Congressmen Still Refuse to Play Straight on Corporatocracy

Tradeoffs with Global Kleptocrats Not a People's Solution in Time of Crisis

By Stephen Taufen

Earlier this week, President Barrack Obama told a joint session of Congress that he wanted to end tax breaks for companies shipping jobs overseas and to raise taxes on those making more than $250,000 per tax year. One of our Nation's most irresponsible yet key Congressmen - Charlie Rangel, a tax cheat - continues to framework along party lines, instead of directly facing the problems with courage and integrity. Sadly, Obama also appeared to be ready for the wrong type of compromises with Republicans.

An article soon appeared in WebCPA (Feb. 24) titled, "Obama Wants to End Tax Loopholes" It said, "During his Fiscal Responsibility Summit on Monday, President Barack Obama discussed the possibility of lowering the statutory corporate tax rate while also closing tax loopholes that allow companies to reduce taxes. In an exchange with Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, Obama and Rangel talked about the tradeoffs that would need to be made if that happened."

Rangel, who is under severe scrutiny for local and state violations on his New York City apartments, campaign and charity funds, and for federal tax evasion concerning non-declared earnings on his Dominican Republic villa, kept to his twisted ways. "If you're looking for a fight, a partisan fight, every loophole you close is a tax increase, and we have to get over that to make certain that the vast majority of businesses recognize it's in their best interests to do the right thing." WebCPA added, "Obama responded by pointing to the Tax Reform Act of 1986. 'You were here in '86 ... It's been done before. We might be able to get it done this time.'"

No Charlie, every loophole we close will be a wrongdoing resolved. It is the corporatocracy who will have to get over it, when both sides of the aisles stop playing politics and start living up to their Constitutional responsibilities. Corporations aren't thinking persons who will recognize "the right thing" - and nothing short of putting their executives (and you) in jail will convince them that their best interests are to represent this nation first, before self-enrichment. With a final cliché: And throw away the key!

Transfer Pricing a Growing Problem:

WebCPA put it this way, "Among the loopholes that Obama may close are those that allow companies to take advantage of transfer pricing to shift revenue to foreign subsidiaries. However, companies have lobbied heavily to keep those tax provisions in place and made contributions to members of Congress in hopes of preserving them. In his opening remarks at the summit, Obama said, 'We'll end the tax breaks for companies shipping jobs overseas, and we'll stop the fraud and abuse in our Medicare program.' He also said he plans to reinstate the pay-as-you-go rules of the 1990s, which require Congress to make revenue-raising offsets for any tax breaks."

CPAs are fully aware of the problems in their "profession" and are having a tough time cleaning up their own backyard. They know that behind every good transnational corporate crook is probably another "certified public accomplice" shaving off his fees, too. The practice of abusive transfer pricing (ATP) - crossborder profit laundering using every trick in 'the books' - has become a primary source of income for many global-practice CPAs today. ATP remains the largest tax and trade topic in the world, and (thankfully) has risen to new heights of awareness under the tensions of the current global financial crisis.

It's about time that the CPA profession itself begins to lead the way in fighting back against the kleptocrat's hired accomplices within their ranks. States must strengthen their accountancy laws and remove public licenses from, even jail, the misbehavers. But what's lacking is Congress openly discussing this modern truth, and taking strong steps to police the global accomplices.

Truth is, while many corporations were doing illicit accounting and robbing the USA of tens of billions annually in federal taxes - through ATP: laundering profits to affiliates offshore instead of leaving them in the USA (through a combination of milking off revenues and loading-in expenses, false royalties and arbitrary charges to fix the books and avoid taxes) - there were tens of thousands of other corporations obeying the laws and paying federal taxes. They had to compete against the crooks every year.

Now the crooks want to framework this as some kind of tax increase, and have another round of tax reductions made to simply gift to them billions in undue compensation. But they've already used those tax rip-offs to rob the Treasury bank by paying tax consultants and lobbyists to keep their games alive. And they are especially keen to use illicit funds to fight all insiders and whistleblowers who would make the public and authorities aware, and try to stop those crimes. It's no different than a bank robber using stolen funds to hire a hit man to stop their pursuers.

Not helping those who warn us about these tax crimes is similar to ignoring the many who warned us of past terrorist acts, and exposed lies that led us to war. And Charlie Rangel is using the House ethics committee today to hide, just as the entire House continues to use its powers to hide Congressman Jefferson's sins - because they didn't want more federal agents poking around their Rayburn building offices.

Hidden Congressional Failures Will Be Revealed:

Worse yet was Congress helping the global corporatocracy in 2004. The Bush Administration signed Congress' sorely-named "American Jobs Creation Act" that allowed global corporate crooks to repatriate hundreds of billions of dollars held overseas upon which they had not paid US taxes. It allowed them a one-year grace period to do so, and to only pay a reduced tax of just under 6%. When was the last time you got to pay one-sixth of what you owed in back taxes (and exempt from penalties and interest, too) at the stroke of a president's pen?

Ask yourself, where are the promised jobs that those AJCA funds flowing back into the USA were supposed to create through domestic-reinvestment plans? Why did Congress allow those funds to replenish pension funds that executives had already raided, and would raid again? And more tellingly, why did the media fail to fully and frequently tell the public about the AJCA schemes?

Citizens have to start refusing the small stipends of tax credits they grant you so that the big boys can take magnitudes more. Former Treasury Secretary William Simon wrote decades ago in "A Time for Truth" that the best way to de-power the Congress and change their ways was to refuse to take federal money - their earmarks and minor payoffs, and force them back to the business of the Nation. Regain the pride of citizenship, the good feeling of paying your share for this great nation's infrastructure and social safety nets that protect us all. Tell your representatives you won't stand for their failures any more, nor take their plug nickels and accept the token shortfalls of their false cares. Tell them you know you are being taxed to death in the most vicious way - through the money supply and inflation. Tell them to resolve the real problems - like the Corporatocracy.

Every step along the way, the so-called major solutions enacted simply proved to be schemes from which the People saw little benefit, while the Corporatocracy (executives, Wall Street, large stockholders) bathed in new riches, while real wages plummeted. Not unlike the current bailout. When Citibank used $100,000 of its bailout money to host Congressmen and other players on a Caribbean island, what does that tell you about all of them? But citizen awareness is beginning to rise. And millions more citizens will be at home from layoffs, but they'll hit the Internet and learn the truths that they were too busy to deal with while deep in the rat race. Let new freedoms ring.

One might begin to ask, how many years away are we from when the USA , similar to the Weimar Republic , may one day have to simply turn off its inflationary dollar printing presses (now hidden in the electronics of ones-and-zeroes) and admit to its historical downfall? Word to the terrorists - don't bother to attack our fiber optic lines, computer and telecom centers, as our own systems are taking us down from within the nation's banking system.

Rangel's own tax evasions and brand of "tradeoff" thinking makes a mockery out of all the good taxpaying citizens, all the fine folks at the criminal division of the IRS and in law enforcement everywhere, and those taxpayers who have played by the rules. For Rangel to framework this as a partisan problem even worsens the insult, as it was crooks on both sides of the political aisle, and business executives who cared not about party or nation who robbed us. Every year, for decades, through ATP alone they have stolen over $40 billion or more; and have kept trillions of dollars offshore - dollars that could have gone to work in the USA . It isn't just cheap labor motivating their global relocations, it is more likely the opportunities to practice ATP and launder their profits through product transfers among their global affiliates that truly determines their structure and strategy.

Obama needs to issue the orders for the Justice Department to put Rangel (and his friends) under full federal criminal prosecution (believe me, the evidence exists) and sanction House leaders for their failures to act, not simply push Charlie behind the scenes. We cannot afford these compromises.

Congressional representatives and senators of both stripes were and are still taking the shave-offs, kickbacks, and bribes that are euphemistically called campaign contributions, and lobbyists stand outside the bank, taking off their shavings from the robbers on the way in and out the door (revolving or otherwise). What a mutual admiration society they have all become.

There is no just "closing a loophole" in the cases of abusive transfer pricing - those were crimes committed, not loopholes that already were a sore spot for those who didn't get their advantages. It is simply a case of making everyone obey the existing and/or same set of tax codes. Of course, there are mechanisms that are technically 'loopholes' that need repair too.

But the chief tax crook from New York, Mr. Rangel (who would already be in prison if House ethics leaders would do their job) is also likely posturing here about the IRS "advanced pricing agreement" (APA) process of making advance agreements about cost and revenue formulas that corporations (behind taxpayer nondisclosure doors) negotiate with the IRS. But never forget that while the marginal tax rate at the high end for corporations may be 34% or so, the average corporate tax rate paid has plummeted over the years to merely 8% to 11% or so. And over 50,000 major firms pay ZERO federal income tax each year, despite their collective revenues in the trillion plus arena.

However, the People and media never get in behind those closed doors with the corporations to hear how they entrench low wages and low resource-provider prices (as they do to fishermen in Alaska on ex-vessel pricing) into their formulaic APAs, guaranteeing commoners share little of the global pie. In Alaska fisheries, this has helped to entrench price-fixing, as books become permanently falsified but "legitimized" by the agreements, as Treasury agents are at the disadvantage when dealing with the industry and its certified accomplices. Congress knows all about these dilemmas, and it can enact proper transparency and accountability laws to correct these flaws at any time. It is lobbying money (largely derived from the stolen funds) that prevents this.

Far too many evaders are foreign-controlled corporations. They take advantage of our costly infrastructure (highways, health systems etc.) for their subsidiaries (and employees) in the USA , but pay little to no taxes here to support what are the basic costs of having a civil society, and a social responsibility. But domestic firms are just as troubling.

Citizens Pay Twice for Corporate Sins:

In round two of the bailout, Chrysler Corporation - if given taxpayer funds - may have to pay over $1 billion of your cash to Canada , because CRY-sler had ripped off Ottawa coffers by abusive Transfer Pricing. A few years ago, Ford Motors had also ripped off billions of dollars from Ford Canada and from stockholders, costing Ottawa national pension fund investors billions, in an ATP scheme that transferred profits out of Canada (product laundered through transfer prices of trucks) and lowered stock returns there. Countless other examples are available.

The problems are rooted in global tax strategies, and corporations are set up with hundreds of global subsidiaries to enact such practices. As Harvard economist and expert in national competitiveness, Michael Porter said, their "Structure implies [their] strategy": and it is not good for the common citizen.

Our health care systems (and Canada 's too) have been ripped off by Merck and GlaxoSmithKline to the tune of dozens of billions of dollars. When caught, they only repaid the IRS $2.3 billion and $3.1 billion in tax, penalties and interest in negotiated "gift shop" settlements - a fraction of their real rip-offs. Moreover, that doesn't correct the falsely-priced drugs and ingredients that then become a $100 billion excessive cost on insurance companies, Medicare etc. who end up paying far too much for what are far cheaper drugs. Microsoft's use of Irish affiliates and ATP methods costs Europe billions, as well. Obama's campaign put fear in the Irish government that he'd correct these wrongs. I'm betting that it's going to take a miracle for Obama to succeed in leading the way among nations in finally addressing ATP problems. But the reasons to do so are everywhere. Africa suffers an estimated $150 billion annual loss due to ATP in trade and its political corruption, according to recent studies.

Congress won't enact national health care and at the same time fails to stop the profit laundering crimes, because it denies the IRS a full budget and permission to pursue all of the corporate cheats. Congress knows this has the adverse effect of the IRS pursuing the smaller taxpayers who will pay up, because they did not steal billions or millions which they can use to hire tax advisors and certified public accomplices to lie to the IRS and minimize any recoveries. And few go to jail for massive crimes.

Congress can learn to talk and act straight to Americans (USA, Canada and Latin America) and work together with our regional trade partners to end these Crimes Of Corporatocracy (Sen. Byron Dorgan called these schemes "Global Shell Games"), or we as nations can fall deeper into the pit of class separation between the super rich and the poor. If we remain on this course, like Germany in the 1920's, many fear that we may also soon fall prey to open "class hostility" in our streets.

As citizen-taxpayers, it is our duty - each and every one of us - to fight this Corporatocracy-caused destruction of our states, our nations. The Kleptocrats have stolen our Congress from us, stolen our jobs, stolen our wages, and ultimately they want to steal our Freedom and Liberty . They act like it is just a game of business. It is not, it is open class warfare. And when foreign firms do it to our nation, as Groundswell continually encounters in fisheries, it is nothing short of economic warfare.

From where we sit, it's time to repatriate Dutch Harbor from Japan's transnationalists (who used ATP to rip-off billions, so far) and declare our seafood to be strategic national resources. Instead, Congress allowed Senator Ted Stevens and Commerce to award them processor quota shares in perpetuity, converting public commons of the USA into "asset commoditized" rights to steal even more from the USA . And again, bankers are right in the mix as they provide the over-capitalizing funds to allow rounds of players to dash for the door in Madoff style pyramid fashion as multimillionaires. Bankers would now control our federal fisheries management system!

Obama proclaimed "Change" and this week he outlined again a general framework for a major part of that change. But if our representatives cannot find the courage to back him, and exercise the integrity necessary to restore our Nation to one of, by and for the People, then they will bring about the very source of their own demise. Our children cannot afford its price. We cannot afford its price. If they cannot deal straight with us, we must elect other representatives who will, before they push our populace to the streets.

Charlie Rangel and all the other crooks in Congress must go to jail. All of these emperors have no clothes, and now even lack the decency to cover up their blatant crimes. They continue to stand before us with their doublespeak, euphemisms and propaganda instead. This Kleptocracy must end now. Then, maybe President Obama will have some in Congress who actually help him do what's best for us - the huddled but readying masses.

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