Category Archives: Politics

Halloween Shocker

Laxalt Or, perhaps not.  The Laxalt Family pulls the plug on support for Adam Laxalt’s candidacy for Attorney General.  [Las Vegas Sun]

It has to hurt when it comes from the family?

“It is our belief that Ross Miller’s documented history of pulling himself up by his own bootstraps and establishing a well-respected career in law and public service while still maintaining a strong sense of family and community constitute the critical characteristics needed for Nevada’s highest legal office.”

Once again we’re treated to the spectacle of the Nevada Republican Party unable to keep the members of the Old Guard aligned with the Tea Party influx of fringe characters from the radical right.   There are Nevada Republicans who aren’t pleased with the antics of the Bundy Family, and who aren’t in ideological lock step with the pseudo-libertarian radicals.  There are Nevada Republicans for whom vote suppression is not a recipe for winning hearts, minds, and votes.  However, it will be a struggle for them to take their party back from the reactionaries and radicals who have provided candidates in some of the last elections.  They are afraid of some of their own, meaning independents and Democrats should be equally alarmed.

Happy Halloween?

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A Message from Your GOP

“Hold Your Breath!” and don’t think…

Be Afraid

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Who is Andrew Martin?

desertbeacon:

An excellent introduction to the Controller’s race in Nevada

Originally posted on Nevada Rural Democratic Caucus:

If you were at Winnemucca’s Labor Day Parade or the Pancake Breakfast on Saturday, you would have had an opportunity to meet and talk to or at least wave at Andrew Martin who is running for State Controller on the November ballot.

As an Assemblyman and member of the Economic Forum Andrew has worked on Nevada’s budget, understands our finances, and knows what needs to be done to improve our economy.  Andrew  is a business owner, Certified Public Accountant (CPA), Certified Fraud Examiner (CFE), Certified in Financial Forensics (CFF), and Certified Internal Controls Auditor (CICA). Mr. Martin has over 28 years of professional experience providing accounting, advisory, audit and tax services to a diverse group of business, individual, governmental, and non‐profit clients.

His opponent, Ron Knecht,  is a “limited government conservative” who was a member of the “Mean 15” and who has signed onto Grover Norquist’s “Taxpayer…

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The Great North Houston Vote Suppression Raid: A cautionary tale for Nevada

There’s a cautionary tale here.  It really does make a difference who controls the offices of the state Secretary of State and who holds the post of State Attorney General.  If the following information isn’t convincing, I’m not sure what might be. 

Five days ago, Texans were reminded of a raid by police officers in protective gear sweeping into a house on the north side of Houston. It wasn’t a drug raid.  The officers displayed a search warrant and then removed computers, hard drives, and documents.  These weren’t related to any money laundering schemes – they were the property of “Houston Votes,” a voter registration effort.  Texas Attorney General Greg Abbott’s delegation of investigators said they were after evidence of voting fraud.  And the result?

“The investigation was closed one year after the raid, with no charges filed. But for Houston Votes, the damage was done. Its funding dried up, and its efforts to register more low-income voters ended. Its records and office equipment never were returned. Instead, under a 2013 court order obtained by Abbott’s office, they were destroyed.” [DallasNews]

The case included all the usual elements, a fervid Tea Party agitator, Catherine Englebrecht of the King Street Patriots, film clips from Fox News about the New Black Panthers, rumors of the organization being “worse than ACORN.”

The justification offered by Attorney General Abbott after the initial Dallas News story,  was that he didn’t know about the investigation at the time. [DallasNews]   A full on raid? Protective gear? Guns drawn? And the man ultimately in charge of this fiasco now can only say, “I trusted my aides?” There were more allegations of unjustified interference from Abbott’s office.

“The Houston Votes case is not the only one of its kind, though it’s unclear how often Abbott’s office investigates allegations similar to those levied against the group. In response to requests from The News, the attorney general’s office provided a list of 637 potential violations of the Elections Code referred to Abbott since he took office in late 2002.

Strickland (Abbott spokesperson) said he could not say how many were investigated or how many involved alleged voter registration fraud.” [Star Telegram]

In short, those 637 hardly constitute an “epidemic” of voter fraud as declared by Abbott in 2006.   So, what does this tale say in terms of Nevada’s upcoming vote?

The Republican candidate for Secretary of State, the person in charge of Nevada’s elections, is Barbara Cegavske, who has made her position clear.  She’s in favor of the photo ID requirements which have been used in states like Texas and North Carolina to suppress voting by Blacks and Hispanics:

Cegavske said that if elected in November she would consider introducing a voter ID bill during the 2015 legislative session if no lawmaker proposes a similar bill. Such measures have repeatedly failed to pass the Democrat-controlled Assembly and Senate, however.

“We need to have something that everyone feels secure about,” Cegavske said after speaking to about 40 people attending a breakfast for Hispanics in Politics, an influential Latino community group. “I don’t want to disenfranchise anybody, but I don’t know anybody who doesn’t have identification.”  Cegavske said that even if people don’t drive they usually have other ID they use to get Social Security checks or food stamps or for other programs that require photo identification.”  [LVRJ]

Her statement couldn’t make it much clearer about whom she’s referring when discussing who might not be able to register to vote.  Cegavske’s opponent is Kate Marshall who has not made these kinds of statements.  The Nevada Democratic Party made its position on Senator Cegavske crystal clear:

“The only way to ensure the integrity of our election system is to keep Barbara Cegavske as far away from the Secretary of State’s office as possible,” said Nevada State Democratic Party spokesperson Zach Hudson.  “Cegavske’s rhetoric today might endear her to extremists in the TEA Party, but the reality is she is a career politician who has spent her time in the legislature killing ethics reform, blatantly abusing tax dollars and trying to suppress people from voting.”

Putting ingredients such as Tea Party + Voting + State Office Holder together is precisely what generated the debacle in Texas.  Cegavske, is indeed, a solution in search of a problem, and most definitely isn’t the best candidate for the office of Nevada Secretary of State.  (See also: Fodder and Folderol]  For that matter, she certainly doesn’t need to be teamed up with “Train Wreck” Adam Laxalt in the AG’s office.

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Money Watch: Who’s playing in the Georgia Senate race?

campaign money There is a negative ad campaign being launched in Georgia against the candidacy of Democrat Michelle Nunn from the “End Spending” super PAC, the brain child of the former CEO of TD Ameritrade.  The group describes itself as an “independent 501(4)c” which is roughly analogous to describing the wheels as independent of the bicycle.

Open Secrets offers a more exact description:

“Ending Spending is a conservative 501(c)4 group that focuses on federal spending and the national debt. The group originally targeted earmarks, but broadened its message to include balancing the federal budget and paying down the national debt. The group was founded by Joe Ricketts, the former CEO of TD Ameritrade and a known conservative backer. Brian Baker, the current president of Ending Spending, was an adviser to former Sens. Robert Dole and Richard Shelby. The group does not disclose its donors, and its money goes towards electioneering expenses.”

The Washington Post reported that as of August 1, 2014 ES Action Fund had ladled $345,000 for air time in August. The Nunn campaign made a $331,000 ad buy.  And where might all the the ES Action Fund money come from, even if the donors aren’t published the New York Times ferreted out some from the 2012 campaign, and the names ought not to be any surprise.

First, of course, there’s Mr. Ricketts who put $11.7 million in the pot in 2012, and then to absolutely no one’s surprise the next two names on the list are Nevada’s own Sheldon and Miriam Adelson, who each donated a half million each in the 2012 cycle.   [NYT] It shouldn’t come as any more of a surprise to find the name of Linda McMahon on a 2014 donor listing. [CPI]  Given the generosity of its donors, and their deep pockets, state elections aren’t off the table, the organization has already ventured into state elections in the Wisconsin recall, and  the 2012 Nebraska Senate race. 

Thus, when the end of the ad says – brought to you by the ES Action Fund, be advised this is the old GOP/Koch/Adelson Gang showering ultra conservative candidates and causes with thousands of reasons to vote in favor of more breaks for millionaires and billionaires.

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Stripping Doesn’t Have To Happen In a Bawdy House

Stripping is associated in most people’s minds with one of two things, either dancing while steadily removing garments accompanied by music by David Rose, or taking layers of paint and varnish off some surface.  In the financial world it means roughly the same thing, only better – for the bottom line. And since we’re not talking our our bottoms, but those of U.S. corporations with overseas affiliates, or those which want to shape themselves that way, let’s try to understand the language they are speaking.

The financial definition of Earnings Stripping is:

“A method of avoiding taxes by paying excessive amounts of interest to another party. For example, an American subsidiary of a foreign company might reduce its taxable income by paying an excessive amount of interest to its parent. The IRS has developed regulations that are intended to limit earnings stripping.”

Yes. the Internal Revenue Service is trying to do something about this highly dubious practice, in Section 163(j) of the law.  Implementing Section 163(j) means the IRS would require adherence to the “arms length” standard in intercompany indebtedness.  In one example, if 60% of an affiliated  firm’s assets are financed by debt, then the deduction for interest is limited to 50% of the firm’s operating profits. [TaxTR]

In order to carry out the law, the IRS has to be able to do two things. First, it has to evaluate whether or not there’s an arms length interest rate.  The key to arms length transactions is that neither side has any incentive to act against his or her own interest.  If I’m the banker I’m going to try to charge the highest interest rate for a loan I can, and if you are the borrower you are going to smile nicely, threaten to go to another bank, and work to get me to reduce the interest rate for the loan.  But, how to evaluate the arms length status of a loan made from the parent company to an affiliate?

Secondly, there has to be a way to determine if the operating profits truly reflect the “income attributable to the functions, assets, and risks incurred by the affiliate.” [TaxTR]  The affiliates credit rating helps determine if the interest rate is at least close to “arms length,” and the operating profits have to be such that the IRS can see that the intercompany interest rate at least has the appearance of propriety.*

And now the fun begins.  The current flap over corporate inversions plays is related to good old fashioned earnings stripping, the Wall Street Journal explains:

“When a U.S. company acquires a foreign firm, and decides to domicile overseas in a low-tax country like Ireland, it will often load the U.S. subsidiary up with debt that is “owed” to the foreign headquarters. Interest payments on this debt can often be deducted from taxable income. If the debt is considered “excessive,” the practice is known as “earnings stripping.”

The Bush Administration took a look at these dubious practices back in 2007.  The report (pdf) analyzed several proposals offered at the time to restrict the ability of foreign controlled domestic corporations to practice earnings stripping.  The report concluded that corporate inversions were associated with earnings stripping, and that the government needed to (1) look carefully at the arms length part of the problem, (2) update the regulations from those issued in 1968, and (3) new rules should be made to help determine the amount of income from a multi-national company is subject to U.S. taxation.

By August, 2014 not much movement had been made on restricting the global corporations from engaging in earnings stripping.  In what has become a familiar refrain,  the WSJ explains:

“The Obama White House has already proposed that Congress pass a law that would effectively end such earnings stripping arrangements, but Congress hasn’t acted. The Treasury Department could instead decide to act unilaterally to prohibit the practice, effectively by amending 163(j) in the tax code.”  (emphasis added)

The White House proposal is summarized by the analysts at CTJ:

“President Obama included two proposals in his most recent budget plan that would address the problem. The first would treat the entity resulting from a U.S.-foreign merger as an American corporation for tax purposes if it is majority-owned by shareholders of the original American corporation. The proposal would also treat the resulting entity as an American corporation if it has substantial business in the United States and is managed and controlled in this country.

The president’s second proposal would address earnings-stripping by barring American companies from taking deductions for interest payments that are disproportionate to their revenue compared to their affiliated companies in other countries.”

The issue was beginning to get some traction by August 14, 2014 when Senator Charles Schumer (D-NY), a member of the Senate Finance Committee, proposed a four part bill to end the earnings stripping game. Republicans were unwilling to move, saying it might make U.S. companies more attractive for foreign takeovers. [WSJ]

Opponents of restricting the stripping also cite the “high” U.S. corporate tax rate of 35%, however, large corporations – as in Fortune 500 – on average paid only 19.4% of their profits in federal income taxes from 2008 to 2012, and 26 companies in the Fortune 500 paid nothing at all during the five year period.  In other words, no matter how low the U.S. corporate income tax is set there will always be some entity lower, say at an inviting 0% – or Tax Havens. It doesn’t seem at all practical to allow U.S. corporations to pretend their profits are earned in Cyprus, Luxembourg, Bermuda, the Cayman Islands, Switzerland, or Singapore, [TW] when it’s perfectly clear for all to see their major business operations are in the United States.

Another argument for doing nothing, or even doing something worse, is that taxing overseas profits gives corporations an incentive to become foreign.  Fact checks are necessary at this point. U.S. taxes on foreign profits are minimal and American companies get “a tax credit equal to any taxes they pay to foreign governments, and are allowed to defer U.S. taxes until they officially bring their offshore profits to the U.S.” [CTJ]

If anything is done at all by the Do Less Than Nothing 113th Congress we might count it as miraculous.  One peek at the official calendar for the House of Representatives demonstrates the point. The House Majority Leader’s calendar illustrates the point that there are only five days on which votes are scheduled for the entire month of September. (pdf) No voting will take place in the House during the month of October, except for October 2nd, thereafter all days are labeled “district work week” – the district work being getting re-elected.    The Senate calendar isn’t much more full.

While Congress fiddles, or the band continues to play “The Stripper,” the list of U.S. corporations which have availed themselves of tax havens and possibly earnings stripping continues to grow. And the band plays on.  The longer the music continues the more average American income earners will be expected to shoulder the burden of generating revenue, and the less will be expected from corporations – those other kinds of “people,” my friend.

*For a more technical look at some of the controversy around Section 163(j) see Morrison, “Section 163(j) and Disregarded Entities,” Bloomberg BNA.  April 6, 2011.

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Alito’s Worst Decision?

On May 27, 2014 Justice Samuel Anthony Alito, Jr. wrote the opinion for the Supreme Court in the case of Plumhoff et. al. vs. Rickard. (pdf)  Mr. Rickard was killed, along with a passenger in his car, by gun fire from police pursuing him after a traffic stop.  The decision found that the use of deadly force was justifiable considering the threat to public safety posed by Mr. Rickard’s reckless high speed getaway attempt, Rickard’s 4th Amendment rights were not violated, and “in any event, the officers were entitled to qualified immunity because they did not violate a clearly established law.” [scotusblog

But, there was more.  How about the number of shots fired in the attempt to halt Rickard’s escape?  Were 15 shots unreasonable? The decision thought not:

“We now consider respondent’s contention that, even if the use of deadly force was permissible, petitioners acted unreasonably in firing a total of 15 shots. We reject that argument. It stands to reason that, if police officers are justified in firing at a suspect in order to end a severe threat to public safety, the officers need not stop shooting until the threat has ended. As petitioners noted below, “if lethal force is justified, officers are taught to keep shooting until the threat is over.” 509 Fed. Appx., at 392.”

There are some problems here.  First, is the Supreme Court really saying that if an officer fires once in the face of a “severe threat to public safety” that all subsequent shots are justified?   The Court did recognize that if initial volleys had incapacitated Rickard, subsequent shots might not be justified.  However, what of Allen, the passenger in the vehicle?

“Allen would be of central concern. But Allen’s presence in the car cannot enhance Rickard’s Fourth Amendment rights. After all, it was Rickard who put Allen in danger by fleeing and refusing to end the chase, and it would be perverse if his disregard for Allen’s safety worked to his benefit.” 

Yes, it would be perverse if Rickard used Allen as something of a hostage.  Yet there is still the unresolved issue of who created that severe threat to public safety?  The police in hot pursuit or Rickard for behaving like a fool? Thus, our second question.

Secondly, what constitutes a “severe threat to public safety?”  Mr. Rickard was stopped for a traffic violation, in his instance a broken headlight.  The initial impression, given the state of the windshield and the dysfunctional headline, lead the officers to believe the car had recently been involved in an accident; Mr. Rickard’s decision to flee the scene and lead the police on a high speed chase didn’t do anything to dissuade the officers that this was the case.  The officers caught up with Mr. Rickard in a parking lot.  Rickard continued his attempt to flee this scene as well, 12 more shots were fired and both individuals in the car were killed. These facts seem to illustrate a tragic process with several moving parts.

Did the reckless high speed chase, in itself, create a severe threat to public safety?  And, does this, in turn hinge on the type of pursuit policy adopted by the police department or law enforcement agency.  There are two forms of pursuit policy – a restrictive policy limits the crimes for which a pursuit may be initiated, and a discretionary policy gives the officers only basic guidance as to when to initiate, conduct, and terminate a pursuit. [PCM

If the Supreme Court is assuming that a discretionary policy is perfectly acceptable, then what does this mean for law enforcement agencies such as Las Vegas, NV which shifted to a restricted policy in the wake of a series of high speed pursuits that ended badly? [LVSun] In fact, Las Vegas Metro went from almost being a poster child for high speed errors to an exemplary  41% reduction in the initiation of high speed pursuits in the three years ending in 2013.  Indeed, the LVMPD was given national recognition for its achievements in improving safe pursuits in October 2013.

Common sense would appear to support the decision of the Las Vegas police to adopt a restricted pursuit policy which lessens the dangers to the suspect, the public, and the police. However, if there is no legal incentive to adopt such a model, then why would ‘unreconstructed’ police departments do so?  And, this of course leads to the unfortunate third question: Did the police create the “severe threat to public safety” when a pursuit was initiated without determining if the pursued was a known felon, or suspected in a felony, or a reasonable conclusion drawn that the pursued must be apprehended immediately?

Some police departments such as the LVMPD have well defined articulated use of force policies (pdf) not that these policies haven’t generated some controversy. [LVRJ 11/29/11]  Others, like the TMCC report dated April 2011 are more general: “… that officers use only the force that reasonably appears necessary to bring an incident under control, while protecting the lives of the officer and others.”  Even this is amended to include a “reasonable fear of death or serious bodily harm, or to prevent the escape of a fleeing violent felon who the officer believes poses a serious threat of death or serious injury to the officer and others.”  The state of California has 56 pages worth of guidelines for pursuits, crafted in no small amount of detail as of 2006.  The Reno (NV) Police Department summarizes its policy as:

“Officers may pursue a suspect when they reasonably believe the suspect has committed a felony or poses an immediate threat to human life. Unless exigent circumstances exist, officers will normally not pursue a suspect who has committed a misdemeanor crime. Officers must articulate justifiable cause necessitating immediate apprehension of the suspect when pursuing for any offense.”

The Reno policy also incorporates other considerations like traffic conditions, weather, pedestrians in the area, time of day, and the identity of the subject being pursued, among others similar to the California standards.   

If the decision in Plumhoff v. Rickard can be faulted for providing cover for law enforcement officers who may well have contributed to the “severe threat to public safety” in an ill-advised pursuit, and further criticized for justifying all the force necessary until the “threat is over,” then can it also be faulted for allowing police departments to meet the lowest possible standards?

Have Justice Alito and his colleagues sanctified the mediocre or worse, while disparaging the efforts of other jurisdictions to articulate and standardize their use of force and pursuit policies?  If so, then this may well be one of  Justice Alito’s worst decisions. 

[See NYT for more]

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