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Stories tagged with “Corporate Ethics

Economy

Federal Board Agrees With Workers That Target Used Illegal Intimidation During Union Drive

A judge from the National Labor Relations Board has overturned a union election at a Target store in New York in which workers ostensibly voted against becoming the first of the retail giant’s locations to organize. The judge ordered Target, which is notorious for its anti-labor practices, to hold a new election after agreeing with the United Food and Commercial Workers, who had accused the company of intimidating workers ahead of the election, Bloomberg Businessweek reports:

The decision comes almost a year after The United Food and Commercial Workers Union Local 1500 contested the 137-85 vote against unionization in June 2011. It argued that Target illegally intimidated workers for months leading up to the vote. Target denied the allegations. [...]

Target completely poisoned the democratic process from day one,” said Patrick Purcell, assistant to the president of the UFCW Local 1500 in an interview with The Associated Press. “And now a judge agreed with everything we said.”

UFCW workers complained of intimidation immediately after the vote last year, and in November, the NLRB found additional evidence that Target officials illegally threatened to close the store if workers organized. It also found that Target supervisors “interrogated workers about their union activity,” complains the judge apparently found to be true.

In March, Target announced that it was temporarily close the store for six months for renovations, a move workers alleged was in retaliation for their organization efforts (1,100 Target stores are undergoing renovations nationwide, but most will remain open throughout the process). According to workers who filed the complaint, those who were the most vocal in their union support were deemed ineligible for transfers to other stores or for re-hire once the store re-opened, and they were given paltry severance packages to boot.

Target, however, says it “respectfully disagrees” with the decision and that its actions leading up to the election were “fair and legal.”

Economy

Report: American Corporations Are Adding More Jobs Overseas Than They Are At Home

With the nation’s unemployment rate still above eight percent, millions of Americans are looking for work, and the country’s biggest corporations are hiring. According to a new report from the Wall Street Journal, however, many of those corporations are adding jobs overseas at a faster pace than they are at home. Even worse, others are cutting their domestic workforces while adding jobs in other countries at a rapid pace:

Those companies, which include Wal-Mart Stores Inc., WMT +2.70% International Paper Co., Honeywell International Inc. and United Parcel Service Inc., boosted their employment at home by 3.1%, or 113,000 jobs, between 2009 and 2011, the same rate of increase as the nation’s other employers. But they also added more than 333,000 jobs in their far-flung—and faster-growing— foreign operations.

The companies included in the analysis were the largest of those that disclose their U.S. and non-U.S. employment in annual securities filings. All of them have at least 50,000 employees. Collectively, they employed roughly 6.4 million workers world-wide last year, up 7.7% from two years earlier. Over the same period, the total number of U.S. jobs increased 3.1%, according to the Labor Department.

Many of the companies are adding jobs in the U.S. but adding even more overseas — reversing a trend from a decade ago in which they were outsourcing American jobs to other countries. But some companies, like Wal-Mart, have boosted overseas employment while maintaining flat job growth in the U.S., and others, like UPS, have slashed jobs at home even while adding them in other countries:

A similar Wall Street Journal report last April found that America’s largest multinational corporations outsourced more than 2.4 million jobs over the last decade, even as they cut their overall workforces by 2.9 million.

President Obama has proposed a tax credit to encourage businesses to bring jobs from overseas back to the United States in order to relieve high unemployment and boost economic growth. Republicans and corporations, meanwhile, have blamed outsourcing on high taxes, even though corporations pay less in America than they would in most of the developed world.

Economy

Whistleblower Reveals Widespread Bribery By Walmart In Mexico

In this Sunday’s New York Times, the paper revealed an explosive story of high-level corruption at Walmart, aided by a whistleblower’s account of how the retail giant bribed its way to market dominance in Mexico. But unsurprisingly, the Sunday talk shows ignored the scandal entirely.

One former executive told the Times about how Walmart employees brought envelopes of cash to government officials in Mexico in order to boost the company’s expansion:

The Times examination included more than 15 hours of interviews with the former executive, Sergio Cicero Zapata, who resigned from Wal-Mart de Mexico in 2004 after nearly a decade in the company’s real estate department.

In the interviews, Mr. Cicero recounted how he had helped organize years of payoffs. He described personally dispatching two trusted outside lawyers to deliver envelopes of cash to government officials. They targeted mayors and city council members, obscure urban planners, low-level bureaucrats who issued permits — anyone with the power to thwart Wal-Mart’s growth. The bribes, he said, bought zoning approvals, reductions in environmental impact fees and the allegiance of neighborhood leaders.

Maritza Munich, former general counsel of Wamart International, also resigned in 2006, after pushing Walmart executives to complete an investigation into the accounts of bribery. Walmart, however, quashed the investigation. The acts of bribery could be violations of the Foreign Corrupt Practices Act, which makes it a crime for American corporations to bribe foreign officials. The Department of Justice is responsible for investigating potential violations of the act.

Walmart responded to the story with a lengthy statement, saying “the investigation is ongoing and we don’t have a full explanation of what happened. It would be inappropriate for us to comment further on the specific allegations until we have finished the investigation.” Walmart International has previously faced criticism for its treatment of workers and mislabeling of products.

Economy

Every Small Business In America Would Have To Pay $2,116 To Make Up Revenue Lost To Corporate Tax Havens

Photo by Flickr user Joseph Seal

This week, Citizens for Tax Justice released a report showing that 26 major American corporations haven’t paid federal corporate income tax for the last four years. But that is just the tip of the iceberg when it comes to corporate tax avoidance.

In fact, the use of offshore tax havens by corporations costs the government $60 billion annually. Such tax dodging gives multinational corporations a leg up on smaller firms that can’t avoid their tax bills, whether its through higher taxes or fewer services. According to a new report from U.S. PIRG, the cost of corporate tax havens amounts to $2,116 for every small business in America:

Instead of competing on a level playing field, small businesses and those without offshore tax havens must pick up the extra tax tab and compete against the artificially lower costs of multinational companies using tax havens.

To illustrate that burden, this paper looks at how much more the average small business tax bill would need to be to cover the $60 billion in federal revenues estimated lost each year from multinational corporations using offshore tax havens. We define a small business as one with less than 100 employees, using Census Bureau data on the number of such businesses. Based on the number of small businesses in the United States, each would need to pay an additional $2,116 in taxes to shoulder this burden.

“When corporations shirk their tax burden by shifting profits legitimately made in the U.S. to offshore tax havens like the Caymans, the rest of us must pick up the tab through either cuts to public spending priorities, higher taxes, or more debt,” said U.S. PIRG’s Dan Smith, a co-author of the report. A poll commissioned by the American Sustainable Business Council, the Main Street Alliance, and the Small Business Majority — organizations seeking to level the playing field between small and large businesses — found that more than 90 percent of small business owners believe that corporate tax havens are a problem, while “three-quarters of respondents agree that their small business is harmed when loopholes allow big corporations to avoid taxes.”

President Obama has been trying, since he came into office, to crack down on some of the offshore tax havens utilized by corporations, but has been stopped by conservatives and corporate lobbying every time. Instead, Republicans have designed a “small business tax cut” that would actually further enrich hedge fund managers, sports teams, and millionaires.

Economy

Paying Your Boss: How States Are Letting Corporations Pocket Their Workers’ Tax Payments

According to a new report by Good Jobs First, an organization that promotes accountability in economic development, a growing number of companies are collecting their workers’ income tax payments and keeping them, with the approval of state governments. Instead of having their taxes go to pay for public services like schools or roads, these workers are, quite literally, handing their tax payments to their bosses:

For some people, the personal income taxes they see deducted from their paychecks aren’t supporting public services. Indeed, this is true for workers at more than 2,700 companies in 16 states.

Nearly $700 million is getting diverted each year. And it is very unlikely that the affected workers are aware, given that no state requires that the diversion be disclosed on pay stubs.

Where is the money going? To the employers of those workers. A growing number of states are diverting revenue traditionally devoted to funding essential government services to pay for lavish subsidy awards to corporations for job creation or sometimes simply job retention. The practice of redirecting large portions of the state personal income tax (PIT) withholding deducted from paychecks means many workers are, in effect, paying taxes to their boss.

Some states, such as Kentucy and Missouri, allow companies participating in certain programs to simply keep their own workers’ tax payments, never remitting them to the state. Others, such as New Jersey and North Carolina, hand the tax payments over to the state and then receive a check later.

As Reuters’ David Cay Johnston noted, allowing companies to keep their employees’ tax payments is a simple way for politicians to hand out corporate goodies without having the government itself write a check. “These deals typify corporate socialism, in which business gains are privatized and costs socialized,” he wrote. And the programs often turn into boondoggles, with states not delivering on the jobs they promised in return for pocketing their employee’s taxes.

As we’ve noted time and again, providing corporations with subsidies in order to entice them into creating jobs is a failed strategy. The fact that companies are being allowed to directly pocket their own workers taxes is just adding insult to injury.

Economy

Corporations Use Private Jets, Security Systems To Give CEOs Massive Tax Breaks

For the last four years, 26 major U.S. corporations have made billions in profits but paid nothing in federal income taxes. But corporations aren’t just dodging taxes on their own behalf, they’re helping their chief executives do it too.

Major corporations like Ford, Halliburton, Kraft, and others either require or recommend that their CEOs travel on private jets, for both business and personal travel, for “security reasons.” Some corporations also pay for home security systems, 24-hour surveillance, chauffeurs, and other perks, all in the name of safety. But as New York Times DealBook columnist Steven M. Davidoff notes, the CEOs aren’t really in imminent danger. Instead, paying for security and private travel “is a common corporate tax trick“:

It’s a different case for personal travel. In those cases, chief executives are required to pay income tax on the imputed portion of the flight — that is, the amount the company paid for the flight. So a chief executive who is a frequent flier can rack up a rather large tax bill.

Luckily, the tax code offers executives a break.

If an outside security consultant determines that executives need a private jet and other services for their safety, the Internal Revenue Service cuts corporate chieftains a break. In such cases, the chief executive will pay a reduced tax bill or sometimes no tax at all.

Corporate taxes in the U.S. have fallen to a 40-year low, while the wealthiest Americans are paying historically low tax rates. And yet, both groups are finding new ways to pay even less in taxes, even if it means making actual taxpayers subsidize their travel and “security.”

Alyssa

‘Community’ Open Thread: Corporations Are People, My Friend

This post contains spoilers through the March 29 episode of Community.

It was, of course, tragic that Community went on a long hiatus if only for the show’s prospects and for our collective enjoyment. But who knew that the show’s long absence from airways denied us a hilarious sitcom riff on Mitt Romney’s declaration in Iowa last summer that “corporations are people, my friend.” Because it’s hard to imagine a show other than Community where an actual personification of a corporation—in this case, a hunky blond named Subway who wants to open a non-profit shelter for disabled animals, reads 1984, and pushes all of Britta Perry’s buttons—would walk jauntily onto the scene. Especially at a time when the show’s deepest friendship is in the middle of a reassessment.

Subway’s appearance on the show is a continuation of the plot that began with Community‘s return: Shirley wanted to own a sandwich shop, but the Dean circumvented her by welcoming a Subway franchise onto campus. Subway (the person) is a way of getting around the Greendale bylaw that requires any on-campus business to be 51-percent student owned. It’s terrific not only for Community to get a chance to make a bid for some of the product placement money liberated by the end of Chuck‘s run on NBC, but for Britta to get a truly entertaining love interest who wasn’t part of the main cast. Britta gets a bad rap for being a buzz-kill, but I appreciate the show acknowledging that it may only be within the disastrous dynamics of the study group that she’s a bore, and there’s a place where her passion is a better fit, and where there’s someone who shares her values and is available for gratifyingly kinky sex.

In keeping with, though in a much more veiled key, I thought it was a nice touch that, as Troy and Abed are facing serious problems in their friendship, Air Conditioning Repair School Dean Laybourne showed up to drive a wedge between them along the lines of their aspirations. Community‘s done a nice job of suggesting that blue-collar jobs can be not just legitimately rewarding but a calling and an art as high as filmmaking. And Laybourne sought to divide his prized target student from his best friends by playing with that idea. To Troy, he implies that Inspector Spacetime and Abed don’t have sufficient respect for Constable Reggie and Troy, that they devalue the work and creativity of the world’s journeymen. And Laybourne exploited Abed’s elitism and nerdery, suggesting that Constable Reggie—and Troy—are a drag on Inspector Spacetime’s wild adventurism and creative spirit.

And if this does escalate to full-scale war, I’m Team Troy and Team Blanket Fort. As much as it’s probably time for Abed to learn some realistic life skills and to experience some failures, it’s also probably time for Troy, now that his friendship with Abed has liberated him from jerky jockdom, to figure out an identity that’s more authentically his own.

Economy

T-Mobile To Lay Off Thousands Of Workers After Taking Millions In Taxpayer Subsidies For Job Creation

Last week, telecom giant T-Mobile announced that it plans to close seven of its 24 U.S. call centers. About 3,300 employees work at those centers, and the company is planning to lay off at least 1,900 of them, while offering transfers to some (though it doesn’t yet know how many). Adding insult to injury, four of the centers that T-Mobile is closing received taxpayer subsidies worth millions of dollars, according to Good Jobs First:

– Frisco, TX: $3.7 million

– Brownsville, TX: $5.3 million

– Lenexa, KS: $3.9 million

– Redmond, OR: $1.3 million

These subsidies took several forms, including sales tax exemptions, salary supplements for workers, and job training money. “T-Mobile USA’s decision to close seven call centers, employing 3,300 workers, is a bad one. It harms workers and communities, and in several locations, abuses taxpayers who provided funds to the company in exchange for employment and economic development,” said the Communication Workers of America.

T-Mobile is certainly not the first corporation to receive subsidies and then cut a community loose. Mega-manufacturer Boeing took a heap of taxpayer money and received significant local help in winning a $35 billion contract before bailing on Wichita, Kansas. Sears will lay off 100 workers after receiving millions from Illinois (and can lay off another 1,750, thanks to the terrible terms to which Illinois agreed).

Fortunately, several of the subsidies received by T-Mobile came with clawback provisions, so officials in the states affected at least stand a chance of recouping some of the money they’ve lost. “The officials in those states should investigate the possibility of recapturing as much of those millions of dollars that were paid out as possible,” said Phillip Mattera, Research Director of Good Jobs First. “The taxpayers didn’t get all that they paid for. They lost those millions of dollars in revenues in the expectation that permanent jobs would be created.”

Economy

Workers Charge Target With Closing Store, Laying Off Workers For Trying To Unionize

Last summer, employees at the Target store in Valley Stream, New York came together to organize a union to address a number of issues they were facing, in particular the startling reality that “many of them earned too little to support a family or afford health insurance, forcing some to rely on food stamps and Medicaid for their children.” The Valley Stream store would have been the first Target in the country to unionize.

For years, Target has enjoyed a reputation as the antithesis of Walmart. But like its big box counterpart, Target is notoriously anti-union — the company reportedly shows new hires a video warning against unionizing, threatening them with fewer promotions and less flexible hours if they were to organize.

When the workers in Valley Stream came forward with the idea of organizing under United Food and Commercial Workers (UFCW) Local 1500, Target ramped up its efforts to stifle the movement. Ultimately, the workers’ vote to unionize failed, due in large part to intimidation tactics employed by the company to strong-arm them into caving. In fact, Target is currently under investigation by the National Labor Relations Board for illegally interrogating and threatening Valley Stream employees.

Yet, Target’s campaign against the workers in Valley Stream presses forward. Last week, company management informed employees at the Valley Stream location that the store will be temporarily closed for six-months for renovations. Employees feel the move is in retaliation for their attempts to unionize; while the Valley Stream location is one of 1,100 other stores currently undergoing renovations, the majority of those locations are slated to remain open throughout.

And while “eligible employees” have been invited to transfer to other Target branches or take an unpaid leave of absence until renovations have been completed, “the most vocal pro-union employees have not been deemed eligible to return:”

Sonia Williams, one of the most active pro-union employees who has frequently spoken to the media, including The Huffington Post, found out last week that she wasn’t eligible to transfer or apply for unpaid leave, she said. She was offered, however, a severance package for her nearly 10 years of work that amounts, after taxes, to about $800, Williams said.

Management told her she was “on final warning,” but did not explain why, Williams said, noting that she had received no prior written or oral notice. Management had met with her once previously about one matter but her manager told her it had been resolved, she said.

UFCW Local 1500 is seeking to block the closure and possibly overturn the results of last year’s election with the aim of conducting a new vote. “This is just as horrible as it gets,” said Pat Purcell, assistant to the president of Local 1500. “It’s right out of the Walmart playbook. That store is being closed in retaliation for union activities of workers.” A Target spokeswoman, on the other hand, maintains that the plans for remodeling have been in the works for “a year and a half or two,” conveniently predating the union’s campaign.

Fatima Najiy

Economy

Sears Lavishes CEO With Pay And Perks, While Laying Off Workers And Bilking Taxpayers

In the wake of the Great Recession, wages have stagnated while CEO pay has soared. Case in point, Sears last year paid its chief executive millions of dollars, and piled on hundreds of thousands of dollars in assorted perks, including charter airfare and covering some of his income tax bill:

Sears Holdings Corp. paid its chief executive $9.9 million last year, including incentives the ailing department store operator offered to lure the former technology executive, according to an Associated Press analysis of a regulatory filing.

Lou D’Ambrosio, who became Sears’ CEO in February 2011, received a signing bonus of $150,000 plus a base salary of $930,769 and $8 million in stock awards, according to a filing the company made Friday with the Securities and Exchange Commission.

D’Ambrosio got another $852,037 in perks, including $803,856 for charter and commercial airfare and ground transportation to commute from greater Philadelphia, where he lives, to Hoffman Estates, Ill., where Sears is based. And he received $29,985 for temporary housing in Hoffman Estates. Sears paid part of the income taxes due on those benefits.

Of course, it’s the company’s prerogative to pay its CEO this much. But at the same time that it was doling out perks to D’Ambrosio, Sears was planning to lay off thousands of workers. Sears has announced that it will be closing 173 stores this year — up from previous estimates of 120 stores — which means that nearly 14,000 workers could be seeing a pink slip.

Adding insult to injury, Sears was also pocketing millions of dollars in tax incentives from the state of Illinois, even as it fired Illinois workers. In fact, under the terrible deal that the state signed with the retail giant, Sears can lay off another 1,750 Illinois workers without losing its taxpayer largesse. But perhaps bilking a state of its needed tax revenue is what Sears pays D’Ambrosio the big bucks for.

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