Big Biz Keeps Tax Breaks,
Kills Tort Bill

Multinational corporations moved their lobbyists in to maintain a lucrative tax break that allows the corporations to avoid U.S. taxes and reduce their foreign taxes too. According to the New York Times on July 12, the fine print of the bill to overhaul the IRS not only gave additional tax breaks to stock market speculators and wealthy heirs but it also preserved "hybrid structures" that allow corporations to use foreign tax havens to reduce their U.S. and foreign taxes on profits from overseas operations.

The Treasury Department, for its part, had tried to rein in the loophole to stop American companies from shifting more of their operations overseas to take advantage of tax breaks that were inadvertently created two years ago when the Clinton administration tried to simplify taxes. Industry lobbyists marshaled their forces, formed no less than 11 business coalitions and got all the Republicans and nine Democrats on the congressional tax-writing committees to send letters to Treasury Secretary Robert Rubin asking him to back down. To his credit, Rubin initially refused but finally, under pressure from Sen. William Roth, R-Del., chairman of the Senate Finance Committee, Treasury agreed to allow multinational corporations that already use the loophole to continue to do so permanently at a cost estimated at $1.8 billion over the next 10 years. Treasury also agreed to allow some new hybrid structures to be set up in the next six years.

"This measure signaled that Congress can't stand up to industry," the Times quoted Michael McIntyre, a tax law professor at Wayne State University in Detroit. "This is one of the biggest tax giveaways. It's outrageous, and as tax policy it's indefensible. This is so far beyond the pale of what is considered legitimate tax avoidance."

Then big business quietly helped scuttle an attempt to pass a compromise bill that would have protected small businesses in product liability claims. If this sabotage doesn't break up the alliance between big business and smaller independents, maybe at least it will cause them to rethink their relationship.

The bill, which would have set the first nationwide limits on court awards for faulty products, was controversial enough and deserved to die. As Ralph Nader and other consumer advocates protested, the bill would have usurped states' rights to hold manufacturers accountable in state courts. But the GOP is willing to overlook principle when it comes to serving the wishes of corporations. In this case one section of the bill would have limited litigation against retailers and wholesalers unless they had altered the product. Another section would have limited punitive damages against companies with fewer than 25 employees or with annual revenues of less than $5 million.

Big business had hoped the bill would include sweeping caps on punitive damages and elimination of the doctrine of "joint and several liability," which often sticks the wealthiest companies with the largest judgments in multidefendant cases. When it appeared that the main beneficiary would be small businesses, the industrial trade groups started working to defeat it, the Wall Street Journal reported on July 7.

Sens. John D. Rockefeller 4th, D-W.V., and Slade Gorton, R-Wash., had carefully wrought the compromise bill over the past two years after President Clinton vetoed an earlier version that Clinton said tilted the playing field too much in favor of business against consumers. The White House had agreed to the new version as long as there were no significant changes.

The house of cards finally toppled when it was disclosed that Trent Lott, the Majority Leader, who had blocked Democrats' attempts to amend the bill, had secretly slipped in his own hand-written amendment that would have applied the limits on punitive damages to Baxter Healthcare Corporation, a major company in his home state of Mississippi. Then Lott had the nerve to criticize the "duplicity" of the Democrats in using his amendment as an excuse to scuttle the bill.

Health Care 'Reform' Up

Republican Senate leaders reluctantly unveiled a bill on July 15 that would give patients some rights in dealing with health maintenance organizations. The Republican Senate plan would allow patients to appeal HMO decisions denying or limiting treatment; patients could see a doctor outside an HMO without paying the entire cost; patients would have the right to emergency-room treatment; and women would be allowed to go directly to obstetricians and gynecologists without getting a referral. But the GOP plan would only cover the 48 million people who work for big companies that insure themselves. The Democrats' plan would also cover the 100 million Americans who belong to other health plans. The Democrats also would allow lawsuits for personal injury or wrongful death caused by the improper denial of benefits in an employer-sponsored health plan.

Neither the Democrats nor the Republicans would address the needs of the 40 million working poor whose employer does not offer health benefits and who cannot afford it on their own.

Republican congressional leaders appear to be heading for votes on controversial trade issues this fall. Among the bills up in the air are the Caribbean Basin Initiative, which would extend NAFTA to the Caribbean; fast track trade negotiating authority; and a free trade bill for Africa. House Speaker Newt Gingrich and other House GOP leaders, under pressure from farmers and business interests, pledged to hold a floor vote this fall. Farmers are desperate for new markets, especially with the drop in exports to financially strapped Asia, but Sen. Tom Harkin, D-Iowa, said fast track will not help farmers as much as the International Monetary Fund aid to weakened Asian economies, restoring export credit guarantees and restoring farm income protections eliminated in 1996.

To tell your senators and your representative "no more 'free trade' until we sort out the mess we're already in," call 800-985-8762 or 202-224-3121.

The Federal Communications Commission won a key victory over the free radio movement June 16 when a district judge in California issued a permanent injunction barring Free Radio Berkeley from broadcasting without a license. U.S. District Judge Claudia Wilken in Oakland ruled that Stephen Dunifer's failure to apply for an FCC license for the 50-watt FM station, which broadcasts a radius of approximately 12 miles, deprived him of the legal standing to challenge the constitutionality of the FCC regulation. Dunifer argued that applying for an FCC license was not only prohibitively expensive but futile because the FCC does not license microbroadcasters. The FCC, which filed the case against Dunifer in 1994, has shut down more than 200 unlicensed low-power stations during the past two years, and an estimated100 remain on the air, although Dunifer said there are thousands of transmitters at large. [See "Radio Pirates Fight for Free Speech," 4/98 Progressive Populist.] In related action, the FCC on July 1 ordered Joseph F. Ptak of San Marcos, Texas, a founder of low-power Radio Kind in San Marcos, to pay a $11,000 fine for operating an unauthorized radio station. He also was ordered to cease and desist.

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