JANUARY/FEBRUARY 1996 · VOLUME 17 · NUMBERS 1 AND 2
N A M E S I N T H E N E W S
JANUARY/FEBRUARY 1996 · VOLUME 17 · NUMBERS 1 AND 2
N A M E S I N T H E N E W S
NINETEEN MAJOR U.S. CORPORATIONS have postponed more than $1 billion in U.S. federal tax payments each by depreciating equipment and buildings faster than these assets wear out, the Washington, D.C.-based Corporate Welfare Project charged in January.
The companies, which generated combined profits of almost $41 billion in 1994, have accumulated more than $50 billion in deferred tax payments by using accelerated depreciation to reduce their taxable income during the early years of the lives of their assets, according to the report issued by the Corporate Welfare Project.
Chief executive officers (CEOs) of seven of these companies -- Ford Motor, Exxon, General Motors, Chrysler, IBM, Amoco, and Chevron -- recently signed a letter to President Clinton and Congress calling for a balanced budget, even though the seven companies have reduced their taxes by more than $27 billion by taking advantage of the accelerated depreciation tax break.
"It is paradoxical and unconscionable that wealthy corporations are taking advantage of billions of dollars in tax breaks at the same time that CEOs are asking the President and Congress to balance the budget by cutting programs for the poor and needy," says Janice Shields, author of the report.
According to the Congressional Joint Committee on Taxation's September 1995 Estimates of Federal Tax Expenditures for Fiscal Years 1996-2000, accelerated depreciation tax breaks will cost the U.S. Treasury $28.2 billion in 1996 and $129.2 billion over the next five years.
"When companies are permitted to reduce their tax bills by deferring payment of taxes, they are in essence receiving interest-free loans from U.S. taxpayers and are contributing to the budget deficit," Shields says. "These 19 companies alone saved more than $4.2 billion in interest expenses (at the prime rate) in 1994 by taking advantage of the accelerated depreciation tax break."
Strawberry Killing Fields
CALIFORNIA STRAWBERRY GROWERS have orchestrated an unprecedented campaign to delay the mandated reporting requirements of California's Birth Defect Prevention Act.
Under the Birth Defect Prevention Act, the registration of methyl bromide and pentachlorophenol is scheduled to be suspended in California on March 30 because pesticide manufacturers have not submitted health studies that were first requested in 1984.
However, the California Assembly's Environmental Safety and Toxic Materials Committee, under heavy pressure from California's giant agribusiness industry, voted in early January to lift the ban.
Lifting the ban "is an outrageous abuse of political power that sacrifices the health and safety of Californians to preserve higher profits for a special interest group," says Anne Schonfield of the Methyl Bromide Alternatives Network.
Methyl bromide is a highly toxic insecticide gas used heavily by California's strawberry growers. It is used to sterilize soil before planting. Research has shown that methyl bromide can cause birth defects in animals. Methyl bromide is also a significant ozone depleter.
The California Department of Pesticide Regulation has attributed 15 deaths to methyl bromide since 1982.
Strawberry farmers argue there is no viable alternative to methyl bromide. But organic farmers say that biological control shows promise in controlling pests.
The United Nations reports that for more than 90 percent of current uses of methyl bromide, economically viable alternatives are available or in an advanced stage of development.
Hyundai Laundromat
HYUNDAI MOTOR AMERICA and Korean Airlines Co., Ltd. were hit in December with record criminal fines totalling $850,000 after the two companies pleaded guilty to making illegal campaign contributions to the 1992 Jay Kim for Congress Campaign.
The $600,000 criminal fine imposed on Hyundai Motor America and the $250,000 criminal fine imposed on Korean Airlines each represents a record criminal fine under the Federal Election Campaign Act.
Both Hyundai and Korean Airlines were convicted under the Federal Election Campaign Act for making prohibited corporate contributions and prohibited foreign national contributions to the 1992 Kim campaign.
Both cases involved schemes where illegal corporate and foreign national contributions were laundered through company employees, thereby concealing from the Federal Election Commission the actual illegal source of the contribution.
Under federal law, it is illegal for corporations and foreign nationals to contribute to candidates in federal elections, and it is illegal to make contributions under the name of another.
Hyundai pleaded guilty to charges that its controller, Paul Koh, and others at Hyundai made illegal contributions of $4,500 in corporate funds through employee conduits to the 1992 Jay Kim for Congress Campaign Committee.
Hyundai also pleaded guilty to the charge that, through its executive vice president, Myung Hun Juhn, a foreign national, it made illegal foreign national contributions to the 1992 Kim campaign. Korea Airlines pleaded guilty to similar charges, admitting illegal funnelling of money to the Kim committee through John Seung Won, a foreign national who served as general manager for finance and accounting for the airline.
-- Russell Mokhiber