Auto Emissions Standards, SCHIP Continued, and Wal-Mart's Tax Evasion Thursday, October 25th, 2007 http://www.progressivestates.org/dispatch [1] In Today's Dispatch: Strengthening Communities Tired of Waiting, States Sue EPA to Allow Tougher Emission Rules Valuing Families Despite Lashing from Right, Family Keeps Fighting for Health Care Growing Economy Wal-Mart Tax Evasion Strategies Revealed in Court Documents

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

California's attorney general is planning to file suit [6]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 [7]the suit against the EPA. The suit was to be filed this week, but has been postponed [8] due to the wildfires raging in Southern California.

California is suing to force the EPA to act on a request [9]to enforce California's Clean Car [10]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 [11]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 [12] 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 [11] California's standards, which are significantly more advanced than Federal ones. To date, 11 other states have adopted [13] California's clean car standards and are waiting to implement them. That means that 35% of the population [14] 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 [15] to protect the environment, including exempting pesticides [16] from the Clean Water Act, adopting [17] air quality standards that actually endanger public health, and appointing Exxon's former chief [18] to chart America's energy future. All of which makes one wonder, what happened to the "environmental protection" part of EPA? 

Despite Lashing from Right, Family Keeps Fighting for Health Care

Despite finding itself in the crosshairs [19]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 [20]reauthorization package, many conservative pundits viciously attacked  [21]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 [22]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 [23]to expand coverage for adults and help small businesses provide health care benefits to employees. 

The Healthy Maryland Initiative [24], which passed the House earlier this year but died in the Senate, is receiving a new look [25] by lawmakers and advocates. Governor Martin O'Malley [26] is including much of the original proposal in his budget and tax plan, which will be taken up by a special session [27]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 [28] purchased by the Maryland Health Care for All! Coalition [29]. 

Revised SCHIP Bill Likely to Limit States: As Kaiser Daily [30]reports, Congress may vote as soon as today [31] on a revised SCHIP package that tries to weaken some of the Right's most repeated criticism [32] of the original package that was heartlessly vetoed [33]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 [34] 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.

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 [35] 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 [36], 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 [37], 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.