Tuesday, August 12, 2008

Transfer Pricing: One Way Multi-National Corporations Avoid Taxes

According to the Government Accountability Office (GAO), about 28% of large US corporations paid no taxes in 2005. The Washington Post's David Cho reports that Senator "Dorgan and Sen. Carl M. Levin (D-Mich.) requested the report out of concern that some corporations were using "transfer pricing" to reduce their tax bills. The practice allows multi-national companies to transfer goods and assets between internal divisions so they can record income in a jurisdiction with low tax rates."

The SF Chronicle (Carolyn Said) added:

"Adam Hughes, director of federal fiscal policy at OMB Watch, a nonpartisan government accountability watchdog, explained how transfer pricing works."

"A company will incorporate offshore where there are no taxes," he said. "That (parent) company charges the U.S. company lots of money for things like the trademark for the company logo. The U.S. company says, 'I made $50 million, but my stupid parent company charged me $50 million for the logo.' The U.S. company gets to deduct the royalty fees as an expense and move profits to the parent company offshore in a tax-free haven."

"Although the US has one of the highest corporate tax rates in the industrialized world, in actuality, it has one of the lowest rates. "From 2000 to 2005, revenue from federal and state corporate income tax averaged 2.2 percent of the U.S. GDP, compared to an average of 3.4 percent in 30 of its trading-partner countries, according to the Treasury Department."

Wednesday, August 6, 2008

Automating and Covering Up White Collar Crime

Yesterday's papers reported that an international ring of computer hackers, including three US citizens, had been charged for stealing 40 million credit card numbers. The Economic Times reports that "the men targeted at least nine major US retail corporations, including "Marshalls and TJ Maxx; BJ's Wholesale Club; Barnes and Noble; Sports Authority; Office Max and DSW shoe stores." NPR reports that retail stores failed to notify consumers, which violates consumer laws. These crimes undermine confidence in the economy, particularly the Internet. NPR also reports that cyber crime now rivals drug crimes in lucrativeness.

Tuesday, August 5, 2008

Disinformation Leading to War: "The Way of the World"

There were two news stories today that open the window slightly on "the way of the world." The first story, from Politico and the book "The Way of the World: A Story of Truth and Hope in an Age of Extremism" is from Pulitizer Prize author Ron Suskind. Suskind reports that a high-ranking official in the White House ordered a forged letter to justify going to war with Iraq in 2003. Suskind adds that the US secretly resettled the Iraqi intelligence chief, Tahir Jalil Habbush al-Tikriti, to Jordan and paid him $5 million in order to deceive the world about weapons of mass destruction.

On NPR (8-7-08), Suskind states that he has tape recorded his sources and is ready to appear before any Senate or House hearings about these crimes of disinformation.

Suskind has also posted a transcript of his interview with a high level CIA contractor Rob Richer.

The second story: In attempting to find someone to prosecute in the anthrax scare,the Federal Bureau of Investigations coerced a man to provide information on his father, a US Army scientist. The Washington post reports that the FBI offered the man $2.5 million and the sports car of his choice. Although the FBI could not prove the father's role in the anthrax scare, their pressure ended in the scientist's suicide.




Monday, August 4, 2008

The Neoliberal Business Cycle

F. William Engdahl (The Online Journal, 8-5-2008) indicates that the banking situation is much worse than most people imagine, with CitiGroup, once the world's largest bank, having to take billions in funds from Dubai. In addition auto sales showed huge declines last month (Ford down 28%, GM down 18%, Toyota down 21%). Even worse, the Labor Department's U6 unemployment rate has risen to 9.6% and, according to Shadowstats, the actual unemployment rate is estimated at 13.7%.

Of course these "problems" are actually how neoliberal economics functions: to consolidate power and resources and to keep the working class in a position of weakness. This list of US retail shop closings indicates another "problem" with the US economy.

Ann Taylor, closing 117 stores nationwide.

Eddie Bauer to close more stores after closing 27 stores in the first quarter.

Cache, a women’s retailer, is closing 20 to 23 stores this year.

Lane Bryant, Fashion Bug, Catherines, closing 150 stores nationwide

Talbots, J. Jill, closing stores. Talbots will close all 78 of its kids and men’s stores plus another 22 underperforming stores. The 22 stores will be a mix of Talbots women’s and J. Jill.

Gap Inc., closing 85 stores

Foot Locker to close 140 stores

Wickes Furniture is going out of business and closing all of its stores. The 37-year-old retailer that targets middle-income customers, filed for bankruptcy protection last month.

Levitz, the furniture retailer, announced it was going out of business and closing all 76 of its stores in December. The retailer dates back to 1910.

Zales, Piercing Pagoda planned to close 82 stores by July 31 followed by closing another 23 underperforming stores.

Disney Store owner has the right to close 98 stores.

Home Depot, closing 15 stores amid a slumping US economy and housing market. The move will affect 1,300 employees. It is the first time the world’s largest home improvement store chain has ever closed a flagship store.


Macy’s, nine stores closed

Movie Gallery, video rental company, plans to close 400 of 3,500 Movie Gallery and Hollywood Video stores in addition to the 520 locations the video rental chain closed last fall as part of bankruptcy.

Pacific Sunwear, 153 Demo stores closing.

Pep Boys, 33 stores of auto parts supplier closing.

Sprint Nextel, 125 retail locations to close with 4,000 employees following 5,000 layoffs last year.

J. C. Penney, Lowe’s and Office Depot are all scaling back

Ethan Allen Interiors, plans to close 12 of 300 stores to cut costs.

Wilsons the Leather Experts,, closing 158 stores.

Bombay Company to close all 384 U.S.-based Bombay Company stores.

KB Toys, closing 356 stores around the United States as part of its bankruptcy reorganization.

Dillard’s Inc. will close another six stores this year.