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Everyday Low Morals
May 2, 2002
By Jeff Ritchie

It's an advertising gimmick with a long pedigree: use your employees to create a "just plain folks" image for your otherwise soulless corporate behemoth. Insurance conglomerates, telecommunications giants, and auto manufacturers hope to convince the public that Amalgamated Industries, Inc. is just like the mom-and-pop grocery store we knew as kids.

Now consumers are learning that with some companies, the phrase "our people are our greatest resource" might be more accurate than they would have us believe. Wal-Mart Corporation, the epicenter of corporate folksiness, finds itself accused of taking out life insurance policies on its employees without their knowledge or consent, then profiting from their deaths.

While it only makes sense for a corporation to insure the lives of its key personnel or corporate officers, these policies are being taken out on part-time cashiers and stock boys. The very people for whom Wal-Mart doesn't provide an affordable health plan because, according to the company, it can't afford such benefits and still remain competitive.

In the insurance industry, these are commonly known as "dead peasant" policies, and some estimate that up to 10 million American workers are effected.

In the case of Wal-Mart, the company has been quietly insuring the lives of its sales associates in Texas, amounting to some 350,000 policies in effect. Given the average U.S. mortality rate, Wal-Mart could be "earning" more than $10 million annually from the deaths of its Texas employees. Another Texas company took out accidental death policies on its employees, then reaped a $250,000 windfall when just one was killed in an auto accident.

What's more, corporations like Wal-Mart keep these policies in effect even after an employee leaves the company. So if you work for several major corporations during the course of your professional life, you might have accumulated - without your knowledge or consent - several life insurance policies that would benefit your former employers.

Corporate hostility toward universal health care suddenly makes a lot more sense; it's not just that corporations don't want to pay the premiums for health insurance, it's because your living a long and healthy life is bad for the bottom line. Corporate America has a genuine financial interest in your early demise.

This is not a mom-and-pop grocery store. This is corporate welfare at its most odious.

And if you thought it couldn't get any worse, it gets even worse. Until recently, the premiums for these policies were considered a tax-deductible business expense, the same as with any other employee benefit. This means that the cost was partially underwritten with tax dollars collected from the same employees who were working at lousy wages but never receiving any of the benefits from these "dead peasant" policies.

Even though the IRS has moved to plug this particular loophole since 1996, some corporations are already attempting to use creative accounting practices to circumvent the law. More than eighty corporations are under federal investigation for using fraudulent policies, at a cost to the taxpayer in the billions of dollars.

And there's more. Proceeds from insurance policies are not considered taxable income to the person (or corporation) who receives it, which means that after taking a generous tax break for the cost of the policy, the corporation receives a tax-free gift after its employees pass away.

But I'm sure all this helps mom and pop through the grieving process.


Jeff Ritchie is a writer and Democratic Party activist in Cincinnati, Ohio

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