to most recent American veterans, who currently suffer from higher-than-average unemployment rates.

In some ways, Walmart represents the archetype of modern capitalism. It is Tyrannosaurus rex. It pioneers cost-saving methods of global outsourcing and resistance to unionization. It leaps national borders in a single bound. It generates huge profits for its shareholders by delivering a gazillion goods to consumers around the world at prices that few other big-box stores – much less small retail businesses – match.

Many of its regular shoppers adore it. Many of its workers, on the other hand, feel underpaid and underappreciated, and have filed numerous suits, accusing it of violations of labor law, including failure to pay overtime,locking workers in stores overnight, union-busting and sex discrimination. The details of the company’s bribery of Mexican officials, in a successful effort to bypass community opposition to store construction in proximity to a historic site, proved particularly embarrassing to its shareholders.

Walmart has long had a love-hate relationship with the American public. But the hate has become more visible in recent years, and the company has made active efforts to abate it.

Read more at the New York Times.

According to the Labor Department, there were 7.5 million net jobs lost in the recession, and a gain of only 3.5 million net jobs so far in the recovery. We have 4 million fewer jobs now than five years ago, and a much larger labor force.

Consider the connection between these tepid job figures and the debate that still occupies center-stage in Washington — deficit reduction. Supposedly, businesses are not creating enough jobs because business leaders are anxious about the Federal debt.

But this turned out to be just about total baloney. During the months when the Congress and the press kept everyone on the edge of their seats wondering about the dreaded fiscal cliff, business behavior went on as normal — and a mediocre normal at that. The lousy rate of job creation hardly changed. Detroit enjoyed a good fourth quarter as very low-interest rates stimulated auto sales. Christmas sales were about what was predicted, as consumers turned to their credit cards.

To the extent that the economy has remained stuck in first gear, it has everything to do with high unemployment and lagging wages, and just about nothing to do with the fiscal cliff or worries about the debt ratio 20 years down the road.

The Volcker Rule was adopted as part of theDodd-Frank financial reform legislation in 2010. The legislative intent was, at the suggestion of Paul A. Volcker (the former chairman of the Federal Reserve Board of Governors), to limit the kinds of risk-taking that very large banks could undertake. In particular, the banks are supposed to be severely limited in terms of the proprietary bets that they can make, to lower the probability they can ruin themselves and inflict great damage on the rest of society. (For a primer and great insights, see this commentary by Alexis Goldstein, a leader of Occupy the S.E.C.)

Read the rest at The New York Times.

Big players in the debate have been pushing for this all along. Take, for example, the “Fix the Debt” campaign, which has recruited more than 90 CEOs as spokespeople and plastered web sites, newspapers, and even a Washington subway station with their ads. The campaign has identified a shift to a “territorial tax system,” which would permanently exempt U.S. corporations’ foreign income from U.S. taxes, as a “basic budget need.” Fedex CEO Fred Smith is one of the biggest fans of this particular corporate tax break. He enjoyed face time with President Obama during one of the umpteen rounds of deficit deal dialogues the White House has held with business leaders. (Pity the few Fortune 500 CEOs who haven’t yet received an invitation.) Smith later explained his idea for a compromise: accept tax increases for the rich in exchange for an offer to “lower corporate tax rates to a territorial tax system.”

Why would a wealthy guy like Smith be willing to barter away his personal tax breaks for this corporate perk? His argument is a patriotic one – that this reform would encourage corporations to bring their money back to America to invest and create jobs.

The trouble is, similar tax breaks on overseas earnings haven’t led to job creation in the past. In the two years after a 2004 “tax holiday” that offered a temporary discounted tax rate of 5.25 percent on repatriated overseas earnings, the Congressional Research Service found that 12 of the top recipients laid off more than 67,000 American workers.

What is certain is that a shift to a territorial system would be a boost to the bottom line of global companies like Fedex. According to their annual report, the company has accumulated $1 billion in offshore earnings.

Read the rest at The Hill.

At the same time, big corporations and the wealthy know how to get and keep tax cuts that are starving federal and state budgets of revenues needed to finance what our children need. Corporations systematically play off one state or city against another for tax concessions and subsidies to stay or move elsewhere, further shrinking revenues available for education, recreation, mental health, and family services.

It seems as if every major interest has political clout – except children. They can’t vote. They don’t make major campaign donations. They can’t hire fleets of lobbyists.

Yet they’re America’s future.

Read more at Salon.

Mr. Silvers is a member of the Public Company Accounting Oversight Board Standing Advisory Group, the Financial Accounting Standards Board User Advisory Council, the American Academy of Arts and Sciences Corporate Governance Task Force, the New York Stock Exchange’s Stock Options Voting Task Force and was a member of the Advisory Committee on Analyst Independence to the House Capital Markets Subcommittee. He is a member of the American Bar Association’s Subcommittee on International Corporate Governance. Mr. Silvers received his J.D. with honors from Harvard Law School. He received his M.B.A. with high honors from Harvard Business School and is a Baker Scholar. Mr. Silvers is a graduate of Harvard College, summa cum laude, and has studied history at Kings College, Cambridge University.

Dr. Roubini has extensive policy experience as well as broad academic credentials. From 1998 to 2000, he served as the senior economist for international affairs on the White House Council of Economic Advisors and then as the senior advisor to the undersecretary for international affairs at the U.S. Treasury Department, helping to resolve the Asian and global financial crises. The International Monetary Fund, World Bank and numerous other prominent public and private institutions have drawn upon his consulting expertise.

He has published over 70 theoretical, empirical and policy papers on international macroeconomic issues and coauthored the books “Political Cycles: Theory and Evidence” (MIT Press, 1997) and “Bailouts or Bail-ins? Responding to Financial Crises in Emerging Markets” (Institute for International Economics, 2004) and “Crisis Economics: A Crash Course in the Future of Finance” (Penguin Press, 2010).

Dr. Roubini’s views on global economic issues are widely cited by the media, and he is a frequent commentator on various business news programs. He has been the subject of extended profiles in the New York Times Magazine and other leading current-affairs publications. The Financial Times has provided extensive coverage of Dr. Roubini’s perspectives.