William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of “control fraud” frauds in which the CEO or head of state uses the entity as a “weapon.” Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae’s former senior management.
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Baltimore. And welcome to this week’s edition of The Black Financial and Fraud Report with Bill Black, who now joins us from Kansas City, Missouri.
Bill is an associate professor of economics and law at the University of Missouri-Kansas City. And he’s the author of the book The Best Way to Rob a Bank Is to Own One.
Thanks for joining us, Bill.
BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.
JAY: So I guess you’ve been following the Apple tax cases or issue.
BLACK: Yeah. So Senator Levin continues to do virtually the only real investigation being done in the United States of the elite entities. And he has summarized this as Apple achieving the holy grail of tax evasion, which is that Apple has succeeded in creating the stateless corporation that makes literally tens of billions of dollars and pays taxes to absolutely no one. And at the hearing that was just conducted, it turned into a love fest for Apple instead of a crackdown on this behavior, with even Levin holding up his iPhone and giving them a free advertisement about what a great product it was and how he loved them. And then Ron Paul attacked the Senate for how dare you criticize Apple for evading taxes.
JAY: Ron Paul or Rand Paul?
BLACK: I’m sorry. Rand Paul.
JAY: Right. And so what was it that Apple said that won them over? I mean, why bother to have them come testify if it’s going to turn into this love fest?
BLACK: Well, what they said was it’s all your fault and we had nothing to do with it. And, of course, that’s completely untrue, because it is the corporate lobbyists that have created this tax. And so they ended up with this really wonderful example of chutzpah, which is if you get criticized for paying virtually no taxes, your proposal is: let’s reduce U.S. tax rates so that they’re virtually nonexistent. And this is called repatriation, when you bring these profits home.
Now, these profits are really home, but they’re not home in the United States in a taxable fashion. So they would bring them home in a taxable fashion, but only if, they said, the tax rate for this kind of corporate income tax was reduced to single digits. And we did this before at the behest of the largest U.S. corporations, and there was a study done, and it found that when they brought these sums back for taxable purposes under a special repatriation legislation, 92 percent of the money went to corporate buy-backs of stock. Now, that’s designed to increase the stock value so that it will increase the value of the senior officers’ bonuses that are largely paid in stocks and to dividends and to direct executive compensation. And the same study found that there was no increase in jobs from all of this.