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Another Clever GE Deal Highlights Flaws of the Corporate Tax Code Print
Thursday, 29 October 2015 13:33

Sloan writes: "General Electric is breaking itself into pieces these days, but its famous tax department is still intact."

Jim Fowler, chief information officer of General Electric, speaks during the Oracle OpenWorld conference on Oct. 26 in San Francisco. (John G. Mabanglo/EPA)
Jim Fowler, chief information officer of General Electric, speaks during the Oracle OpenWorld conference on Oct. 26 in San Francisco. (John G. Mabanglo/EPA)


Another Clever GE Deal Highlights Flaws of the Corporate Tax Code

By Allan Sloan, The Washington Post

29 October 15

 

eneral Electric is breaking itself into pieces these days, but its famous tax department is still intact.

You can see that from a pending transaction that would allow GE to finish extracting $23.5 billion of value by unloading one of its businesses — without paying a penny of income tax on the approximately $4.6 billion of profit that it would show shareholders if the deal were completed today.

Yes, I know this sounds confusing. But please bear with me as I tell you about GE, its soon-to-be-former subsidiary named Synchrony Financial and a tax-efficient, corporate-mainstream transaction called a split-off.

In what proved to be a timely transaction — please forgive the pun on Synchrony’s name — GE had Synchrony become a public company in summer 2014 via an initial public stock offering that raised about $2.9 billion and turned Synchrony into a company with 15 percent public ownership, leaving GE with 85 percent.

Synchrony runs “private-label” credit cards for merchants, such as Amazon.com and Wal-Mart, and even has its own bank. It’s a nicely profitable business that used to be part of GE’s financial arm, which GE is in the process of divesting.

The money Synchrony raised through its IPO helped it repay about $8 billion that it owed GE, which is why I include the $2.9 billion of IPO proceeds in the value GE is realizing by unloading Synchrony. Because the money Synchrony gave GE was repaying an intra-corporate loan, GE owed no income tax on it.

Now, we come to the big bucks — a “split-off” under which GE will offer its shareholders a chance to swap some or all of their GE shares for the Synchrony shares that GE owns. GE would swap Synchrony stock worth $22.2 billion (at Synchrony’s closing price on Wednesday) for GE stock worth $20.6 billion. The $1.6 billion price differential is designed to give GE shareholders an incentive to absorb all the 705 million Synchrony shares that GE owns.

The deal, scheduled to be completed in mid-November, would let GE retire about 7 percent of its outstanding shares if Synchrony and GE stock is the same then as it is now. The transaction is the functional equivalent of selling its Synchrony stake and using the cash to buy GE shares — except that there’s no taxable gain, the way there would be in a straight-up Synchrony stock sale.

How much would this save GE? By my reading of GE’s documents, the deal would show a $4.6 billion profit for earnings purposes at today’s prices but no gain for tax purposes. So I will use $4.6 billion as the taxable gain GE will avoid having to show. That would save GE about $1.75 billion in income taxes. The actual profit will be determined when the deal closes.

GE told me it could not comment on my math because the split-off deal is in registration with the Securities and Exchange Commission.

GE’s tax office is famous — some would say infamous — for finding innovative ways to cut GE’s income tax bill. While I was at Fortune magazine, from which I retired this year, I tried to do a story in conjunction with ProPublica (where I’m a senior editor) that would have put GE’s now-retired tax chief on the cover and called him “GE’s Most Valuable Employee.” Alas, that story fell through.

By GE standards, this split-off isn’t aggressive or groundbreaking. “Split-offs have been around for a long time,” tax expert Robert Willens told me. He said that a 1997 transaction in which DuPont split off its stake in Conoco, a big energy company, was the first time a prominent, blue-chip company used the technique. Numerous other split-offs have followed.

Why am I writing about this deal even though it’s not scandalous, illegal or even hyper-aggressive? Because the fact that a deal such as this has become routine tells us a lot about how convoluted our corporate tax code has become. And how hard it will be to fix it. If we ever try.

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Abusive Cop vs. Dancing Cop: One Chose Force. The Other Chose Humanity. Print
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=27855"><span class="small">Petula Dvorak, The Washington Post</span></a>   
Thursday, 29 October 2015 13:29

Dvorak writes: "Twice this week, the nation was moved by the way a white cop confronted a black teenaged girl and her mobile phone. For very different reasons."

A D.C. teen says an officer tried to defuse a conflict with her impressive dance skills. (photo: Antwain Bynum)
A D.C. teen says an officer tried to defuse a conflict with her impressive dance skills. (photo: Antwain Bynum)


Abusive Cop vs. Dancing Cop: One Chose Force. The Other Chose Humanity.

By Petula Dvorak, The Washington Post

29 October 15

 

wice this week, the nation was moved by the way a white cop confronted a black teenaged girl and her mobile phone. For very different reasons.

In South Carolina, the teen was texting in math class and wouldn’t put her phone away. Teens and their phones, right?

But the campus officer who came to the class responded in the worst possible way, yanking, slamming and dragging the girl across the classroom. It was a violent 11 seconds of video that made millions of people gasp and, thankfully, got the cop fired.

Sadly, in this time of a national awakening to stunning incidents of Bad Cop brutality — from ruthless arrests caught on camera to fatal shootings — this has become what we expect to see.

But many of this country’s 780,000 sworn police officers know how to do their jobs the right way.

In Washington, police showed up in a neighborhood near the Nationals baseball stadium to break up a fight between two groups of teens. After it was over, 17-year-old Aaliyah Taylor, a senior at Ballou High School, walked up to the officer and started playing “Watch Me (Whip/Nae Nae)” on her phone. Instead of clearing out, as the police officer had demanded that she and the rest of the crowd do, she started dancing the Nae Nae. You could totally see a teen doing this, right?

That officer had a choice. Yell at the teen for being defiant and disrespectful? Go rogue and slam the teen to the ground, South Carolina-style?

Nope. Instead, the officer began dancing, too, matching Aaliyah move for move. It was a hilarious, uplifting and refreshing 56 seconds of video that immediately went viral.

It shouldn’t be news that a police officer used her humanity to defuse a tense situation instead of escalating it, that a white cop didn’t use force against a black teen. But for many people in Aaliyah’s community, it was.

All seven of her siblings have been cuffed or arrested by police for nonviolent crimes, like breaking curfew, she told The Washington Post’s Perry Stein. And her brother and six sisters all told her that the police were rough on them. We saw that video in South Carolina. We know it happens.

Aaliyah lives in a rapidly changing city that is becoming less and less welcoming to people who look like her.

Her neighborhood near Ballou High School in Southeast Washington is a world of jump-outs and street corner pat-downs. Dozens of students at her school have been killed in the past decade. You’re wearing a hoodie? Dark pants? You’re going to get stopped. Kids in her neighborhood run when they see police.

Surveys and studies — Gallup, Pew, USA Today — show that nationwide, African Americans aren’t confident in the way police interact with their communities.

“I thought all cops were cruel because that’s how I saw them,” Aaliyah explained later.

The police officer, rather than taking her down like a drug kingpin caught in a sting, laughed at Aaliyah’s challenge to her authority, warned her that she had better moves and started dancing, clunky cop shoes, turtle-shell body armor and all.

“Instead of us fighting, she tried to turn it around and make it something fun,” Aaliyah said. “I never expected cops to be that cool. There are some good cops.”

Yes, Aaliyah, there are some good cops.

The police officer, who has been on the force for about three years and recently returned from a tour of duty in Iraq, told The Post she was embarrassed that her take on community policing had gotten so much attention.

“This is what we do every day,” she said.

D.C. Police Chief Cathy L. Lanier later reinforced that, issuing a statement calling the dance-off one “of the many positive police-community interactions that take place daily in Washington, D.C.”

Maybe not with so much style, but yes, this does happen every day, all over the country. (Actually, cops in Utah, San Diego, Sacramento, Texas, New York and Philadelphia have all been filmed dancing the Nae Nae on duty this year. Seriously.)

But it’s also true that Bad Cops — and the long-standing refusal of many departments and prosecutors to hold them accountable for their actions — ruin the reputation, hard work and personal sacrifice of the tens of thousands of Good Cops.

One America is gasping at the brutality of the South Carolina video — the kind of stuff black Americans have been talking about all along — while another America is stunned that Good Cop actually exists.

We’re slowly making progress.

Dance on, Good Cop.

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FOCUS | Best Moment on GOP Debate Night: Bernie Sanders Print
Thursday, 29 October 2015 10:45

Excerpt: "Chris Christie, Ted Cruz, Donald Trump, Ben Carson ... had memorable moments calling out the media during the 3rd Republican debate, but the candidate for president who had the best moment of the night was Bernie Sanders. No, it wasn't on Twitter, where he shined during the first two debates of the clown car. This time it was on stage at George Mason University."

George Mason University senior Remaz Aedelgader asks Senator Bernie Sanders how he will push back against Islamophobia. (photo: Alice Ollstein)
George Mason University senior Remaz Aedelgader asks Senator Bernie Sanders how he will push back against Islamophobia. (photo: Alice Ollstein)


Best Moment on GOP Debate Night: Bernie Sanders

By Scott Galindez, Reader Supported News

29 October 15

 

here were several memorable moments during the GOP debate, mostly at the expense of the media. I don’t usually agree with the Republicans, but I do think they have a point on all the gotcha questions they faced in the first and third debates. Don’t get me wrong, I enjoyed them, and even personally think the candidates deserved what they got. But I do agree we would all be better served if we had debates on the issues.

There is a case to be made that if the candidates are running negative campaigns, like most Republicans are, they deserve to be called out. Chris Christie, Ted Cruz, Donald Trump, Ben Carson … had memorable moments calling out the media during the 3rd Republican debate, but the candidate for president who had the best moment of the night was Bernie Sanders.

No, it wasn’t on Twitter, where he shined during the first two debates of the clown car. This time it was on stage at George Mason University. Bernie was holding a national student town hall meeting. A question came from an American Muslim student who said she wants to change the world. Bernie called her up on stage and gave her a hug and then gave a very personal response.

George Mason University senior Remaz Abdelgader asked Senator Sanders how he would deal with the rising tide of Islamophobia in the country she loves.

“With the growing Islamophobia in this country if you look at the Republican candidates feeding into their constituents and constantly bashing Muslims in the media, Ben Carson and Donald Trump, the biggest bigots. As an American Muslim student who aspires to change the world — (Applause) (Hug from Bernie)

“Thank you. As an American Muslim student who aspires to change the world, currently majoring in international conflict resolution, and I hope to be a human rights attorney. Hearing the rhetoric that’s going on in the media makes me sick. I as an individual am constantly trying to raise awareness and make sure that everyone is treated equally in this country. As our next president of the United States, what do you think about that?” (Bernie took Remaz’s hand and walked backed to the podium with her.)

Bernie then responded:

“I’m Jewish. My father’s parents were killed in concentration camps. I will do everything I can to rid this country of the ugly stain of racism, which has existed far too many years. Let me tell you something: what racism is about is many things, it is pent up hatred that is lashing out at people in uncontrollable stupid ways, but it is something very different than that. For many years in this country you have had politicians, and I’m old enough to know this, who played black off against white, so they told white workers who were earning pennies an hour, they said hey, you think you’re in trouble, but you’re better off than the blacks, who can’t drink at a water fountain or go to your school, and they told straight people, well you think you’ve got problems, but you’re better off than those gay people, right? And they played men against women. We played one group off against another. The rich got richer and everybody else is fighting with each other.

“Our job is to build a nation in which we all stand together as one people. [Applause] And you are right, there is a lot of anger being generated and hatred being generated against Muslims and immigrants in this country, and if we stand for anything we have got to stand together and end all forms of racism, and I will lead that effort as President of the United States.”

Bernie then gave Remaz another hug as thousands of students gave a standing ovation.

If you watch the mainstream media today, you will see Jeb Bush attack Marco Rubio for not showing up for enough votes in the Senate. You will see Chris Christie tell the moderator that his interruptions are rude even by New Jersey standards. You will see Ted Cruz slam the moderators for asking gotcha questions instead of questions with substance, you will see Jeb bush offering a big warm kiss to any Democrat who will cut spending, and the best line of the debate, you’ll see Chris Christie listing the important issues facing the country, and asking why they were talking about fantasy football.

Nothing in the two hour Republican debate was as important as the moment at the Bernie Sanders student town hall. But I’m guessing you won’t see it on CNN.


The whole Sanders town hall can be viewed at https://www.youtube.com/watch?v=Up46s_gb7PY



Scott Galindez attended Syracuse University, where he first became politically active. The writings of El Salvador's slain archbishop Oscar Romero and the on-campus South Africa divestment movement converted him from a Reagan supporter to an activist for Peace and Justice. Over the years he has been influenced by the likes of Philip Berrigan, William Thomas, Mitch Snyder, Don White, Lisa Fithian, and Paul Wellstone. Scott met Marc Ash while organizing counterinaugural events after George W. Bush's first stolen election. Scott will be spending a year covering the presidential election from Iowa.

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

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21 Hilarious and WTF Moments From the GOP Debate Print
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=37115"><span class="small">Tessa Stuart, Rolling Stone</span></a>   
Thursday, 29 October 2015 08:34

Stuart writes: "The third Republican debate felt long - so long that our entire lives flashed before our eyes, and by the end of it we were walking with our five grandkids through the charred remains of America with the voice of Mike Huckabee echoing somewhere in the distance."

Third Republican debate. (photo: Robyn Beck/AFP/Getty)
Third Republican debate. (photo: Robyn Beck/AFP/Getty)


21 Hilarious and WTF Moments From the GOP Debate

By Tessa Stuart, Rolling Stone

29 October 15

 

"I'll buy you a tequila. Or even some famous Colorado brownies," said Ted Cruz at Wednesday's CNBC debate

he third Republican debate took place Wednesday evening at the Coors Event Center at the University of Colorado, Boulder. It felt long — so long that our entire lives flashed before our eyes, and by the end of it we were walking with our five grandkids through the charred remains of America with the voice of Mike Huckabee echoing somewhere in the distance. By the end of it, the only thing we needed to hear was that Donald Trump had convinced CNBC to limit it from going any longer, and we were ready to elect him our benevolent dictator for life.

Here are the 21 most notable moments.

  1. "If you want someone to grab a beer with, I may not be that guy. But if you want someone to drive you home, I'll get the job done." - Ted Cruz

  2. "What is this, a French work week?" - Jeb Bush, attacking Marco Rubio about missing Senate votes

  3. "I'll buy you a tequila. Or even some famous Colorado brownies." - Ted Cruz to moderator Carl Quintanilla

  4. "Boy, am I good at solving debt problems. No one can solve them like me." - Donald Trump on filing for bankruptcy

  5. "Find me a Democrat that is for cutting spending $10, I'll give them a warm kiss." - Jeb Bush

  6. "I used it to pay off my student loans — and it's available on paperback if you're interested in buying it." - Marco Rubio on his $1 million book deal

  7. "They shouldn't automatically assume that because you believe marriage is between one man and one woman, you're a homophobe." - Ben Carson

  8. "I don't know. You people write this stuff." - Donald Trump, feigning ignorance about where moderator Becky Quick found his quote calling Marco Rubio "Mark Zuckerberg's personal senator." (It's on his campaign website.)

  9. "The Democrats have the ultimate super PAC — it's called the mainstream media." - Marco Rubio

  10. "Drugs is one of the greatest scourges in this country." - John Kasich

  11. "I like to be unpredictable." - Donald Trump on carrying a gun, sometimes

  12. "I love Donald Trump. He's a good man. I'm wearing a Trump tie tonight." - Mike Huckabee

  13. "We have $19 trillion in debt. We have people out of work. We have ISIS and Al Qaeda...And we're talking about fantasy football? Let people play. Who cares?" - Chris Christie

  14. "Even in New Jersey, what you're doing is rude." - Chris Christie to moderator John Harwood

  15. "It's your grandparents' fault for having too many damn kids." - Rand Paul on paying for Medicare

  16. "I'm against anything that's bad for my mother." - Marco Rubio on entitlement reform

  17. "I want a government so small I can barely see it." - Rand Paul

  18. "When millions of Americans rose up against Obamacare, I was proud to lead that fight. When millions of Americans rose up against amnesty, I was proud to lead that fight. When millions of Americans rose up against Planned Parenthood, I was proud to lead that fight." - Ted Cruz

  19. "I can assure you I am Hillary Clinton's worst nightmare." - Carly Fiorina

  20. "I negotiated it down to two hours so we can get the hell out of here." - Donald Trump on the debate's length

  21. "I do not want to walk my five grandkids through the charred remains of America." - Mike Huckabee
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Syria Is a Clusterf*ck, and It's About to Get Worse for the US Print
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=11104"><span class="small">Charles Pierce, Esquire</span></a>   
Wednesday, 28 October 2015 14:00

Pierce writes: "I am getting ominous 1965 flashbacks again. The mission creep parallels to Vietnam should be cause for concern."

Secretary of Defense Ash Carter. (photo: Chip Somodevilla/Getty)
Secretary of Defense Ash Carter. (photo: Chip Somodevilla/Getty)


Syria Is a Clusterf*ck, and It's About to Get Worse for the US

By Charles Pierce, Esquire

28 October 15

 

The mission creep parallels to Vietnam should be cause for concern.

am getting ominous 1965 flashbacks again. Robert McNamara and Creighton Abrams are starting to appear in my mind's eye, pointing down a long, dark tunnel at the lights of an oncoming train.?

The debate over the proposed steps, which would for the first time position a limited number of Special Operations forces on the ground in Syria and put U.S. advisers closer to the firefights in Iraq, comes as Defense Secretary Ashton B. Carter presses the military to deliver new options for greater military involvement in Iraq, Syria and Afghanistan. The changes would represent a significant escalation of the American role in Iraq and Syria. They still require formal approval from Obama, who could make a decision as soon as this week and could decide not to alter the current course, said U.S. officials who spoke on the condition of anonymity because the discussions are still ongoing. It's unclear how many additional troops would be required to implement the changes being considered by the president, but the number for now is likely to be relatively small, these officials said.
?

"The number for now…"

?

Those are two words—"for now"—that could be full of blood. There could be hundreds of American kids interred in those two words—"for now"—along with god knows how many Syrians and Iraqis. Once, we allegedly learned the folly of involving ourselves in a distant civil war. Now, we seem primed to involve ourselves in two of them. Our role seems to have been designed in a funhouse mirror.

The biggest problem facing Carter, and Obama, is that the increase in American military commitment would be unlikely to produce any major changes to the political situations in Iraq and Syria that have given rise to the Islamic State. In Iraq, the United States is fighting the Islamic State alongside Shiite militias—some of which are backed by Iran. Just across the border in Syria, Iran-backed Shiite militias are fighting in support of Syrian President Bashar al-Assad, who is barrel-bombing civilians and battling the moderate rebel groups that the United States is supporting. Obama has said that Assad, who depends on Iranian and Russian military backing for his regime's survival, must go for there to be any hope of peace.
??

If you're keeping score at home, in Syria, we'll be fighting alongside the people against whom we'll be fighting in Syria. The enemy of my enemy is my friend. And the friend of my friend is the enemy of the enemy of my friend. And the friend of the devil is a friend of mine. This isn't foreign policy. It's a Lewis Carroll poem, and it's getting to be a longer one.

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