MATTHEW MOSK, BRIAN ROSS

Although it is not apparent on his financial disclosure form, Mitt Romney has millions of dollars of his personal wealth in investment funds set up in the Cayman Islands, a notorious Caribbean tax haven.

A spokesperson for the Romney campaign says Romney follows all tax laws and he would pay the same in taxes regardless of where the funds are based.

As the race for the Republican nomination heats up, Mitt Romney is finding it increasingly difficult to maintain a shroud of secrecy around the details about his vast personal wealth, including, as ABC News has discovered, his investment in funds located offshore and his ability to pay a lower tax rate.

"His personal finances are a poster child of what's wrong with the American tax system," said Jack Blum, a Washington lawyer who is an authority on tax enforcement and offshore banking.


http://abcnews.go.com/Blotter/romney-parks-millions-offshore-tax-haven/story?id=15378566#.TxeJqYFX-uJ

Many analysts say it's true. "The U.S. tax system does provide an incentive to locate production offshore," says Martin Sullivan, a contributing editor to Tax Notes, a non-profit publication that tracks tax issues.

"If you had two companies in Pittsburgh that both were going to expand capacity and create 100 jobs, our tax code puts the company who chooses to put the plant in Pittsburgh at a competitive disadvantage over the company that chooses to move to a tax haven," says former White House economist Gene Sperling, a Clinton adviser.

The Democrats, saying the United States has overlooked the costs to working Americans in its rush to embrace globalization, have vowed to eliminate any tax incentive for further offshoring.

The deferral clause has been in the tax code for more than half a century and has outlasted numerous reform efforts. In April 1961, even as U.S.-backed rebels were dying at Cuba's Bay of Pigs, President Kennedy asked Congress to rewrite tax provisions that "consistently favor United States private investment abroad compared with investment in our own economy."

http://www.usatoday.com/money/perfi/taxes/2008-03-20-corporate-tax-offshoring_N.htm

We contacted the congressman's office, and they pointed us to a story about representative Darrell Issa, the chairman of the House Oversight Committee, who said on Saturday "Majority Leader Cantor has assured me that we will continue to work to address outstanding concerns and work to build consensus prior to any anti-piracy legislation coming before the House for a vote."

Cantor himself has not issued an official statement.

So yes, this week's vote on the bill has been postponed. But "work to build consensus" means it could come back in some other form.

The White House has also come out against the bill in its current form.

But the Senate's similar Protect IP Act (PIPA) is still being considered.



Read more: http://www.businessinsider.com/no-sopa-is-not-dead-yet-2012-1#ixzz1jimxOvTu

Mike Hall,

Dallas Cowboys owner Jerry Jones spent $1 billion to build the gilded palace his legendary National Football League team plays in eight Sundays a year. But in the gift shops inside Cowboys Stadium and in sports apparel stores around the nation, Cowboys fans are buying fancy jackets, jerseys and other gear made by Cambodian workers earning just 29 cents an hour for 10-hour days, six days a week.

And now the Cowboys merchandising arm—Silver Star Merchandising—is pursuing deals with major U.S. universities for exclusive rights to produce the schools’ logo apparel, reports ESPN’s Outside the Lines. A recent episode spotlighted the Cambodian supplier’s factory where workers fear the wrath of their supervisors if they talk to a co-worker sitting next to them or take too long at the bathroom. They say they are essentially forced to work overtime daily and describe a hostile work environment in which supervisors yell and insult them. They work while sick because either they can’t afford to go to the doctor or fear they will be fired if they miss work.

http://blog.aflcio.org/2012/01/14/illegal-procedure-dallas-cowboys-called-on-sweatshop-connections/

Marisa Lagos, Chronicle Staff Writer

Gov. Jerry Brown wants to cut state prison spending next fiscal year for the first time in nearly a decade, a departure from the goals of recent administrations, which consistently increased corrections spending and pushed for prison expansion.

Brown's budget would save California $1.1 billion on housing inmates and hundreds of millions more by allowing the state to halt some prison construction - savings largely due to his administration's recent overhaul of the state's criminal justice system.

General fund spending on prisons nearly doubled under Brown's Republican predecessor, Arnold Schwarzenegger, from $5.2 billion in 2004 to $9.5 billion in 2011, when Brown, a Democrat, took office. The increase in spending was largely caused by an exploding inmate population and a court order to improve medical care in prisons.



Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/14/MNEM1MNAFQ.DTL#ixzz1jch7kgmj

Andrew Dunn | Charlotte Observer

CHARLOTTE, N.C. — The country's biggest banks are overwhelmingly supporting Mitt Romney's bid for the Republican presidential nomination, an analysis of federal campaign contributions shows.

Employees at the five largest U.S. banks by assets, including Bank of America Corp. and Wells Fargo & Co., had given Romney about $600,000 through the first three quarters of 2011, according to the most recent filings available from the Federal Election Commission.

The second-largest recipient of bank employee contributions, President Barack Obama, had far less, about $200,000, the analysis showed. The Republican presidential hopeful with the second-highest total, former Minnesota Gov. Tim Pawlenty, dropped out of the race in mid-August.

Romney received more from employees of those top five banks than all the other candidates combined, helping make the former Massachusetts governor the best-financed candidate in the Republican nomination battle, which is heating up in South Carolina ahead of Saturday's primary.

Read more here: http://www.mcclatchydc.com/2012/01/15/135945/big-banks-have-picked-their-candidate.html#storylink=omni_popular#storylink=cpy

Kevin Yamamura | The Sacramento Bee

As unemployed Californians struggle to find work, Gov. Jerry Brown has proposed strict rules for parents on welfare: Get a job in two years or lose nearly half of cash aid along with training and child care.

"This is not nice stuff, but that's what it takes to balance the budget," Brown said earlier this month when he released his plan, which would halve the current welfare-to-work time limit.

The governor's welfare cuts would lop nearly $1 billion off the state's $9.2 billion general fund deficit. He would prioritize employment as California faces federal penalties for having too many parents who do not work 30 hours a week.

Those who study poverty say Brown's proposal is harsh because even well-qualified workers can't find jobs in this economy. They contend that parents who max out on welfare benefits are the least equipped to join the workforce.

Read more here: http://www.mcclatchydc.com/2012/01/16/135964/california-gov-brown-proposes.html#storylink=cpy

April 4, 2006

Dr. Usha C. V. Haley

Director, Global Business Center, University of New Haven

Statement before the U.S.-China Economic and Security Review Commission

Subsidies exist in all industries that the Chinese state and provincial governments considered economically or militarily strategic, including Resource Extraction, Steel, Computing, Software, R & D, Environmental Services and Conservation, and Autos.

The subsidies exist in various forms, including:



Free to Low-cost Loans. The government exercises a vice-like grip on banks, stock markets and bond issuance and these translate to the ability to make grandiose loans. The most extreme statistics in the financial sector deal with loans outstanding. In three years from 2002 to 2004, loans increased by 58 per cent, or $785 billion. In 2003, new lending equaled almost one quarter of gross domestic product (GDP). A credit binge fueled this latest boom. Half of all bank loans go to SOEs. Most of these loans will never be repaid. Huawei for example, has a $10 billion credit line from China Development Bank.

Asset Injections: The SOEs’ parent companies, usually municipal governments or ministries, provide their protégés with opportunities to acquire state-run businesses, such as toll bridges, at highly preferential terms.
No Break-even: Poor bookkeeping practices, and lax bottom-line considerations, grant SOEs freedom from the need to make profits, or to break even.

Subsidized Purchases: SOEs can purchase their components and raw materials below cost and directly from each other, affecting the competitiveness of certain sectors in the global economy. This tradition propelled the Chinese motorcycle industry’s ability to buy control of virtually all Indian motorcycle companies short of Bajaj and turn them into assemblers of Chinese components.

International Bargaining Power: Beijing has used its enormous buying power to intercede for its SOEs with foreign suppliers and to reduce acquisition costs for raw materials. A recent example includes the Chinese government’s aborted attempt to bully down the cost of iron ore for the Chinese steel industry below internationally-negotiated price levels. The Chinese government has also secured contracts and exploration rights abroad for its SOEs.

Labor Controls: The government exercises various methods to control employees including the dang’an or employment dossier; and to reduce labor costs through injection of part-time and migrant workers and the use of prison labor.

Tax Breaks: Many SOEs avoid taxation or reduce it through tax breaks (although this can backfire if a company’s management loses favor).

Energy and Land Subsidies: The state subsidizes gasoline and electricity. Currently, Beijing tightly controls the price of both gasoline and electricity at well below their true economic levels. The state also offers free land and utilities to SOEs and companies in key strategic sectors.

http://www.uscc.gov/hearings/2006hearings/written_testimonies/06_04_04wrts/06_04_04_haley.php

Usha C.V. Haley and George T. Haley

Many assume that China’s cost advantage in manufacturing comes from cheap labor. But in China’s burgeoning steel industry, our research suggests, massive government energy subsidies, not other factors, keep prices down. These subsidies have broad implications for how companies compete and collaborate with Chinese businesses.

In 2005, Beijing designated steel as a pillar industry for the Chinese economy. China was the world’s largest producer of steel, with 27% of global production, but until then it had imported 29 million tons of steel annually. That year, China suddenly transformed itself from a net steel importer to a net steel exporter. In 2006, the country became the world’s largest steel exporter by volume, up from the fifth largest in 2005. Today it remains the world’s largest consumer and producer of steel, with 40% of global production. How did China make these astonishing gains so quickly and manage to sell steel for about 19% less than steel from U.S. and European companies? Labor accounts for less than 10% of the costs of producing Chinese steel, and Chinese steel doesn’t appear to rely on scale economies, supply-chain proximities, or technological efficiencies to lower its costs.



Our research revealed that energy subsidies to the steel industry were paid to the energy sector and passed on through lower energy prices, which suggests that the energy supplied to China’s other manufacturing industries is subsidized as well. The steel industry may benefit disproportionately from energy subsidies because of its voracious appetite for coal, but the energy subsidies obviously help other industries too.

http://hbr.org/2008/06/subsidies-and-the-china-price/ar/1