Middle-Class Tax

Recently, Congress voted not to raise the minimum wage. In typical congressional fashion, riders were attached to the minimum wage bill, but one rider received more attention than others. The GOP attached a rider that would have required the repeal of the estate tax. At the same time Congressmen were voting to raise the wage that must be paid to the nations lowest paid workers, it was also voting to make the richest of people richer by allowing them to avoid the estate tax.

The estate tax already exempts the first million dollars of an estate and affects only the richest 2% of all Americans. Nonetheless, the GOP has been relentless in trying to destroy this tax. It passed a bill that was vetoed by President Clinton and in the tax reform bill that passed in 2001, it raised the cap significantly and actually eliminates the tax for one year prior to the law’s sunset. Since then, the GOP has been trying to make the repeal permanent.

The GOP spends a great deal of its time trying to convince middle America that they are supporters of the little guys and that they are looking out for the middle-class. The rider on the minimum wage bill proves otherwise. There was no indication that the GOP was interested in changing the parameters of who is required to pay the Alternative Minimum Tax (AMT), which is a tax that is unintentionally subsuming more and more middle-class Americans. Rather, the GOP relentlessly attacks a tax that affects few rich people. The AMT was intended to prevent the rich from avoiding taxes by placing significant amounts of money in tax shelters, but the threshold amount has not been adjusted for inflation. The end result has been that people lower and lower on the economic scale are being penalized by the AMT. Now, mostly only the middle-class is paying the tax opposed to the intended targets, the rich.

The GOP has also gone out of its way to force the middle-class to pay more in other respects as well. The GOP has systematically reduced federal funding to institutions of higher education and at the same time destroyed the subsidized loans that students used to be eligible for. This has resulted in the middle-class having to pay more in initial costs for education and they are paying higher amounts of interest because the government is not assisting them through the subsidies it used to provide.

If this is not enough, a recent study regarding the tax code suggested that mortgage interest be removed as a tax deduction. Considering this is the largest tax deduction must middle-class Americans receive, reducing or removing it as a tax deduction would have a disproportionate impact on the middle-class.

Everything the GOP does is designed to hurt the middle-class. The GOP is not at all interested in bringing the middle-class up to the upper thresholds of the wealthy. They are trying to push them back into the throws of the poor. Until the GOP stops hurting the middle-class, it cannot and will not be known as a friend of the middle-class. It is time for the middle-class voters to stop voting for the GOP so long as they are being hurt by this party.

Prudhoe Bay

BP has closed down its operations in Prudhoe Bay, Alaska. Up to 400,000 barrels of oil are pumped out of the oil field every day, and after learning that there are corroded components, BP determined that opposed to risking a major oil spill it would shut down its operations. Some oil has spilled in the area; however, BP claims that if it did not shut down the operations, a larger oil spill could have occurred. Now, BP is conducting maintenance on its equipment and trying to prevent any spillage from occurring, so it can restart its drilling operations.

The State of Alaska heavily taxes the oil that comes out of the ground. Nearly 80% of the State’s revenue is generated by oil tax. Losing a tax on 400,000 barrels of oil per day for who knows how long results in Alaska losing a lot of money - billions of dollars. Due to this loss of revenue, the Governor of Alaska is having his Attorney General investigate whether there is any liability which BP may have to the State for this lost revenue.

So BP is put in a bad spot. It could shut down the oil fields and prevent a larger oil spill than that which has already occurred and face liability to the State for its lost revenue. Alternatively, it could have continued operations, tried to make the repairs while active drilling continued and risked an oil spill for which it would have had to pay an environmental penalty and the cost of clean-up. Either way it was losing money. So at this point BP was in a no win situation. Should it protect its coffers or the environment. Oil companies are not known for being too concerned with the environmental impact of their operations. Thus, it would be more likely that facing this dilemma, the environment would be expendable in its opinion. Considering the alternatives, maybe BP should be commended for have protected the environment from more significant damage.

Then again, maybe BP has been delinquent up to this point and should be penalized through fines by the State and Federal Governments. BP did not engage in the preventative maintenance to ensure that the equipment was not corroded and dilapidated in the first place until it was already in a failing state. By failing to ensure that the pipes were in proper condition, BP placed itself in a position whereby it faced the option of causing a major oil spill or being sued by the State for lost tax revenue. This decision to not perform preventative maintenance placed the environment and the company at risk, yet BP did nothing until it was too late.

Corporations failing to ensure that its equipment is was not in proper condition seems to be habitual. The northeast blackout was caused because an electrical company chose to not maintain electrical lines. There was no profit in maintaining the electrical lines so it was a low priority. This low priority cost the nation billions of dollars in lost revenue when the lights went out for several days in the entire northeast.

BP has committed the same crime. It chose to not maintain essential equipment and risk the consequences regardless of what they may be. Deregulation allowed for the Ohio electrical company to not properly maintain the electrical lines, and lack of government oversight of the oil fields allowed BP to not maintain its equipment properly. In both cases, the public has been harmed as a result of a lack of government oversight.

Brand Names

First impressions are the most important thing a person can make. Once that first impression is made, typically the other person holds on to the impression, and it is difficult to change. Businesses seek to create impressions too. Obtaining a reputation or "brand" is important for a business. The brand can be established through a company’s actions or clever marketing. When one thinks of G.M. they likely think about possible bankruptcy and pension default; Ford - the Pinto; Exxon - obscene profits and the Valdez. There are people who still refuse to purchase gas at an Exxon station due to the Valdez accident which occurred seventeen years ago (March 24, 1989). In other words, the actions of a company can break a company.

Clever advertising can create a brand, too. Ben and Jerry’s, even though it is now owned by a huge corporation (Unilever), still has the reputation of being a small town company which is concerned with the environment, donates to charity, and is involved in progressive social programs. All of these things may have been true before the company was acquired by Unilever, but it is unlikely that much if any of it is true today considering it has to be more concerned with stockholders’ returns opposed to social welfare.

Clever advertising can also change a brand. BP is an oil company that engages in all of the bad things that oil companies do. In fact, they are currently embroiled in a dispute regard oil leaks in Prudhoe Bay, a pristine environmental sanctuary. Nonetheless, BP has changed its brand from a nasty oil company to a "green" company because it reduced its own emissions by about 20% and claims to be focused on alternative energies. To create this image, BP spent untold sums of money, a lot of time and a lot of energy.

When the average American is asked about labor unions the likely impression is corruption. They know the stories of Jimmy Hoffa and others who where involved with the mob or were skimming money from the till. While the FBI spent a decade or more infiltrating organized labor and the mob, the reputation of the corrupt unions which are out more for their own gain opposed to the interests of the workers they represent remains. This reputation or brand is detrimental to the union movement. If the unions want to increase membership, infiltrate Wal-Mart and other large employers, then they need to rebrand.

Unions as a whole need to create an image which is advantageous to the workers and not adversarial. Low wage workers, who think the fat cats at the top of the union organizational chart are making millions off their union dues, which they see as a hardship to pay in the first place, will not voluntarily give up part of their small salary if they believe that they will not benefit from the membership. If the goal of the AFL-CIO or SEIU is to unionize Wal-Mart, then they need to be in a position to convince the employees that they will benefit more from the membership than the union will benefit. This is a difficult sale to make based upon the animosity toward unions that has established itself and the reputation unions created for themselves. Until this is done, however, the unions will merely spin their wheels and continue to fail in expanding their membership.

Failure to get more members could also result in the final destruction of unions. One of the main reasons people join unions today is for the pension system. If there are more retirees than workers, then the pensions will go bust. Loss of the pensions will result in a loss of membership. The continued loss of members be it for reduction in pension benefits or due to general attrition, will ultimately result in unions folding up shop and organized labor will become a thing of the past.

With union membership at about 13% of the US workforce, the Unions need to find ways to attract new members and become a force within the nation again. While their reputation remains as corrupt organizations, their membership will remain low and continue to decrease. Absent rebranding, the unions will not accomplish their goal and all workers, union and non-union will suffer as a result.