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Pensions

  • Pensions in jeopardy
    • Shift from Defined Benefit Plans to Defined Contribution Plans
    • Reductions in / elimination of employer contributions

The “Global Economy”

  • 53 of the world’s 100 largest economies are private corporations; 47 are countries
    • GM was, until recently, larger than Denmark, Thailand, Hong Kong, and Turkey
    • Apple is larger than Poland
    • Wal-Mart is larger than Israel and Greece
    • AT&T is larger than Malaysia and Ireland

The “Global Economy”

  • Until 2007, the combined revenues of GM and Ford exceed the combined GDP of all sub-Saharan Africa
  • Combined sales of the top 6 Japanese companies are nearly equivalent to the combined GDP of all of South America

Corporations

  • Almost 6 million corporations
    • ¼ non-profits
  • 500 companies control 70% of world trade
  • 148 corporations control 40% of world’s wealth (most are financial institutions)

Corporations

  • “The [only] social responsibility of business is to increase its profits.”
  • - Milton Friedman

Corporations

  • “Corporations [have] no moral conscience. [They] are designed by law, to be concerned only for their stockholders, and not, say, what are sometimes called their stakeholders, like the community or the work force…”
  • -Noam Chomsky

Corporations

  • Internalize profits
  • Externalize health and environmental costs
  • Confidential legal settlements keep important public health and safety information secret
    • May delay governmental intervention, cause unnecessary morbidity and mortality

Corporate Taxation

  • Nearly 1/3 of all large corporations (assets > $250 million or annual sales > $50 million) pay no annual income tax

Corporate Taxation

  • Big business claims that U.S. corporations pay the highest corporate taxes in the world (35%)
  • FALSE: The rate actually paid, after foreign governments get their cuts, money sent to foreign subsidiaries, loopholes, etc. = 2.3% (U.S. Treasury Department); 17% for corporations with assets over $10 million
  • Corporate taxes are at their lowest level since WW II

Corporate Taxation

  • 2004: Bush administration offered temporary tax holiday on foreign earnings
    • $300 billion in profit repatriated
      • 92% went to dividend payouts, stock buybacks, and corporate coffers
      • Only 8% went to R and D, new factories, and hiring

Reasons for Inadequate Corporate Taxation

  • Tax breaks, corporate welfare, corporation-friendly tax laws, loopholes, transferring assets overseas
  • Cities and states offer incentives to companies to locate in their communities, in exchange for the promise of jobs
    • Companies often leave when a better offer becomes available

Reasons for Inadequate Corporate Taxation

  • Incentives:
    • Cash grants and loans
    • Sales tax breaks
    • Income tax credits and exemptions
    • Free services
    • Property tax abatements
    • Highway and school construction
  • $80 billion in 2011
    • Income tax breaks - $18 billion
    • Sales tax relief - $52 billion

Reasons for Inadequate Corporate Taxation

  • Cheating and under-payment common
    • Auditing program understaffed and underfunded
    • 1/3 high school students admits to stealing something from a store in the past year

Reasons for Inadequate Corporate Taxation

  • At least 367 (73%) of the Fortune 500 companies operate one or more subsidiaries (at least 10,366 subsidiaries) in tax haven countries
  • Lost annual tax revenue:
    • $250 billion worldwide
    • $100 billion in US

Reasons for Inadequate Corporate Taxation

  • Offshore tax havens and shell companies shelter capital (for corporations, organized crime, and human-rights-abusing despots)
    • Up to $32 trillion estimated (1/3 of all global wealth)
    • 72% of U.S. corporate cash holdings (2016)
    • $11.5 trillion in individual wealth
      • U.S. GDP = $16 trillion
    • Cayman Islands:
      • Population 150,000
      • Home to 92,000 corporations

Ugland House, Cayman Islands 18,000 Corporations Registered Here

Job Creators?

Corporate Crime

  • Each year in America, we lose;
    • $3.8 billion to burglary and robbery
    • $100-$400 billion to health care fraud; $40 billion to auto repair fraud, $15 billion to securities fraud, etc.; the S and L fraud cost between $300 billion and $500 billion

Corporate Crime

  • Fines meager, often considered a cost of doing business
  • Corporate crime under-prosecuted, prosecutors under-funded
  • Hide no Harm Act (pending in Senate) would hold corporate officers criminally accountable if they knowingly concealed serious dangers that led to consumer or worker deaths or injuries

Corporate Crime

  • 25% decrease in federal prosecutions of white collar crime, including corporate crime, since 1999
  • Increase in non-prosecution and deferred-prosecution agreements
  • 3/5 U.S. companies settling corporate crime cases illegally deduct some or all of the settlement to the IRS

Corporate Crime

  • Companies mandating forced arbitration
    • SCOTUS allows corporate binding arbitration contracts, limiting class action lawsuits (AT&T v. Concepcion, 2011)
  • Arbitration Fairness Act would counteract ruling
  • Arbitrators private business people, thus hope to please corporate entities that retain them


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