June 23, 2011 Issue

June 23, 2011 by · Leave a Comment 

Commerce to Explore Local ‘Green Zones’

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City of Commerce officials agreed on Tuesday to hold a series of workshops to explore ways to maintain the city’s focus on businesses and industry, while also protecting the health of its more than 12,000 residents.

The city council approved a recommendation from the city’s Environmental Justice Advisory Task Force calling for a group comprised of members of the public, government officials, and researchers to come together this fall to look at establishing a “green zones” policy.

Task Force Chairman Angelo Logan told Commerce officials on Tuesday that representatives of the U.S. EPA have offered to help facilitate the discussions so that the “burden of the working group is not on” city staff.

The group will discuss strategies to attract green businesses and jobs to the city, as well as using land use planning methods to ensure areas where families and children frequent are protected from industrial pollution.

Residents and members of a local environmental justice group came out to support the green zones working group. “I’ve been here 45 years, and the air really doesn’t seem to get any better…. I’m supporting the green zone,” said Sonny Roque.

Supporters of a green zones policy in Commerce watches as the city council considers setting up a working group. (EGP photo by Elizabeth Hsing-Huei Chou)

In a letter written to the city, resident Kristina Santana urged city officials to move toward creating the policy “so that we may truly be a model city, and not a city that will let businesses pollute as much as they want and endanger the residents’ health, but then appeases them with free bus rides to the supermarket.”

Maria Cristina Muñiz, a 35-year Commerce resident and executive member of the Commerce City Employees Association,  added her support, saying green zones “will help to reduce environmental hazards that exist in our city.”

Assemblyman Ricardo Lara (D-Bell Gardens) also submitted a letter of support. “The disproportionate amount of pollution put low income minority families at greater risk for various health complications. Commerce residents need a sustainable solution to reduce their exposure to pollution from railyards, freeways, and other industrial land uses,” he wrote in a letter to the city.

The specifics of the green zones policy have not yet been “fleshed out,” Logan said on Tuesday. He asked that the city keep the workshops informal by not requiring a quorum, and urged officials to set a milestone to have a green zone policy drawn up by a set time.

“We need to move expeditiously… so that we’re not late in the game, and the last city to adopt a green zone policy. We want to attract those businesses first so that we can gain those revenues and resources and create those jobs for our residents,” said Logan.

Similar efforts to create “green zones” were initiated in the City of Los Angeles in the Boyle Heights and Pacoima neighborhoods earlier this year.

Environmental Justice Advisory Task Force Chairman Angelo Logan urged the council to move "expeditiously" to develop a green zones policy in Commerce. (EGP photo by Elizabeth Hsing-Huei Chou)

The city staff report prepared for the meeting states that land use recommendations like this require “careful analysis by staff” and that “ultimately, land use strategies must seek to strike the right balance between environmental quality/conservation and property rights without discouraging land recycling and reinvestment in property which is so vital to the Commerce economy.”

Logan is also co-executive director of Commerce-based environmental justice group East Yard Communities for Environmental Justice (EYCEJ) which backed the workshops, saying in a press release that a “Green Zone policy would discourage toxic industry away from residential areas of Commerce, and encourage green industries to add vitality to the city by creating healthy communities and good jobs.”

Logan sits on the city’s Environmental Justice Advisory Task Force, together with residents, city officials, and members of the business community. Last year the task force voted to recommend buffer zones to prevent environmentally harmful industries from locating near places like daycare centers, schools, churches and homes.

The buffer zone proposal was based on collaborations with research institutions like the University of Southern California, and on recommendations in the California Air Resources Board’s Air Quality and Land Use Handbook.

Since proposing the buffer zones, there have been discussions between city staff and the task force to incorporate a green economy development strategy into the effort, potentially establishing “green zones.”
The business community, including the Commerce Industrial Council Chamber of Commerce, and several union groups have been approached about the green zone idea, according to Logan.

Mayor Pro Tem Tina Baca Del Rio said the business community often sees environmental protection measures as an “adversarial thing,” but this green zones policy idea takes “businesses into consideration.”

Instead of looking at a green zones policy as a way of limiting the kind of businesses that could come into the city, she says this policy could mean actively attracting businesses to the city.

“Everyone knows there are problems with the economy… we need to balance the budget, get out of the red, so it makes sense to bring in businesses that will help us do that… by seeking out green businesses,” Del Rio said.

Others on the council also seemed eager to begin the process toward creating green zones in Commerce. “What I’d like to know is, how soon can we start this?” said Councilwoman Denise Robles. She also mentioned that she spoke to business leaders who are “open to this idea of the workshop.”

On Tuesday the city council tossed around a potential start date of August for the workshops, and plan on coming back in four to six weeks for an update.

Representatives of the planning commission, and the Commerce Industrial Council, are expected to be part of the working group. Green economy experts and academic researchers have also been lined up to take part.

Wider I-710 Bridge Through Commerce Could Affect Bandini Park

June 23, 2011 by · 2 Comments 

The view from a City of Commerce park could change if city officials clear the way for the state’s plans to widen an I-710 freeway bridge.

Caltrans is seeking access to property in Commerce so that it can widen the freeway bridge next to Bandini Park as part of a larger project called the I-710 Long Life Pavement Project.

The proposal is part of a project to fix up the I-710 Freeway through several Southeast and East Los Angeles area communities. In Commerce, the plans are to widen the freeway bridge next to Bandini Park by 35 feet on each side, and to put in a 3.5 feet crash barrier and a 12-feet high sound wall. The project would also impact the Union Pacific Railyard on the other side.

Read this story IN SPANISH: Proyecto del Puente I-710 por Commerce Podría Afectar el Parque Bandini

Caltrans says the widened freeway bridge will improve safety and road conditions. There will be space for new shoulder lanes, and driving lanes will be increased from 11 to 12 feet wide.

According to Caltrans spokesperson Kelly Markham, construction on the bridge widening is currently unfunded but is scheduled to begin in 2014.

At this time the city is being asked to grant both a temporary easement to allow Caltrans access for the construction phase, and a permanent easement to locate the base of the support column in Bandini Park and to give Caltrans “air rights” for the bridge overhang.

The bridge project is separate from the ongoing I-710 Expansion Project, and is instead part of an effort to rehabilitate the I-710 through the cities of South Gate, Cudahy, Bell Gardens, Bell, Vernon, Monterey Park, East Los Angeles and Commerce.

A community meeting on Tuesday, June 28, at 6 p.m. in the Bandini Park community center will provide information on the project’s local impact. The public’s feedback and concerns will be presented at a city council meeting planned for July 5, when officials will be asked to sign off on a letter of “concurrence,” which would state the project “will not have a significant impact on the environment and further that design elements of the project will serve to ameliorate any environmental issues/concerns to the community especially as it relates to potential effects on Bandini Park,” according to a city report.

Caltrans has plans to widen freeway bridge near city park by 35 feet on either direction. (Image courtesy of the City of Commerce/Caltrans)


While the wider freeway could provide some benefits to freeway users, it also has the potential to create a new set of problems for nearby residents and park maintenance, not the least of which is added pollution.

Those concerns prompted city staff to ask Caltrans to address several potentially harmful impacts to the city before Commerce officials will agree to sign off on the letter of “concurrence.”

Among the city’s concerns is the damage pollution and sediment from the freeway — during construction and following the project’s completion — could have on Bandini Park’s multipurpose courts, softball field and facility.

The freeway’s closer proximity to the park also raises concerns that debris, vehicles, or parts of the planned sound wall and crash barrier could fall into the park.  Other issues relayed to Caltrans include concerns about traffic disruption due to construction; use of the bridge overhang as shelter by the homeless; and the possibility that balls from the softball field could fall onto the freeway.

Caltrans has responded to some public feedback from the local advisory committee for the I-710 Expansion Project, which raised concerns that the construction activity could also affect the Ayers neighborhood, especially on Connor Ave. Caltrans said they would include the use of clean construction equipment in their construction specifications, and responded that the tunnel at Conner would remain open during construction.

The committee also raised concerns about graffiti on the sound walls and questioned if the walls would be effective in reducing noise from the freeway. Caltrans assured the sound walls would do their job and said graffiti would be minimal because the walls would be too difficult to access.

Vernon Schoolhouse Home To LAUSD Parent Center

June 23, 2011 by · Leave a Comment 

Parents play a big role at Vernon City Elementary School. They bring food, help clean up, and do whatever they can to help.

So when they asked for English language classes, there was no hesitating. “We gave it to them,” said Principal April Diedrich.

At first the classes of about 10 or so parents were constantly on the move, depending on the availability of space. Sometimes they were in a classroom, sometimes in the auditorium.

But last Thursday they found a place of their own – a yellow, one-room schoolhouse that 134 years ago served as the site for the original Vernon school.

Read this story IN SPANISH: Primer Centro de Padres de LAUSD tiene Techo en la Escuelita Histórica de Vernon

A ribbon cutting marks this schoolhouse as the first site in a $20 million LAUSD initiative to open or upgrade nearly 300 parent centers.

“This center will be a valuable resource hub for parents as they support their children’s education,” said LAUSD Board Member Yolie Flores at the ribbon cutting.

LAUSD Board Member Yolie Flores, center, celebrated Vernon City Elementary school’s new parent center with a ribbon cutting. The new center is located in a restored 134 year old schoolhouse. (Photo courtesy of LAUSD)


On Tuesday, the parent English language class held its first session at the new Vernon City Elementary Parent and Family Center, which will also house other parent programs including nutrition and fitness classes, and pre-kindergarten parenting classes, with around 25 parents a day using the programs.

“Everything came together,” said Diedrich, who explained they happened to be in the process of restoring the schoolhouse when the district came around asking about extra space to house the new parent center.

According to Diedrich, about 50 percent of the students at the school attend on a permit, meaning parents made a conscious attempt to place their children at the school, rather than their local school.

Many of the parents work in Vernon, making the school’s location convenient. Others might be looking at the overall API score of the 260 students at the school, which currently sits at 791. Asked if she thinks the school will break the recommended 800 score, Diedrich replied, “We’d better! We’re so close!”

Diedrich says the schoolhouse was designated a historical site in 1975, when a group of Huntington Park High School construction trade students came along to help save the building from demolition and began its restoration.

The parent center grant helped to fund the final phase of the schoolhouse’s restoration, she says. In the past, fix-ups would occur every five years or so, following the drib and drab pace of funding availability.

Diedrich says future plans for the parent center include holding technology classes using the facility’s 25 new laptops. With much of their children’s education information now online, these classes will give parents the tools to keep track of their children’s education, she said, adding that parents will also have better access to teachers, and vice versa through email.

But not everything at the parent center is shiny sign of the times – a strong pull on a thick rope at the back of the room causes the old schoolhouse bell to chime, a call to parents to engage in their children’s education.

Vernon City Elementary School Principal April Diedrich tugs on a rope to ring the school house bell. (EGP photo by Elizabeth Hsing-Huei Chou)

Young ‘Financial Literacy Ambassadors’ Ready to ‘Bootstrap’ East LA

June 23, 2011 by · 2 Comments 

East Los Angeles second grader David De Santiago no longer begs his mother for candy and toys during trips to the store.

It’s because “I’m saving for college,” he says very seriously.

The training he received as part of the Financial Literacy Ambassador Program has changed him, and he can now distinguish between “needs” and “wants” and exercises self-control, says his mother, Estela De Santiago.

“I really like the program because it taught him not to misspend money, to know that he needs to save money, and to know what purchases are really ‘needs,’” his mother told EGP while holding numerous certificates of recognition presented to her son and other children at the program’s culmination ceremony last Friday.

Pan American Bank launched the financial literacy task force last year in response to a 2009-2010 report by the Federal Deposit Insurance Corporation (FDIC) that indicated that nationwide, minorities, and Latino families in particular, did not use mainstream banks.

Nearly 50 percent of Latino families are “unbanked” and use costly check-cashing services and rent-to-own offers that don’t allow them to build credit, according to Pan American Bank CEO and President Jesse Torres.

U.S. Representative Grace Napolitano, left, congratulates Pan American Bank CEO/President Jesse Torres for pioneering financial literacy programs.

Since January, Pan American has taken 21 children from local schools under it wings in order to help them, and their families, become financially literate. Torres says he hopes the Financial Literacy Ambassador Program will expand to more schools in the future, adding it costs $75,000 to $100,000 a year to operate. Participants in the program are instructed to share their knowledge with others, thus the “ambassador” designation.

Torres says while the program might not be a threat to Southern California’s consumer culture, the innovative program does have the potential to create a revolution of financial empowerment that could elevate East LA residents into the middle class.

“We haven’t been very good at providing our children with the necessary skills to enable them to succeed in the future both as consumers, as small business owners and as members of corporate America,” Torres told parents during the Friday’s ceremony. “These are skills that other communities are providing to their kids.”

The value of a dollar, the importance of saving, and knowledge about investments are things individuals born with a silver spoon in their mouth are taught, said Torres. Now this program will help level the playing field so future generations can benefit from college savings, and make the right financial choices so they will have the same opportunities as other Americans, he said.

The Financial Ambassadors include 10 second-graders at KIPP Raíces Academy, five Esteban Torres High School students, five Garfield students and one student from Wilson High School. The students were selected from a pool of applicants based on their desire to make a difference and to educate their peers, said Hector Perez Pacheco of Pan American Bank.

The ambassadors include Garfield’s recently elected Student Body President, Rudy Torres, who says he now feels more confident about making spending decisions and speaking in public. Personally, he plans to use his new knowledge to save for college and be more mindful of his senior prom expenses. He says he is eager to use his new platform to empower other Bulldogs.

Financial literacy seems like common sense; “Save money and don’t spend it like loco,” said Rocio Ortega, a high school-aged Financial Ambassador, who said high schools don’t offers courses to prepare students for their financial futures.

“If it’s common sense than why are people in the financial mess that they are in right now? Save money, we hear about it all the time but why don’t we actually do it?” she asked showcasing her skill at getting other young people’s attention.

The participants have created energetic presentations for their peers. The high school students created a jeopardy type game that helps reveal a person’s financial personality and values that could lead to financial problems. It also demystifies ways to save money.

The students spent the last three months sharing their knowledge with their peers and are now ready to reach out to the community, all they need now are venues, said Perez Pacheco.

As a bonus for their participation, each received a $300 deposit into their Pan American Bank savings account.

Pan American Bank is offering to open 14,000 new savings accounts for minors — about half the school-aged population in East LA — and the bank will deposit the first $5 in each account.
Numerous elected officials support the program, including US Rep. Grace Napolitano, who said the program has the potential to create a new economy in East Los Angeles.

She said the program is a step toward making East Los Angeles, as “an incorporated city,” financially “viable.”

“We’re already known worldwide, there are songs and movies already that talk about East LA. We need to prove that the Latino community is just as strong as any other community. Because you are,” Napolitano told parents and students.

State Senator Ed Hernandez said Latinos have made great strides in electing political representatives and earning advanced degrees, but the missing piece is financial empowerment. He said Pan American Bank is helping to “plant the seed.”

Read this story IN SPANISH: Jovenes Concientes de Finanzas Listos para Transformar el Este de Los Ángeles

Torres says the program, a private-public partnership, is part of a long-term strategy. “It’s generational, we won’t see the results of this until the kids involved in the program grow-up, graduate and go to college. But the idea is that we plant the seeds today so that we have it flourishing as they grow up,” he told parents, thanking them for their support.

He says he’s hoping to see the unbanked Latino community drop to 5 percent when the FDIC conducts its study a decade from now.

“I’m looking forward to seeing what you guys do, what you produced, and to help us bootstrap [up] East LA into the middle class,” Torres told the program participants.

Council Approves Autry Plans and City-led ‘Working Group’ On Southwest Museum

June 23, 2011 by · Leave a Comment 

A decision to allow renovations of the Autry National Center located in Griffith Park, was upheld on Tuesday by the Los Angeles City Council, which also denied the appeal of a local resident who charged proper environmental review laws had not been followed.

Councilmember Ed P. Reyes cast the lone dissenting vote on the 12-1 decision to deny the California Environmental Quality Act (CEQA) appeal. On a separate 10 to 3 vote, the council let stand a Department of Recreation and Parks Board of Commissioner’s decision to allow the Autry to move forward with its $6.6 million facility renovation.

The Council’s decision disappointed a coalition of Northeast Los Angeles residents and organizations that has repeatedly tried to tie attempts by the Autry to expand its facilities to the future of the Southwest Museum of the American Indian located on Mount Washington.

The Autry and the Southwest Museum merged in 2003, but the relationship has been rife with mistrust and accusations of unfulfilled promises.

After refusing to put their commitment to the Southwest Museum in a “prenuptial agreement, …the wedding was off, ” Councilmember Jose Huizar (CD-14) told the council, explaining the long held disagreements between the Friends of the Southwest Museum Coalition and the Autry.

Huizar and Reyes, whose districts include the areas surrounding the Southwest Museum, and Councilmember Tom LaBonge (CD-4) whose district includes the Autry, don’t necessarily agree on what’s best for the two facilities, but they put their differences aside on Tuesday and proposed to continue discussions on the future of both museums.

Ann Walnum of the Friends of the Southwest Museum Coalition, speaks at Tiesday’s city council meeting on behalf of the Mt. Washington museum. (EGP photo by Gloria Angelina Castillo)

In a motion made by Huizar and seconded by Reyes and LaBonge, the council instructed the Chief Legislative Analyst to convene a working group comprised of representatives from the Department of Recreation and Parks, the City Administrative Office, the City Attorney, and council districts 1, 4, and 14 to engage in formal discussions with the Autry, museum experts, stakeholders and community groups.

“Hopefully, as we move forward, though we are not going to get married, we can sit down together and think about how we need to move forward,” Huizar said.

The goal would be to develop long-range plans for the Autry in Griffith Park, and for the Southwest Museum and Casa de Adobe sites in Northeast LA. The working group would review the lease renewal process for the Autry, which sits on city land; the merger agreement between the Autry and the Southwest Museum and ways to implement its mandates; and identify revenue sources for renovating and operating the Southwest Museum. The group would report back to the Arts, Parks, Health and Aging Committee, and Budget and Finance Committees within 60 days on their findings.

The council’s decisions are not a victory for the city, said Nicole Possert, chair of Friends of the Southwest Coalition.

Possert said the council was “co-opted” into making their decisions because they did not want to be “perceived as loosing money for the city.” If the Proposition 84 funds did not go to the Autry, they would have gone to another grant applicant in the city, she said.

Possert says she’s not impressed by calls for more discussion. “They have plans, they don’t have plans. I mean talk is cheap. They’ve not put anything in writing,” she said.

At Monday’s Arts, Parks and Health and Aging Committee, the Autry proposed a partnership and a Memorandum of Understanding (MOU) that would allow Los Angeles to take legal possession of the Southwest Museum and building. Though the offer might at first appear generous, it does not include an offer to return the museum’s 500,000 pieces of Native American art and artifacts, or resources to once again make the Mount Washington site a real destination, she said.

She says the Autry’s offer is a “sham.”

“It’s not significant enough for any partner to build something viable in that location,” she told EGP.
Autry CEO and President Daniel Finley, however, welcomed Council President Eric Garcetti’s offer that the city help secure funds to pay for repairs to the historic museum.

Finely told the council that their studies show it will take a “staggering” $25 million to “make the old Southwest building viable as a museum,” which he says is the root of the ongoing conflict. “…Who should pay for it? So far no one has stepped up,” he said.

When asked if the Autry has applied for grants to repair the Southwest Museum, Finley told EGP the Autry’s priority has not been the building, but the collection.

He said the Autry’s number one and top priority has always been to preserve the Southwest Museum’s collections, which they have received both private and public funds to do.

“So our priority to date has been making sure that the collection isn’t at risk [of deterioration or damage] which you heard [during public comment from Autry employees] it clearly has been at risk.”

The Friends of the Southwest Museum are concerned that the Autry wants to hold on to both the Southwest Museum’s collections and the rights to the Southwest Museum name, while divesting itself of any financial responsibility for the Mt. Washington sites. If they are no longer affiliated with the sites, they should give up the collections and the names, say Southwest Museum supporters, who hope to one day find a viable partner to run the facility.

State Legislators Should Learn From Chiang’s Decision to Not Pay Them

June 23, 2011 by · Leave a Comment 

As of now, none of us knows when a state budget will be adopted that passes muster with both Governor Jerry Brown and State Controller John Chiang.

But listening to the news that has for the most part focused attention on the complaints of state legislators who will not be paid because the state controller has decided the budget they hastily passed before the constitutional deadline did not meet the mandate that it be balanced, one would think they are the only group in the state that will have to do without in the days ahead.

For too many years, our state legislators have failed in their duty to pass an on-time balanced budget, preferring instead to use paper fixes and accounting gimmicks to relieve them of their fiduciary duties, and to leave the hard decisions to whomever takes their place. Those chickens have come home to roost, and now it’s their livelihood on the chopping block.

There are many groups of people who depend on state funding— including school districts, those receiving state subsidized medical services, and many municipalities trying to get their spending plans in order. Unfortunately for them, too many of our legislators have moved to the extremes of their party rhetoric, and are more interested in getting re-elected than the public service part of their job.

Hopefully the governor’s quick and determined veto and Chiang’s bold decision to withhold the pay of elected officials will move them to quickly pass a balanced budget.

In the meantime, we hope state legislators will come to understand firsthand and empathize with the many Californians who today have no paycheck to look forward to.

This may be a way for them to learn to do what the rest of us are told we should do, and that is to have at least six months of expenses in a rainy day savings account.

Our Prison System is Bankrupting Us

June 23, 2011 by · 2 Comments 

If there was any doubt about the broken state of our prison system, the news this week should put it to rest.

The Global Commission on Drug Policy, made up of former presidents and other luminaries from the United States and abroad, concludes that the Drug War is an expensive failure. The California prison system—which the U.S. Supreme Court declared to be in violation of the 8th Amendment due to overcrowding and neglect—has yet to develop a plan to bring it into compliance with the court order.

Less well publicized, but also disturbing, is a letter from Tom Lutz in which he resigns from his post as department chair at the University of California Riverside. Lutz warns that the state is dismantling in just a few years a world-class system of higher education. Funding has shifted dramatically from educating California’s young to imprisoning them—not a way to build a strong country.

Meanwhile, massive state budget deficits are worsened by the expense of locking up more of our own citizens than any other country in the world.

Perhaps we’re finally ready for a reassessment. What might a more effective and rational system look like?

As we researched the summer issue of YES!, “Beyond Prisons,” we found a blossoming of creative alternatives to the punitive drug war and to the criminal justice system’s expensive punishment ethic.

People behind bars for drug possession make up the greatest share of the massive uptick in the prison population. The experts we talked to, including a former police chief and a medical doctor who specializes in addiction, called for an end to the war on drugs. Instead of punishing drug addicts—many of whom are victims of trauma—treatment, needle exchanges, and safe housing lessen addiction, disease, and the crimes caused by drug use.

Most of the 2.3 million now in prison will eventually be released. Education and job training are proven ways to reduce the number who re-offend and return to prison. Ex-offenders and ex-addicts can be the best mentors of those released from prison; the Delancey Street Project, for example, offers peer support and job-skills training in businesses run by ex-inmates and addicts, and their success record is impressive.

Traditional approaches to crime hold special promise. In New Zealand, instead of locking up young offenders, a council made up of family, community members, and crime victims holds them accountable for their crimes, and then gives them an opportunity to make restitution and be reintegrated into the community. This approach, which borrows from the Maori people, has become the norm in New Zealand, reducing to almost zero the number of young people locked up in expensive and violent detention facilities.

This “restorative justice” approach is spreading. Studies show crime victims who are involved in victim-offender mediation processes are less likely to experience long-term post-traumatic stress.

The involvement of the broader community is key to the success of restorative approaches. A welding instructor who volunteers to instruct inmates, a Girl Scout leader who brings girls to visit their imprisoned mothers, or a garden club that helps inmates start prison gardens all do their part to create vital links to the outside.

There are people we might agree should be locked up: psychopathic killers, rapists, and others who endanger their families or communities.

But most of those in prison are people with few resources who have committed nonviolent offenses

—especially poor people, people of color, drug users, alcoholics, and the mentally challenged.

Imprisoning millions of these people does not make us safer. But imprisoning 2.3 million people does deplete government coffers resulting in massive cuts in programs—like California’s system of higher education—that have proven track records for reducing crime.

A smarter and more compassionate criminal justice system could not only save lives and restore communities especially hard hit by imprisonments, it could save us from fiscal meltdown.

Sarah van Gelder is executive editor of YES! Magazine and yesmagazine.org. The Summer 2011 issue of YES! Magazine is “Beyond Prisons.”

Avoiding Taxes the Way Big Corporations Do It

June 23, 2011 by · Leave a Comment 

I’m an accountant. My college degrees and CPA license are the intellectual properties that enable me to earn a living. Now suppose that I formed a corporation to deliver my services, then took my diplomas and license off my wall and placed them in a safe deposit box in a Luxembourg bank. When clients came to my Oregon office, I would explain that the value of my services was represented by the diplomas and license now held in the offshore bank, and they should send their payment to my corporation housed at a PO Box in Luxembourg. Using this little accounting trick, I would be able to avoid paying U.S. taxes, until I brought those “foreign” funds back to the United States.

If I spun this ludicrous tale to my clients, I expect most of them would leave my practice immediately and find a different accountant.

But this accounting acrobatics is exactly the sort of transaction that hundreds of U.S. multinational corporations use to avoid paying billions of dollars annually in U.S. corporate income taxes. Technology, pharmaceutical and entertainment corporations, whose profits depend heavily on patents, trademarks and copyrights, have aggressively shifted profits from the United States, to one of dozens of tax havens that charge little or no taxes.

Bloomberg Business Week recently illustrated examples of this tax avoiding behavior: Forest Laboratories “sells nearly 100 percent of its drugs in the U.S. – and cuts its U.S. taxes dramatically by attributing the bulk of its profits to a law office in Bermuda. … Google reduced its income taxes by $3.1 billion over three years by shifting income to Ireland, then the Netherlands, and ultimately to Bermuda.”
These tax avoiding strategies cost the U.S. Treasury more than $100 billion a year. And they have led to more than $1.2 trillion in liquid assets being stashed offshore by U.S. corporations.

A new coalition of corporate tax avoiders including Google, Apple Computer, Pfizer, Duke Energy and an array of industry trade groups are demanding that Congress pass a special tax break that would reward these tax avoiders who “repatriate,” or bring back their offshore stash to the U.S., with a 5.25% tax rate, not the 35% corporate income tax that would otherwise be owed.

The coalition calls itself WIN America, but the numbers involved in the corporate tax holiday mean a real loss for America. The Congressional Joint Committee on Taxation has calculated this tax windfall would cost $80 billion, money that would be made up with higher taxes on small business people like me, or through reduced government services and infrastructure upon which all businesses, communities and families depend.

Tax amnesty programs are nothing new. The IRS has a couple of times allowed individual taxpayers to declare hidden offshore assets and pay both the full tax due and penalties in exchange for avoiding prosecution and possible jail time. While much corporate tax-dodging through the use of tax havens is neither hidden, nor illegal under current law favoring U.S. multinationals, it wholly stems from corporations who engage in these transactions for the principle purpose of shifting profits between countries in order to avoid taxes. Creating an incentive for such anti-social behavior through preferential tax rates will only serve to accelerate the offshoring of U.S. profits through fictional transactions.

Indeed, this is exactly what happened in 2004, when Congress enacted the American Jobs Creation Act, a bill which promised that a 5.25% tax rate would bring home billions of dollars that supporters claimed would be reinvested to create American jobs. The promise never materialized; most of the funds went instead to boost shareholder dividends and stock buybacks. Many of the biggest beneficiaries of the tax break, including Pfizer, Honeywell, and Hewlett Packard, laid off thousands of workers just months after receiving their tax windfall.  That tax holiday, and the promise of another, has dramatically accelerated the amount of U.S. profits shifted offshore.

All of my education took place in the United States, as do all of my client meetings. The vast majority of Americans find it right and logical that I have a duty to pay taxes in the U.S. It is time that the same logic applies to multinational corporations, and that we stop accepting fairy tales about patents and trademarks held in some far-away bank vault.

Setzler is President and founder of TriLibrium, a public accounting and business advisory firm located in Portland, OR Copyright (C) 2011 by American Forum. 6/11.

For the Record

June 23, 2011 by · Leave a Comment 

Re: “Mayor Shakes Up L.A. Housing Authority (pub. June 16, 2011) incorrectly referenced a story on the alleged misuse of affordable housing funds to remodel a Glendale councilman’s home as tied to the Housing Authority of Los Angeles (HACLA): They are not related. The funds and project in question are managed by the Los Angeles Housing Department (LAHD).

En la nota “Alcalde Sacude la Autoridad de Vivienda de Los Ángeles” (publicado 16 de junio 2011) se hizo referencia errónea a un reporte noticiero sobre la supuesta malversación de fondos de vivienda asequible para remodelar la casa de un concejal de Glendale como algo vinculado a la Autoridad de Vivienda de Los Ángeles (HACLA): la acusación de malversación de fondos no están relacionado con HACLA. El proyecto en cuestión esta gestionado por el Departamento de Viviendas de la Ciudad de Los Ángeles.

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