Tuesday, August 26, 2014

California Businesses Need Stronger Federal Clean Water Rules

By Steve Frisch

You don't have to be a native Californian to know how important water is to our state, especially in light of the current record-breaking drought. The total cost of this drought is already running into the billions of dollars, and could end up costing us thousands of jobs.
Water is an economic necessity, and we need to protect it. That's why a law like the Clean Water Act, designed to protect our waterways from harmful discharges, is so important -- not just for agriculture, but also to industries like tourism, fishing, manufacturing and even technology. With water so scarce in California, and the state expected to grow to 50 million people by 2050, we need to make sure we re protecting every drop.
Unfortunately, a pair of Supreme Court decisions in 2001 and 2006, made Clean Water Act enforcement confusing. The Environmental Protection Agency (EPA) has proposed a new "Waters of the U.S." rule to address this confusion. We need Senator Dianne Feinstein to join us in supporting that rule.
"Waters of the U.S." makes clear that most seasonal and rain-dependent streams, as well as wetlands near rivers and streams, are and have always been protected waterways. About 60 percent of streams in the US flow seasonally or following rainfall, and about 117 million Americans -- one in three of us -- get drinking water from public systems that rely at least in part on these streams.
Contrary to what many opponents have claimed, these rules would not give the EPA any new authority under the Clean Water Act. No new types of waters would get protection, and -- despite some particularly strange claims -- irrigation ditches would not be covered. All the rules would do is more clearly define the waterways the EPA can protect.
They will also give the business community the certainty they have been asking for since the Supreme Court's decisions a decade ago. This aligns with Senator Feinstein's demonstrated support for California businesses and her efforts to address the drought-induced state of emergency declared by Governor Jerry Brown in January.
Small business owners are in favor of these protections. A national scientific poll recently released by the American Sustainable Business Council found that a whopping 80 percent of small business owners support the protections described by the proposed "Waters of the U.S." rule. And that includes strong majorities of Republicans, as well as Democrats and Independents.
They understand that without clean water, many companies cannot operate. As water costs go up, supply chain materials either disappear or cost substantially more to obtain, and potential customers feel the pinch and spend less on goods and services, existing businesses suffer -- and more of them shut down.
Big business isn't different. One reason Silicon Valley soared as a technology manufacturing hub was its access to clean water from the Sierra Nevada. That growth has had a tremendous positive impact on our state's economy, to the point where Silicon Valley accounts for 28 percent of our income tax base.
And smart water regulations can do wonders for economic development. In localities like Placer County, for example, regulators have been working to identify and plan for protection of water and other resources under a project called "Placer Legacy," which speeds permitting processes and reduces carrying costs on investments. It's just smart business.
Then there's the flip side. If we don't protect our waterways, our local economies will suffer. The Elk River spill earlier this year cost $19 million a day. Our economy doesn t need that kind of damage. No business benefits from contaminated water, and for many industries, it's potentially devastating. We need to act now to protect them. That's why we hope Senator Feinstein will help protect this precious resource by supporting this new EPA rule.
Frisch is President of the Sierra Business Council, a non-profit network of more than 4,000 businesses, community organizations, local governments and individuals working to foster thriving communities in the Sierra Nevada.

Walgreens' Founder Wouldn't Approve Company's Unpatriotic Tax Dodge 

By Jim Burke

Charles Walgreen Sr., founder of the nation's biggest drugstore chain, would not approve of what the management of his company is planning. He would never have considered moving his headquarters address to a foreign country just to avoid paying the company's fair share in U.S. taxes. He loved his community and country too much.

How do I know? Because I'm the mayor of the small city in Illinois where Charles Walgreen spent his formative years, went to public school and had his first experience working in a drugstore. Later, after Walgreens bought a pharmacy in Chicago and grew it into a hugely successful chain, he became a major benefactor of the city of Dixon because he believed that a good business gives back. Now, instead of giving back, the company he founded soon may turn its back on our nation.

Walgreens' management may decide by the end of July whether to renounce its corporate "citizenship" in the United States.

To be clear: the corporation wouldn t move any of its 8,200 U.S. stores overseas. It likely would not move its management, employees, or headquarters offshore. Just its corporate address would change -- on paper -- from Deerfield, Illinois to somewhere in Switzerland, a tax haven country. With that simple switch, the company would avoid $4 billion in U.S. taxes over the next five years, according to a recent analysis.

Walgreens would still derive almost all of its $72 billion in annual revenue from loyal American customers. A quarter of that income comes from public sources -- Medicare and Medicaid prescription payments. Even if you don't shop at Walgreens, as a taxpayer, you're aiding its bottom line.

Even with its new offshore address, Walgreens would still benefit from all the services U.S. taxes pay for -- from roads to education to stable markets to our legal system to national defense. But it would pay far less for that privilege, leaving American taxpayers to pick up the tab.

I'm not anti-business. I'm a small business owner myself. I believe in free enterprise. As mayor, I encourage economic development and the jobs it creates. But I also believe that Americans have the right to expect that the corporations they support with their patronage should return their loyalty.

That's how it worked here in Dixon -- and we can thank Charles Walgreen in large part for that. He saved the Dixon National Bank during the Depression, donated 100 acres to create Dixon s public golf course, established our municipal airport and even helped erect a statue to another Illinois success story, Abraham Lincoln.

Like Lincoln, Walgreen rose from humble origins. Charles R. Walgreen, Sr., was born to Swedish immigrants on a farm near Galesburg. At 14, he moved with his family to Dixon, where he attended public school, played sandlot baseball and swam in the Rock River. He worked in a local shoe factory, general store and finally found his true calling in a drug store.

He started his business after moving to Chicago as a young man, but soon returned to Dixon. And as his business thrived, he made sure its home thrived as well. Now his successors want to abandon that ideal by abandoning our country.

Walgreens wouldn't be the first corporation to try this change-of-address tax dodging trick -- more than 75 others have done it since 1983. And at least a dozen other companies -- including AbbVie, Medtronic, Mylan and others -- are quietly planning to announce their own plans to abandon America.

If Walgreens becomes the first big retailer to abandon the United States, it could start an even larger tide of corporate defections that could cost U.S. taxpayers almost $20 billion over the next 10 years according to the non-partisan Joint Committee on Taxation. More and more U.S. corporations will unscrew the nameplate on their U.S. headquarters building, tack it up in a tax haven offshore and dodge billions in U.S. taxes -- all while continuing to receive all the privileges and benefits of operating here in America.

Where is their sense of shame? Where is their patriotism? Where are the morals that guided Charles Walgreen?

Unless Congress acts, we won't be able to block these shady maneuvers. But I expect that many Walgreens' customers may vote with their feet and pocketbooks, passing by the local Walgreens to shop at another drugstore chain or a neighborhood pharmacy that is paying their fair share.

Walgreens executives say they still haven't decided whether or not to pull off this accounting sleight-of-hand. Before they decide, they should give some thought to their founder -- and also to a young kid who used to caddy for him at that public golf course he built. The caddy's name was Ronald Reagan, another Dixon native, whose patriotism and sense of public duty were surely encouraged by the example of Charles Walgreen.

Burke is mayor of Dixon, IL.

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The Smart Money is on Energy Efficiency

By Russell Cann 

If you can invest money now on something that will pay for itself in three years, then provide you with free money every year after that, would you do it?
Well, this "something" really exists, and it's called energy efficiency. Right now, we need the state government to embrace it. Unfortunately, the South Carolina legislature has taken the opposite step, pushing legislation this year that attacks energy efficiency in the state. The result being that the economic benefits of energy efficiency in the state will not be realized. There's no apparent reason for this -- especially if you're someone who thinks government should be run like a business.
At Elauwit, we build and manage private telecommunications and data networks around the country, and we have firsthand understanding of how well energy efficiency can work. When we renovated our network operations center in Columbia, we spent over a quarter million dollars on energy efficiency -- everything from improved windows and high-efficiency lighting to occupancy-managed HVAC.
Yes, that's a big investment, but the payoff has easily been worth it. Our energy bills should have been over $14,000/month -- but with our energy efficiency investments, we cut them to $2,000/month. Our big investment will pay for itself in just two years. Everything after that is free money -- money we can use to make more investments, hire more people, and improve our bottom line. This is money we wouldn't have had otherwise. And since we work in over 40 states, there are a lot of places we can use this.
In addition, energy efficiency is something we work on with our clients around the country. Just by managing HVAC and hot water usage, we have cut client energy usage by as much as 30 percent, thus paying for the investment in less than twenty four months.
This wasn't always the case. Even just six years ago, the technology was so expensive that the return on investment wasn't there from a business perspective. But technology has advanced rapidly since then.
Think how much technology exists in your phone today that was not there in 2008. Apply that same technology shift to energy management and you understand the cost reductions that have occurred in this arena. Infrared sensors now can turn off lights when people leave a room and controls can change hot water usage in periods of lower demand. Investing in energy efficiency technology can pay for itself in a few short years, if not months.
Yes, there's an environmental benefit -- and a lot of companies will point to that in their marketing materials -- but the economic benefit can't be understated.
For government, it makes even more sense to follow the Leadership in Energy & Environmental Design (LEED) standards that offer the best building strategies and practices. Borrowing costs are usually lower for government than business, and government usually replaces its infrastructure less frequently. This means the overall return on investment can be greater even if the cost is higher.
There are jobs to be created as well. A total of 139 South Carolina businesses are members of the US Green Building Council (USGBC), whose LEED program is among the best energy efficiency programs nationwide; fifteen of those are among the state's top 50 employers. Statewide, there are more than 190 LEED-certified projects with more than 16 million square feet of space. That's a lot of work for the 1,600 South Carolinians who are LEED-credentialed to design, install and manage energy efficient systems.
This trend isn't limited to South Carolina; according to McGraw-Hill Construction's 2013 Dodge Construction Green Outlook report, green construction will represent 55 percent of all commercial and institutional construction by 2016. Nationwide, 88 of the Fortune 100 companies already use LEED. That construction is green for the environment -- and green for the money it saves.
We often hear people say that government should be run like a business. It should -- especially when it comes to new construction and renovation of public buildings. By following LEED today and adopting new standards as they are developed, the operational costs of these buildings for decades will be dramatically lower due to incorporating energy efficiency into the design. The additional upfront costs will be recouped many times over by saving money for future generations of taxpayers.
That's what running government like a business means: making smart business decisions about energy efficiency today that will yield a financial return in the future.
Cann is chairman of the board of Elauwit, LLC, a content and technology company based in Columbia, South Carolina.

Time to Stop Corporate Defections

By Frank Clemente 

In the most blatant display of national disloyalty since Benedict Arnold sold out to the British, at least a dozen American corporations are planning to renounce their corporate "citizenship" in the United States and declare themselves foreign companies.
They won't physically move their facilities overseas -- they'll just reincorporate on paper in a tax haven where they have few employees or any real business. They will continue to enjoy the substantial benefits of operating here, but they'll pay the rock bottom tax rates of a tax haven.
These defections, known as corporate "inversions," will lose $20 billion in revenue over the next decade, according to the Joint Committee on Taxation. Many observers think that estimate is too low because it does not take account of the recent stampede of companies to invert. But there is no doubt that American taxpayers will be forced to pick up the tab.
The question is whether Congress has the will to act swiftly to stop the defections. Some argue that legislation to restrict inversions should be part of a broader tax-reform package. But it is obvious that no major overhaul will take place before 2015 at the earliest. Senate Finance Committee Chairman Ron Wyden (D-OR) is holding a hearing on the issue this week to explore what can be done. He has said he wants a short- and long-term solution to the inversion problem. It is critical that Congress pass a short-term fix to prevent even more companies from defecting.
Members of Congress who haven't paid attention to this issue may find that it is burning hot back home in August. In a few weeks, Walgreens, the largest pharmacy chain in America with 8,200 stores and locations in all 50 states, will likely announce that it will become a Swiss company. More than 75 companies have undergone inversions since 1983, but none is as highly visible in every state in the nation as Walgreens.
Walgreens will have little to stand on if it claims it is renouncing the United States for valid business reasons because its motivation is pure tax dodging. The inversion would allow it to avoid $4 billion in U.S. taxes over the next five years, my organization recently determined. The company earned almost all of its $72 billion last year in America. One quarter of the total came from U.S. taxpayers -- through Medicare and Medicaid. And its chief competitor -- CVS -- actually paid a higher average tax rate from 2008 to 2012 than did Walgreens.
Corporate inversions don't just hurt our public pride; they also steal our public services. Companies that invert continue to take full advantage of our educated workforce, legal system, patent law, financial markets, transportation system, and federally-funded research -- without fully paying for that right. They still get lucrative government contracts and make huge profits selling products to millions of American consumers, even after deserting America.
By refusing to pay their fair share of taxes for those benefits corporations cause larger deficits, deeper cuts to government services, or higher taxes on average American families, small businesses and large domestic firms that play by the rules.
If Walgreens declares it is a foreign corporation for taxes purposes, Americans will see it as an abandonment of the United States, a rejection of our values, a betrayal of our trust, and a deeply unpatriotic, un-American or even traitorous act.
Sen. Chuck Grassley once said "These expatriations aren't illegal. But they re sure immoral."
If Walgreens abandons America, Congressional offices should expect to field phone calls from angry constituents who want to know why Congress hasn t yet done anything to stop it. A simple first step would be to support a legislative proposal from President Obama, which is embodied in the Stop Corporate Inversions Act of 2014, sponsored by Sen. Carl Levin (D-MI) and 21 other senators and by Rep. Sander Levin (D-MI).
Their legislation would make inversions difficult in two ways. The foreign company that emerges after a U.S. company merges with and effectively becomes a subsidiary of a foreign firm would have to be more than half owned by foreign shareholders. Moreover, its operations would have to be managed and controlled by the foreign firm; currently U.S. companies that invert keep their headquarters and base of operations here.
If Walgreens becomes a Benedict Arnold company by renouncing its American corporate "citizenship," there will be no avoiding the corporate inversion issue. In this election season, Members of Congress would be wise to get ahead of the curve, to be outspoken and to fight hard for legislation that stops these corporate betrayals. This is one injustice that the public is sure to understand -- and remember.
Clemente is executive director of Americans for Tax Fairness.