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Stories tagged with “Corporate Ethics

Economy

Facebook’s Initial Stock Offering Will Help It Dodge Corporate Income Taxes For Years

Back in 2008, Google seemed to have set the standard for tech corporation tax dodging, using complex accounting and subsidiaries in Ireland and Bermuda to drives its tax rate all the way down to 2.4 percent. But if all goes according to plan, Facebook will be able to use its initial public offering — via the stock options it gives its employees — to not only avoid paying corporate income tax for years, but to receive a $500 million refund from the federal government, as Citizens for Tax Justice explained:

Tax law says that if a corporation issues options for employees to buy the company’s stock in the future for its price when the option issued, then if the stock has gone up in value when employees exercise the options, the company gets to deduct the difference between what the employee bought it for and its market price.

When, as Facebook expects, the 187 million stock options are cashed in this year, Facebook will get $7.5 billion in tax deductions (which will reduce the company’s federal and state taxes by $3 billion). According to Facebook, these tax deductions should exceed the company’s U.S. taxable 2012 income and result in a net operating loss (NOL) that can then be carried back to the preceding two years to offset its past taxes, resulting in a refund of up to $500 million.

Facebook’s filing papers with the Securities and Exchange Commission confirm as much:

Option exercise activity would generate a corporate income tax deduction [that] exceeds our other U.S. taxable income [and] will result in a net operating loss (NOL) that can be carried back to the preceding two years to offset our taxable income for U.S. federal income tax purposes, as well as in some states, which would allow us to receive a refund of some of the corporate income taxes we paid in those years. Based on the assumptions above, we anticipate that this refund could be up to $500 million.

“Due to the stock option loophole, Facebook may not pay any corporate income taxes on its profits for a generation,” said Sen. Carl Levin (D-MI). “It isn’t right, and we can’t afford it.” The Treasury Department estimates that it loses about $2 billion per year due to companies using this stock option loophole to avoid taxes.

Politics

Portland, Maine City Council Votes To End ‘Corporate Personhood’

After more than four hours of testimony last night, the city council of Portland, Maine voted 6-2 to call on the state’s congressional delegation to support an amendment to the U.S. Constitution abolishing “corporate personhood.” Of course, Mitt Romney made headlines and raised eyebrows this summer when he told a town hall attendee that “corporations are people, my friends.”

The resolution was a response to the Supreme Court’s Citizens United ruling. While advocates acknowledged the council’s vote has no legal authority, they said it was nonetheless important symbolism:

I can’t think of a more important thing to talk about than democracy. It is being threatened,” said Eric Johnson, a small-business owner from Portland. “You need to help us be heard. There is no more important issue.”

Anna Trevorrow said, “It is absolutely the business of the City Council. The community has come together and asked you to make a statement.”

Mayor Michael Brennan, along with [Councilor David] Marshall and councilors Kevin Donoghue, John Anton, Jill Duson and Nicholas Mavodones, supported the resolution.

The measure’s sponsor said the Occupy Wall Street movement inspired him to submit the non-binding resolution. Maine’s two congressmen, Rep. Mike Michaud (D) and Chellie Pingree (D) have both been critical of the Citizens decision, as has Sen. Olympia Snowe (R-ME).

Los Angeles, New York City, and a handful of cities held similar votes last year.

Alyssa

‘Enlightened’ And The Challenges Of Corporate Responsibility And Non-Profit Work

Spurred on by Laura Dern’s Golden Globes win for her roles as Amy Jellicoe, I’ve been catching up on Enlightened. It’s a fascinating show, one of the more uncomfortable things I’ve ever watched in its combination of Amy’s intense selfishness and immaturity and New Age preachiness. But I’m also struck by how much it’s a story about what it means to work for a company you think is actively harming the world, and how difficult it is to do socially responsible work.

The company that Amy worked for before her breakdown, and that she finds herself attempting to reform, is literally called Abaddon, after the place of destruction in Jewish religious texts and the king of the Pit in Revelation. Amy hopes to implement a corporate responsibility program when she comes back to work after her stint in rehab, but instead finds herself in the basement, consigned to a program for people the company considers kooks, but who they can’t fire. When she tries to convince HR to give her a task force or let her act as a community liaison by giving the department head a printout of stories about Abaddon’s environmental and labor problems, the woman is actively frightened that talking about those issues will get them both fired. Amy’s former assistant shuts her down when Amy suggests that they could be getting into bed with a company responsible for industrial accidents in India. The inertia and terror are deep.

And when Amy tries to get a job with a non-profit, she’s devastated to learn that the salary on offer at a place where she thinks she’d fit in is $26,000, just $2,000 more than her bill from the rehab center. “I can’t live on $26,000 a year. I’m in debt, I’m living with my mother,” Amy cries to the man interviewing her for a job at a homeless shelter. “There are all these things I want to do. And I can’t. And it’s so frustrating.” Of course it is. And it’s a huge problem that we can’t make socially responsible and socially fulfilling work financially rewarding, much less viable, for people with debt and bills.

Alyssa

The Future Is Corporate

One thing I’ve always liked about the Alien franchise is that it’s part of that subgenre of science fiction that’s concerned with the rise of corporate power. The Mars novels may be my favorite example of this, but work in the space tends to assume that the future might not be so shiny and happy after all, and plots get kicked off not when utopia is shattered, but when something threatens to upend what fragile balance we’ve achieved. So I’m pretty curious to see if the research team in Prometheus, for which we finally, oh joy, have a trailer, turn out to be independent or corporate-funded. Skewing results for the sake of pleasing your backers could make for some really nice tension.

Update

Friend of the blog Paul Reda say the team is working for our old corporate pals from the earlier movies. In which case I already want a movie that’s about what Weyland-Yutani executives knew and when they knew it, and why they kept sending teams out to be eaten by space-monsters. It’s like a John Gisham novel for our grim corporate future!

Economy

Predatory Payday Lenders Compare Themselves To MLK And Civil Rights Marchers In Fight Against Regulations

Payday lending companies are combining their money in order to form a corporate front group to fight for the right to charge interest rates of 445 percent and more in the state of Missouri.

Payday loan interest rates in the Show Me State average nearly 60 percentage points higher than the rest of the nation, 445 percent to 391 percent. Fed up with the disastrous effect that such predatory lending is having on poorer Missourians, a group of citizens, religious groups and civic organizations are gathering signatures for a proposed November ballot initiative that would restrict payday lending interest rates in the state to 36 percent.

Payday lending companies, ruffled by the prospect of being able to charge a mere 36 percent interest rate, have teamed up to fight the initiative. Two weeks ago, a new group – Stand Up Missouri – emerged, purporting to represent “consumers, businesses, civic groups, and faith-based organizations.” However, a look at their finance records reveals that the group is funded – to the tune of $216,000 – by just seven payday lending corporations, including Tower Loan, Western Shamrock Corporation, and Brundage Management Company. The front group’s CEO and chairman, Tom Hudgins, is the vice president of Western Shamrock Corporation.

In its first two weeks of existence, Stand Up Missouri has already taken an Orwellian approach to the term “payday lending” – they prefer the phrase “traditional installment loan” – and invoked the Civil Rights Era to defend why payday lenders ought to be allowed to gouge consumers. An ad on their homepage currently explains to viewers how payday lenders are just like Dr. King and Civil Rights Era marchers:

AD: You had poor people who followed Dr. King and walked with him hundreds of miles because they believed in civil rights that much. In this day and time, when can we say we’ve seen something like that where people are willing to leave their job to support something that they believe in? We have that statement, “actions speak louder than words,” and that’s why I’m here. That’s why it was important for me to take time off to be here because I believe wholeheartedly in the company that believes in me.”

Stand Up Missouri joins another pro-payday lending group in the state called Missourians for Equal Credit Opportunity, which has used a loophole in campaign finance law to hide whoever or whatever corporation(s) gave $600,000 to combat the initiative.

It’s not difficult to see why payday lenders are fighting the consumer effort so vociferously. The St. Louis Post-Dispatch details just how ubiquitous payday lending has become in Missouri: “In 2010, there were about 1,040 payday loan stores in Missouri, according to the Missouri Division of Finance. Missouri is second only to Tennessee among its neighbors in the number of licensed payday lenders. Some 2.43 million payday loans were made in Missouri in 2010.”

The proposed 36 percent interest rate cap is also not without precedent. Until the mid-1990s, Missouri law restricted lenders to a 28 percent ceiling.

Update

Felix Salmon argues that Stand Up Missouri represents Consumer Installment Lenders rather than traditional payday lenders. The former doles out loans above $500, the latter below.

Media

Lowe’s Anti-Muslim Stance Prompts Calls For Boycott, Sparks Fury From Lawmakers

In a brazen act of cowardice, the home improvement giant Lowe’s buckled to the right-wing Florida Family Association’s (FFA) demand that it pulls ads from TLC’s reality show “All-American Muslim.” The company issued a generic policy statement that called the show a “lightning rod” for complaints, insisting all the while that, “We have a strong commitment to diversity and inclusion.”

Americans across the country are voicing their concerns with Lowe’s prejudice. Religious advocates and even entertainers including Kal Penn, Russell Simmons, and Mia Farrow are urging a boycott of the company. So incensed over Loew’s “un-American” and “naked religious bigotry,” California state Sen. Ted Lieu (D) is boycotting the company and is looking into (unlikely) legal ramifications of Lowe’s decision:

“Lowe’s is engaged in religious discrimination… it is utter nonsense, it is religious bigotry, and I’m just stunned that Lowe’s pulled their advertising,” he said. “Those views from the Florida Family Association are completely bigoted.” [...]

If the show was called All-American Asian, or All-American Jew or All-American Latino, don’t you think the outcry would be a lot different? For some reason, people seem to think that it’s okay to discriminate against Muslim-Americans, and I’m just trying to say, ‘no, it’s not,’” he said.

Other lawmakers, including Muslim pioneers, are equally disgusted with the company:

Rep. Keith Ellison (D-MN): One of two Muslim House representatives, Ellison blasted Lowe’s for choosing “to uphold the beliefs of a fringe hate group and not the creed of The First Amendment.” He added, “Corporate America needs to take a stand against these anti-Muslim fringe groups and stand up for what is right because this is what it means to be an America.”

Rep. Andre Carson (D-IN): Also a Muslim representative, Carson said Lowe’s decision “runs contrary to our American ideal of combating expressions of hate and division while defending those oppressed by intolerance.”

Rep. John Conyers (D-MI): A strong advocate against religious discrimination and the representative of the town in which the series is filmed, Conyers demanded the Lowe’s “unequivocally apologize to the Muslim and Arab American community and strongly repudiate the intolerant messages espoused by anti-Muslim groups.”

State Rep. Rashida Tlaib (D-MI): The first Muslim elected to the Michigan legislature, Tlaib wrote Lowe’s CEO Robert Niblock, “I told them I was extremely disappointed that you give credibility to these hate groups.”

Hip Hop mogul (and Buddhist) Russell Simmons purchased ad time during this week’s episode of “All-American Muslim” to counter Loew’s. In doing so, ad time for this Sunday’s show is “now sold out.” The computer hacking group Anonymous also contributed to the effort by “working through 15 layers of security to breach its website,” forcing FFA to shut it down Monday night.

Update

The Muslim Public Affairs Council has published a full list of companies that FFA claims it persuaded to pull ads from the show. The list includes Airborne Vitamin, Bare Escentuals, Campbell’s Soup, Capital One, Cotton, Inc., Dell computers, Estee Lauder, Gap, Good Year, Hershey Kisses, Ikea, JC Penny, Kayak.com, McDonald’s, Nationwide Insurance, Old Navy, Pier One, Radio Shack, Sears, T-Mobil, Volkswagen, Wal-Mart, and Whirlpool. Click here to see the full list.

Update

Today on the House floor, Connecticut Rep. Chris Murphy (D) joined these lawmakers in their outrage. Noting that FFA’s “anti-Muslim bigotry is not new,” he blasted Loew’s, a “fortune 100 company,” for “endorsing this nonsense.” “This is a major American company rubberstamping basic, foundational bigotry,” he said. Watch it:

Politics

Lowe’s And Other Companies Reportedly Pull Ads From Muslim Reality TV Show After Pressure

The TLC reality TV show All-American Muslim chronicles the lives of a group of Muslims in Dearborn, Michigan. The show has been well-received for its fair and realistic portrayal of the Muslim American experience in the United States. Watch a trailer for the show here.

But a reality TV show that lets Americans relate to the lives of Muslims in the United States is an offensive idea to those who want to demonize Islam. The Florida Family Association (FFA) launched a campaign earlier this year to get companies to pull their advertising from the program. FFA claims that 65 of the 67 companies targeted have done this, including home improvement giant Lowe’s and megabank Bank of America:

The Florida Family Association, a Tampa Bay group, has led a campaign urging companies to pull ads on “All-American Muslim.” The FFA contends that 65 of 67 companies it has targeted have pulled their ads, including Bank of America, the Campbell Soup Co., Dell, Estee Lauder, General Motors, Goodyear, Green Mountain Coffee, McDonalds, Sears, and Wal-Mart.

One of the companies that FFA claims pulled commercials, Amway, told the Washington Post that such reports were “misleading” and that it has done no such thing. Lowe’s told the paper that it did indeed pull advertising. “We understand the program raised concerns, complaints, or issues from multiple sides of the viewer spectrum, which we found after doing research of news articles and blogs covering the show,” said Katie Cody, a spokeswoman for Lowe’s.

The Islamic Circle of North America is urging concerned citizens to call Lowe’s and protest their withdrawal of advertising: “We urge the American Muslim community and our friends, family, neighbors and all people of conscience to call Lowe’s CEO Robert Niblock at (704) 758-2084 or Executive Support Mr. Andrew Kilby at (866) 900-4650 and respectfully complain about this decision.”

Update

Lowe’s issued this statement on Facebook confirming that it pulled the ads: “Lowe’s has received a significant amount of communication on this program, from every perspective possible. Individuals and groups have strong political and societal views on this topic, and this program became a lighting rod for many of those views. As a result we did pull our advertising on this program.”

Update

The Florida Family Association, the right-wing group responsible for manufacturing a campaign against All-American Muslim, says this about the show:

Clearly this program is attempting to manipulate Americans into ignoring the threat of jihad and to influence them to believe that being concerned about the jihad threat would somehow victimize these nice people in this show.

Economy

Between 2008 And 2010, 30 Big Corporations Spent More Lobbying Washington Than They Paid In Income Taxes

General Electric spent more lobbying the government than it did in federal income taxes between 2008 and 2010.

Today, thousands of 99 Percenters will march on K Street in Washington, D.C. as a part of an action called “Take Back The Capitol,” taking aim at the lobbying firms that corporate interests use to influence the federal government.

A report released this month by Public Campaign demonstrates just how important it is for Americans to battle corporate special interests and reclaim our democracy. The group’s research finds that thirty big corporations actually spent more money lobbying the federal government between 2008 and 2010 than they spent in taxes. For example, General Electric — one of the top 10 most profitable companies in the world — got a net tax rebate of $4.7 billion during this period. Meanwhile, it spent $84 million lobbying the federal government.

Here’s the full list of the 30 corporations identified and what they paid in federal taxes as opposed to lobbying:

To follow today’s actions, check out Take Back The Capitol’s website, and find instant updates about the protest through the hashtag #99indc. ThinkProgress will be covering today’s events at our 99 Percent Movement special topics page.

Update

For more, see Public Campaign’s full report.

Economy

Taking A Moral Stand, American Airlines CEO Retires With No Severance Package As Company Goes Bankrupt

American Airlines CEO Arpey decided to retire and skip the golden parachute.

This week, American Airlines, the world’s fourth largest airline, filed for Chapter 11 bankruptcy. This is a step that former CEO Gerard Arpey, who just resigned, did not want to take.

For years, major airlines have “slashed wages and pensions after similarly declaring bankruptcy,” using the financial process to avoid obligations to their workers. For example, when United Airlines declared bankruptcy, its employees faced the “single largest pension default in U.S. history.” Some pilots at Aloha Airlines lost 90 percent of their retirement benefits after that business declared bankruptcy.

So instead of leading the company through bankruptcy, Arpey decided to retire after 30 years with the company, denying him any severance pay.

D. Michael Lindsay, the president of Gordon College, interviewed Arpey for a New York Times op-ed about his choice. Arpey told Lindsay that he wanted his company to honor its commitments to its workers:

When we discussed the prospect of bankruptcy at American he spoke with an almost defiant tone of the company’s commitment to its employees and holders of its stock and debt. “I believe it’s important to the character of the company and its ultimate long-term success to do your very best to honor those commitments,” he said. “It is not good thinking — either at the corporate level or at the personal level — to believe you can simply walk away from your circumstances.”

“This country would be so much better off if we had more people who had Gerard Arpey’s sense of responsibility and character as well as ability,” said David Boren, the president of the University of Oklahoma and a former governor and U.S. senator.

Arpey distinguishes himself from his predecessor, Donald Carty. Carty resigned “after it was disclosed that…executives’ pensions were protected in a separate trust, at a time when union members were being asked to approve deep concessions for their members.”

Economy

Former Chase Banker Admits His Bank Pushed Minorities Into Subprime Mortgage Loans

One of the most pernicious practices in which the nation’ biggest banks engaged during the lead up to the financial crisis was pushing minority borrowers into subprime loans, even when many of them qualified for prime loans. Wells Fargo had perhaps the most horrifying practices in this department, calling the subprime loans that they pushed in poor, black neighborhoods “ghetto loans.”

This rampant predatory lending helped inflate the housing bubble; a Center for American Progress investigation actually found huge racial disparities in lending at the big banks that wound up getting bailed out, with minority borrowers far more likely to receive high-priced loans.

One former banker for Chase — James Theckston — told the New York Times’ Nick Kristof that not only did his bank push minority borrowers into higher-priced loans, but senior executives then tried to cover up the racial disparity in their banks’ lending:

One memory particularly troubles Theckston. He says that some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans.

These less savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up.

“The bigwigs of the corporations knew this, but they figured we’re going to make billions out of it, so who cares? The government is going to bail us out. And the problem loans will be out of here, maybe even overseas,” Theckston explained.

In 2006, Chase made high-price loans to 16.4 percent of white borrowers, while nearly half of black borrowers and more than one-third of Hispanic borrowers received high-price loans. These disparities help explain why, according to a new report from the Center on Responsible Lending, Latinos and blacks are twice as likely to have been impacted by the housing crisis as whites. In fact, “approximately one quarter of all Latino and African-American borrowers have lost their home to foreclosure or are seriously delinquent, compared to just under 12 percent for white borrowers.”

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