Day: May 5, 2009

Is There A Strong Wind Blowing Offshore?

God knows that I have been an ouspoken critic of some of the Obama programs, not because I dislike them but rather I feel that more needs to be done, especially for the middle class.  But I have to give him his props where they are due.

President Barack Obama’s move to curb overseas tax havens and job out-sourcing was his first major proposal in what promises to be a broad overhaul of the U.S. tax system.

“It’s a downpayment on the larger tax reform we need to make our tax system simpler and fairer and more efficient for individuals and corporations,” Obama said making his tax-have an announcement on Monday.

These tax shelters are giving US companies a way to avoid almost ALL their tax debt.

Tax shelters are countries with corporate tax rates much lower than those of the U.S., which make them popular for U.S. businesses looking to lower their tax bills.

Whereas the U.S. corporate tax rate is 35 percent, Iceland’s is 15 percent and Switzerland’s is just 8.5 percent. Many countries in the Caribbean don’t tax corporations at all. Companies shift profits to subsidiaries in such low-tax countries to avoid paying the Internal Revenue Service.

One of the most popular tactics involves setting up multiple overseas subsidiaries to move profits from high-tax countries to low-tax countries. Under so-called “check the box” rules, companies can register their subsidiaries as separate units that aren’t subject to U.S. tax rules.

In one scenario, a U.S. company could use operations in the Virgin Islands to avoid paying taxes on investments in Sweden. The company does this by setting up three new corporations: a subsidiary in Sweden, a holding company in the Virgin Islands as well as another subsidiary owned by the holding company.

A January report by congressional investigators found that 83 of the 100 largest publicly traded companies in the U.S. operate subsidiaries in tax havens, like the British Virgin Islands and Bermuda, where there is no corporate tax.Use of subsidiaries varies greatly among big corporations. Banking giant Citigroup has more than 4,000 subsidiaries, according to the Government Accountability Office, a nonpartisan investigative arm of Congress.

I will be watching and ranting about how effect the President will be on this important piece of legislature.

Did Corporate Perks Go Away?

Remember back about a month ago when bashing corporate CEOs was all the rage?  But that is silent now, the populist backlash has been silenced by a flu bug and a political deserter.

You do realize that the problem has not gone away?

U.S. companies remain generous with the perks they give to CEOs, including some that are unfathomable to the average American worker: chauffeured cars, bodyguards, club memberships and free travel in company jets.

The median value of these and similar perks rose nearly 7 percent in 2008, according to an Associated Press analysis of regulatory filings from 309 companies in the Standard & Poor’s 500. The increase came even as overall CEO compensation fell 7 percent to $7.6 million.

Perks rose despite a public backlash against such benefits, which many investors and lawmakers deem excessive. They argue well-paid executives should cover the costs of life insurance, charitable donations and financial planning themselves, especially as companies struggle with falling profits, slumping stock prices and massive job cuts.

But plenty of companies are keeping the spigots open. Occidental Petroleum CEO Ray Irani, for example, received $400,000 worth of financial planning, part of a $30 million pay package in 2008. To put it another way, that $400,000 in financial planning is more than the total annual household income of the vast majority of Americans. Occidental spokesman Richard Kline said the comprehensive financial planning helps Irani to “keep his complete attention on the company’s business.”

The median value of perks — which is the midpoint at which half of the executives received more and half less — was $170,501 in 2008, up from $159,586 the year before. Only three CEOs in the AP survey received no perks in 2008.

And perks made up a bigger percentage of total compensation, rising to 2.25 percent in 2008, up slightly from 1.95 percent, the AP’s analysis found.

So you see the perks are still being paid to the CEOs, just now it is done more quiet than before and they try to get it in under the populist radar.  THe workers are losing their jobs at an alarming rate and the corporate leaders are getting their perks at an even more alarming rate.

Taxpayers need to pay attention, their money is being misused and they are getting nothing out of their generosity.  Let the CEOs eat cake and the real people that should be benefiting from the government’s philanthropy.

A Free Press Is Not As Free

One of our most important freedoms is the freedom of the press.  Some say that a free press is a indicator of a true democratic society.  Just how is the world doing with the free press thing?  “Global declines in press freedom” persisted last year, with setbacks highlighted in Israel, Italy, Taiwan, Hong Kong and elsewhere across the world, an annual survey said Friday.

Freedom House, a nongovernmental organization that supports democracy and freedom of the media, said in its annual press freedom survey that “negative trends” outweighed “positive movements in every region, particularly in the former Soviet Union, the Middle East and North Africa.”

“This marked the seventh straight year of overall deterioration. Improvements in a small number of countries — including bright spots in parts of South Asia and Africa — were overshadowed by a continued, relentless assault on independent news media by a wide range of actions, in both authoritarian states and countries with very open media environments.”

It seems that most of the slide is from countries that are tied closely with the US, so why cannot we use our influence to make it a freer press society?