Auto Emissions Standards, SCHIP Continued, and Wal-Mart's Tax Evasion

Strengthening Communities

BY J. Mijin Cha

Tired of Waiting, States Sue EPA to Allow Tougher Emission Rules

California's attorney general is planning to file suit in federal court against the EPA for stalling on a decision about whether California and 11 other states can implement rules requiring car makers to produce cleaner cars. Connecticut, Pennsylvania and Washington also plan to join the suit against the EPA. The suit was to be filed this week, but has been postponed due to the wildfires raging in Southern California.

California is suing to force the EPA to act on a request to enforce California's Clean Car legislation. The Clean Car legislation requires car makers to reduce global warming emissions from new passenger cars and light trucks beginning in 2009 and aims to cut emissions 25% by 2030. Before the law can be implemented, however, California must request a waiver from the EPA under the Clean Air Act because the state would be implementing its own motor vehicle emissions standard that would be different from Federal regulations. California first requested the waiver in December 2005, almost two years ago.  Fed up with EPA inaction, California is turning to the courts. The suit also falls on the heels of an earlier Supreme Court decision that decided the EPA had the authority to regulate carbon dioxide under the Clean Air Act, a precedent that opens the way for California to enact its own regulations under the Act if granted a waiver.

The delay affects more than just California. Once the waiver has been granted, other states can adopt California's standards, which are significantly more advanced than Federal ones. To date, 11 other states have adopted California's clean car standards and are waiting to implement them. That means that 35% of the population would be under California's emissions rule if the EPA would grant the waiver. The EPA's inaction is inexcusable and just another example of its utter failure to act to protect the environment, including exempting pesticides from the Clean Water Act, adopting air quality standards that actually endanger public health, and appointing Exxon's former chief to chart America's energy future. All of which makes one wonder, what happened to the "environmental protection" part of EPA? 

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Valuing Families

BY Adam Thompson

Despite Lashing from Right, Family Keeps Fighting for Health Care

Despite finding itself in the crosshairs of the Right's fire-at-will attack machine, a Maryland family is unbowed as it shifts focus from advocating for SCHIP reauthorization to a Maryland proposal expanding health care. Unfortunately, Maryland and other states may find it harder to implement state/federal programs like SCHIP in ways that best meet their residents' unique needs. As Congress seeks to develop a veto-proof SCHIP bill, the Right is winning concessions that will limit a state's ability to implement SCHIP programs that best meet its residents' unique needs - an odd development given the Right's past rhetoric of "state's rights."

Desperate to defeat the bi-partisan SCHIP reauthorization package, many conservative pundits viciously attacked 12-year-old Graeme Frost and his

family after he gave a radio address calling on President Bush to sign the legislation. Three years earlier, Graeme suffered severe brain injuries in a car accident and had his medical bills covered by Maryland's SCHIP program. Never to let the truth get in its way, these columnists and bloggers distorted the family's financial situation and argued they shouldn't receive public health care. In fact, the Frost's are a family of 6 with a combined income of $45,000, which puts them below 200% of the poverty line, and their children attend private school on scholarships.

The Frosts make too much for Medicaid, but their children qualify for SCHIP, leaving the parents uninsured. Bonnie and Halsey Frost are putting the national political controversy aside and turning their activism to a proposal before the Maryland legislature to expand coverage for adults and help small businesses provide health care benefits to employees. 

The Healthy Maryland Initiative, which passed the House earlier this year but died in the Senate, is receiving a new look by lawmakers and advocates. Governor Martin O'Malley is including much of the original proposal in his budget and tax plan, which will be taken up by a special session of the legislature starting October 29th. The health care provisions include a Medicaid expansion to cover an additional 100,000 people, help for small businesses to afford coverage, and a $1.00 increase of the cigarette tax to help reduce smoking rates and finance the expansions. To support the initiative, Bonnie Frost is featured in a radio ad purchased by the Maryland Health Care for All! Coalition

Revised SCHIP Bill Likely to Limit States: As Kaiser Daily reports, Congress may vote as soon as today on a revised SCHIP package that tries to weaken some of the Right's most repeated criticism of the original package that was heartlessly vetoed by President Bush; including the false yet politically manipulative assertion that the bill would have expanded coverage to families earning $83,000 a year. Unfortunately, this revised package is likely to include new restrictions on how states implement their SCHIP programs, including eligibility capped at 300% of poverty and burdensome proof-of-citizenship requirements. Although Congressional leadership is committed to a $35 billion expansion and covering 10 million children, additional restrictions limit the ability of states to devise programs that meet their resident's unique needs, a hallmark of state-federal partnerships over the last 40 years.

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Growing Economy

BY Nathan Newman

Wal-Mart Tax Evasion Strategies Revealed in Court Documents

Corporations don't usually like to reveal how they evade taxes, but a lawsuit by the state of North Carolina over Wal-Mart's tax practices has produced the detailed game plan for how the company has manipulated the law to cut their state taxes. As the Wall Street Journal detailed Tuesday, the court case highlighted how the company used tax shelter strategies designed by corporate accounting firm Ernst & Young, a company where four current and former partners were indicted this year for illegal tax-shelter work. 

The key to many of the tax evasion strategies used by Wal-Mart, like many other companies, was to manipulate the reporting of national profits and expenses in different states tailored to wherever reporting them would minimize the taxes owed. The end result was that instead of paying the 6.9% average tax on corporate profits paid by most companies to state authorities, Wal-Mart paid only half that rate. As we discussed earlier this year, one key strategy has been using real estate trusts owned by Wal-Mart to "rent" property to itself. Six states this year passed laws to prohibit this maneuver and encourage combined reporting of all profits by subsidiaries in a state. Four other states are challenging the practice in court. 

The Journal article highlights the problem of having a company like Ernst & Young providing tax advice, then turning around to act as an "outside auditor" to pass judgement on its own advice in reporting to shareholders, exactly the kind of dual role that led to wholesale criminal activity at Enron. 

Requiring Tax Disclosure: It shouldn't take a lawsuit for public officials to be able to identify tax abuses by big companies. When supposedly independent auditors have become partners in often criminal tax evasion, the time has come for states to require annual and public disclosure of what taxes large corporations are paying and how they are allocating supposed costs and profits between different states. In its Requiring Corporate Tax Disclosure, the Center on Budget Policy & Priorities outlined a model plan for how states can design such tax disclosure policy to allow legislators and tax authorities to identify likely corporate abuses more easily.

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Research Roundup

In two new reports, the Urban Institute highlights data on how government can encourage low-income families to save and acquire assets for long-term economic empowerment:

In "Foreclosure Exposure 2: The Cost to our Cities and Neighborhoods", ACORN  surveys 96 metropolitan areas where property owners, local governments, lenders and investors alike stand to lose more than $25 billion due to foreclosures.

American Rights at Work and the Leadership Conference on Civil Rights will be releasing a report today, FedUp with FedEx: How FedEx Ground Tramples Workers' Rights and Civil Rights, on the chronic misuse of independent contractor laws by FedEx to deny legal wages and benefits to their workers and use creative accounting to evade taxes owed.   

In the Hudson Valley Farmworker Report, researchers from Adelphi and Bard College highlight how farmworkers in New York are denied many of the legal protections other workers enjoy, particularly the freedom to form unions, resulting in desperately low wages, fears due to their immigration status, and abuse by employers.

As Georgia leaders discuss abolishing the state's property tax, two reports from Georgia State University's Fiscal Research Center (FRC) detail how repealing property taxes would create an $8.6 billion budget hole for the state -- and that a proposed increase in sales taxes to make up for the deficit would fall at least $2 billion short of filling that hole.

As part of a federally funded study, RAND found that while states are meeting requirements under the No Child Left Behind Act (NCLB) to ensure that every child is taught by a "highly qualified teacher," state standards on what counts as a highly qualified teacher vary dramatically. However, significantly fewer special education teachers were deemed to be highly qualified under state standards and many schools failed to communicate to teachers what their status was and what was needed to raise their training appropriately.

Please email us leads on good research at


Tired of Waiting, States Sue EPA to Allow Tougher Emission Rules

Progressive States - Supreme Court Rules for State's Rights and the Environment

CA Clean Cars - AB 1493

Clean Cars Campaign

BushGreenwatch: Tracking the Bush Administration's Environmental Misdeeds

Despite Lashing from Right, Family Keeps Fighting for Health Care

Maryland Health Care for All! Coalition  

Families USA - The Healthy Maryland Initiative: Good for Maryland's Economy

Center on Budget and Policy Priorities - Poor Children First - Or Last?  Watch What the Administration is Doing, Not What It Is Saying

Wal-Mart Tax Evasion Strategies Revealed in Court Documents

Progressive States - "Wal-Mart Rips Off Taxpayers by Paying Rent to Itself "

Progressive States, -"Disclosing Corporate Tax Dodgers "

Wall Street Journal, -"Inside Wal-Mart's Bid To Slash State Taxes "

Center on Budget Policy & Priorities - State Corporate Tax Disclosure: The Next Step in Corporate Tax Disclosure

Wal-Mart Watch - Wal-Mart's Tax Avoidance Schemes

Ernst & Young memo on tax-cutting strategy for Wal-Mart

Eye on the Right

You may think voter ID laws are an unnecessary burden that discriminates against minority groups, and a number of lawyers at the Justice Department agree with you. But that didn't stop their boss in the Civil Rights Division, John Tanner, from approving the policy.

In fact, Tanner went on to argue that, contrary to his subordinates' findings, white voters would be the ones most affected. The group most likely not to have ID is the elderly, and while white people age, Tanner argues minorities simply "die first."

Tanner went on to say, "People who are poor are poor. They're not stupid. They're not helpless." Well, apparently the Justice Department is doing all it can to change that last part when it comes to voting, even if it means ignoring his employees' findings.

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The Stateside Dispatch is written and edited by:

Nathan Newman, Policy Director
J. Mijin Cha, Policy Specialist
Adam Thompson, Policy Specialist
John Bacino, Communications Associate

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