Another St. Louis Summer

By Landon Jones, The New Yorker

23 August 14

any summer days in St. Louis are what my dad called three-shirt days. In the Midwestern heat, before widespread air-conditioning, he would leave our apartment, at Waterman and Union, wearing a laundered white shirt that he had pulled out of a drawer that morning. At midday in the office, with his first shirt now collapsed and clinging to him like a soggy washcloth, he would pull it off and put on a clean one for lunch. It would last until he came home for dinner, when it came off, and another clean shirt came out with the ice and chilled bourbon.

The smellscape, also unmitigated by air-conditioning, was different, too. The heat and humidity would distill the pungent aromas of the fermenting hops in the breweries into an olfactory miasma that settled like a fog over the city. Adding to this yeasty mix were the St. Louis National Stockyards, whose thick, loamy, gamey smells—ripening manure, blood, rancid fats from the slaughterhouse—filled your nostrils. Breathe deeply and you recoiled as the stench hit the bottom of your brain, a reptile memory suddenly brought alive.

In 1953, St. Louis was no backwater but, rather, the proud capital of an inland empire—the eighth-largest city in the United States. I could read, in the World Almanac, that my hometown was bigger than Washington, D.C., Boston, San Francisco, Pittsburgh, or Houston. America’s two mightiest rivers, the Mississippi and the Missouri, joined there, draining most of the country. A corporate oligarchy ruled the city—Monsanto, Ralston Purina, Anheuser-Busch, Pet, Inc., Seven-Up, McDonnell Aircraft.

St. Louis was also one of the most formidably segregated cities in America. Although Jackie Robinson had integrated Major League Baseball six years earlier, black people who wanted to see him play were confined to the right-field pavilion at Sportsman’s Park. In the evenings, the Grand Avenue movie theatres were off-limits, as was the city’s biggest amusement park, the Forest Park Highlands.

Most of the city’s black residents were crammed into a few square miles of substandard housing that spread directly west of the central St. Louis business district. Restrictive zoning confined them to these deteriorating buildings even as thousands more black people emigrated from the South, ballooning the city’s population and further crowding the ghetto. Virtually all of the area’s major retail businesses were downtown—the flight to the suburbs had not yet begun—and downtown was the only place to shop. But black St. Louisans were not served at the lunch counters at department stores, or dime stores, or drugstores. Those venturing downtown to shop would plan their trips to avoid the lunch hour, or might bring along a sandwich to eat furtively in a restroom.

Exactly a month before my tenth birthday, to earn pocket money, I began selling tickets to the Boy Scout Circus in the urban streets near our apartment. I would knock on doors up and down Waterman, a street lined with brick apartment houses where the only black people worked as janitors. “Hello, I am selling tickets to the Boy Scout Circus,” I’d begin. “How many would you like?” The big payoff was with the rich people who lived in the nearby gated streets with Victorian mansions. I would make most of my revenue from the maids, who would give me a couple of dollars just to go away.

On Tuesday, October 6th (the day after the Yankees won their fifth straight World Series, with a 4–3 victory over the Dodgers at Yankee Stadium), I somehow got inside the Town House Hotel, on Pershing Avenue. I wandered up and down the corridors, knocking on room doors, trying to sell tickets. Later that day, Richard (Carl) Hall would be sitting in Room 324, drinking bourbon and shooting morphine. A week earlier, Hall had killed Bobby Greenlease, the six-year-old son of a millionaire auto dealer, and he was now the object of a ferocious manhunt.

It’s hard to overstate the fascination that the Greenlease kidnapping and murder engendered among kids then. It was the first major crime to achieve national prominence on television—his sorrowing family was on every night—and we had not yet learned how to process news of this intensity and intimacy. When we try today to make sense of the kidnapping, the pieces, as with many of the events of the nineteen-fifties, do not assemble into a familiar narrative. The experienced world of 1953, its three-shirt days, remains unknowably strange.

Maggie Dagen, a high-school social-studies teacher with a Quaker background, was particularly attuned to scenes of injustice in St. Louis. She and her husband, Irv Dagen, who worked in the shoe industry, started a pioneering interracial discussion group called Humanity, Inc., which met in their apartment, near the Delmar Loop, in University City. It was almost certainly the only house in the city of St. Louis where black and white residents were meeting together to discuss common problems.

One Sunday night, a lively woman with reddish-blond hair joined the discussion. Bernice Fisher, a union organizer who had moved to St. Louis from Chicago, described her role in founding the Committee of Racial Equality (CORE). In Chicago and Detroit, CORE had successfully adapted Mohandas Gandhi’s tactics of nonviolent civil resistance and direct action to the cause of American civil rights. In his autobiography, the early civil-rights activist James Farmer described Fisher as combining “a fiery hatred of racism with a violent rejection of war. Both evils made her fighting mad. I often called her the most warlike pacifist I ever knew.”

The Dagens were intrigued. Many of the members of their discussion group were already active in the long battle to integrate Washington University, which finally succeeded in 1952. Moreover, they could see a clear opportunity. Other groups, such as the N.A.A.C.P. and the Urban League, were focussed on legal struggles over jobs, housing, and integration. But protesting ground-level segregation at local lunch counters lent itself to Gandhian direct action—picketing and sit-ins—and was small and definable enough for the group’s limited resources to have an impact.

The Dagens’ apartment became increasingly crowded, with between thirty and forty new CORE members sitting around their white trestle picnic table at weekly meetings. The regulars included an interracial couple (Charles and Marion Oldham), two black teen-agers from Vashon High School (Norman Seay and Walter Hayes), a white student from Washington University (Judy Stix), an Army veteran and his young wife (Joe and Billie Ames), and a black art student from Stowe Teachers College (Wanda Penny). “We had picnics,” Charles Oldham recalled, in an oral history of the St. Louis CORE, held at the State Historical Society of Missouri. “We played bridge. We became a very close-knit group. We were very dedicated and very sincere and very nonviolent. We studied Gandhi. We knew the techniques he had used. And we were committed to what we were doing.”

More than a decade before the now famous sit-ins at the Woolworth’s counter in Greensboro, North Carolina, in 1960, the Dagens and their CORE chapter were preparing one of the first sustained, nonviolent, direct-action civil-rights campaigns in America.

Their targets would be restaurants and hotels. They would first send in “test” groups—a neatly dressed pair of CORE members, one black and one white. “They were always spiffy and better dressed than the regular clientele of the restaurant,” Maggie Dagen noted. Her goal was for anyone looking on to have to say that “they’re not being served because they’re black—Negro—and no other reason could occur to them.”

The CORE members decided that the best way to get results was to be completely transparent. The Dagens met with restaurant managers in advance to urge their coöperation. Some told them that they would integrate only if their competitors did the same thing. Others claimed that their own employees would not stand for the idea of serving black customers. “We tried to persuade management that this wasn’t a horrendous event in their lives and wouldn’t destroy their business,” Charles Oldham explained. “Management would have the opportunity to observe the reaction of customers and waitresses, and we worked this out with any number of stores, and the results were amazingly all good. Once they agreed to the testing program, it meant that they were on the way to opening the store.”

But not every manager agreed. One memorable negotiation was with Harry Pope, whose family owned the popular Pope’s Cafeteria chain. As Dagen recounts in her memoir, “Victory Without Violence” (written with Mary Kimbrough), when she met with Pope he suggested that integration should proceed very gradually. He proposed that, in the first week, a white person should come in with a very light-skinned black person. The next week, the white person would come back with a black person whose skin was slightly darker, and so on, each week bringing someone with darker skin. That way, Pope thought, the customers would gradually get accustomed to seeing black people in the restaurant. After hearing out his proposal, Dagen replied, “Mr. Pope, we can’t do that. We are a human-relations organization, not a paint store.”

Around this time, a newly hired reporter for the St. Louis Post-Dispatch, Richard Dudman, happened to stumble upon one of the sit-ins, at a downtown department store. He had never seen anything like this—a mixed-race group occupying all of the lunch-counter stools, patiently waiting for food that never came. “What’s going on?” he asked. It was a civil-rights demonstration organized by CORE, he was told. Dudman rushed back to the newsroom with his scoop.

Oh, he was told, “The newspaper knows all about it, and there is no need for a story.”

“Why not?”

“Because if it gets into the papers, it could stir up violence.”

Or perhaps the Post-Dispatch was sensitive to the fact that the department stores were among its biggest advertisers. Or the editors were simply made uncomfortable by the emerging movement. In any case, the city’s newspapers and TV stations joined in a conspiracy of silence about one of the nation’s first prolonged civil-rights actions. Interestingly, the Dagens and their group accepted this. They could see the downside in publicly forcing store owners into a corner. “It was about finding a way out for the other guy,” Dagen said. The result was that, as they entered 1953, the St. Louis CORE group, operating entirely out of public view, was on the way to achieving one of the most innovative and least publicized victories in the long struggle against racial segregation in America.

In the end, this is what remains most unknowable about those days: it was the time of the Midwestern gothic of the Greenlease kidnapping, but it was also a time when the quest for justice could encompass both black people and white people, operating together and freely.

Microsoft Admits Keeping $92 Billion Offshore to Avoid Paying $29 Billion in US Taxes

By David Sirota, International Business Times

23 August 14

icrosoft Corp. is currently sitting on almost $29.6 billion it would owe in U.S. taxes if it repatriated the $92.9 billion of earnings it is keeping offshore, according to disclosures in the company’s most recent annual filings with the Securities and Exchange Commission. The amount of money that Microsoft is keeping offshore represents a significant spike from prior years, and the levies the company would owe amount to almost the entire two-year operating budget of the company’s home state of Washington.

The company says it has "not provided deferred U.S. income taxes" because it says the earnings were generated from its "non-U.S. subsidiaries” and then "reinvested outside the U.S.” Tax experts, however, say that details of the filing suggest the company is using tax shelters to dodge the taxes it owes as a company domiciled in the United States.

In response to a request for comment, a Microsoft spokesperson referred International Business Times to 2012 U.S. Senate testimony from William J. Sample, the company’s corporate vp for worldwide tax. He said: “Microsoft’s tax results follow from its business, which is fundamentally a global business that requires us to operate in foreign markets in order to compete and grow. In conducting our business at home and abroad, we abide by U.S. and foreign tax laws as written. That is not to say that the rules cannot be improved -- to the contrary, we believe they can and should be.”

The disclosure in Microsoft’s SEC filing lands amid an intensifying debate over the fairness of U.S.-based multinational corporations using offshore subsidiaries and so-called "inversions" to avoid paying American taxes. Such maneuvers -- although often legal -- threaten to signficantly reduce U.S. corporate tax receipts during an era marked by government budget deficits.

White House officials have called the tactics an affront to "economic patriotism" and President Obama himself has derided "a small but growing group of big corporations that are fleeing the country to get out of paying taxes." In a July speech, he said such firms are "declaring their base someplace else even though most of their operations are here."

"I don't care if it's legal; it's wrong," Obama said. Meanwhile, Democratic lawmakers have been pushing legislation they say would discourage U.S. companies from avoiding taxes through offshore subsidiaries. The proposals are being promoted in advance of the 2014 elections, as polling suggests the issue could be a winner for the party. In Illinois, the issue has already taken center stage in the state’s tightly contested gubernatorial campaign.

Because Microsoft has not declared itself a subsidiary of a foreign company, the firm has not technically engaged in an inversion. However, according to a 2012 U.S. Senate investigation, the company has in recent years used its offshore subsidiaries to substantially reduce its tax bills.

That probe uncovered details of how those subsidiaries are used. In its report, the Senate's Permanent Subcommittee on Investigations described what it called Microsoft’s “complex web of interrelated foreign entities to facilitate international sales and reduce U.S. and foreign tax.” The panel’s report noted that “despite the [company’s] research largely occurring in the United States and generating U.S. tax credits, profit rights to the intellectual property are largely located in foreign tax havens.” The report discovered that through those tax havens, “Microsoft was able to shift offshore nearly $21 billion (in a 3-year period), or almost half of its U.S. retail sales net revenue, saving up to $4.5 billion in taxes on goods sold in the United States, or just over $4 million in U.S. taxes each day.”

U.S. Sen. Carl Levin, D-Mich., said at the time: “Microsoft U.S. avoids U.S. taxes on 47 cents of each dollar of sales revenue it receives from selling its own products right here in this country. The product is developed here. It is sold here, to customers here. And yet Microsoft pays no taxes here on nearly half the income.”

Apple and General Electric, which also employ offshore subsidiaries, are the only U.S.-based companies that have more money offshore than Microsoft, according to data compiled by Citizens for Tax Justice. In all, a May report by CTJ found that “American Fortune 500 corporations are likely saving about $550 billion by holding nearly $2 trillion of ‘permanently reinvested’ profits offshore.” The report also found that “28 these corporations reveal that they have paid an income tax rate of 10 percent or less to the governments of the countries where these profits are officially held, indicating that most of these profits are likely in offshore tax havens.” 

Microsoft’s use of the offshore subsidiary tactics has exploded in the last five years, with the amount of Microsoft earnings shifted offshore jumping 516 percent since 2008, according to SEC filings.

According to Microsoft’s filings, if the company repatriates the $92.9 billion it is holding offshore, it would face a 31.9 percent U.S. corporate tax rate. U.S. law generally permits companies to deduct the foreign corporate taxes they’ve already paid from the U.S.’s official 35 percent corporate tax rate. According to CTJ's Richard Phillips, that means Microsoft's disclosure implies the company is paying just 3.1 percent in the locales where it is currently holding the cash. Phillips says such an extremely low rate strongly suggests the firm is keeping the earnings not just in relatively low-tax locales like Ireland, Singapore and others the company has disclosed, but also in smaller countries like Bermuda that are considered true tax havens.

According to a Wall Street Journal report in 2012 about companies reducing transparency about their subsidiaries, Microsoft “once disclosed more than 100 subsidiaries [but] reported just 13 in its 2003 annual report and 11 in its 2012 report.”