Category Archive for: ‘Corporate Power’
Seattle Dance Clubs Fundraise to Pay Microsoft’s Tax Bill
In April 2010, Washington State’s Legislature changed the definition of its software royalty tax and effectively granted amnesty to Microsoft, helping the company lock up $1.51 billion in savings from its thirteen-year Nevada tax dodge - and more than $100 million annually each year into the future.
This is also when the state’s Department of Revenue began reinterpreting an obscure decades old tax on “the opportunity to dance” selectively auditing night clubs and dance clubs around the city and aggressively targeting them for back taxes.
The Century Ballroom, a popular Seattle dance club, was assessed $250,000 and is holding ongoing fundraisers to help pay its tax bill. Other popular clubs face tax bills of $30,000 and even $200,000:
The “Opportunity to Dance” is not in any law. It is only the DoR’s interpretation of the law in the Department’s rules. It is also impossible to clearly define what dance is, let alone what the opportunity to do so is. The DoR itself has acknowledged this.
From the time Microsoft opened its Nevada office until 2010, the company earned more than $509 billion – between 1/3 and 1/2 of that from software licensing. The Department of Revenue’s decision not to challenge the company’s Nevada accounting has contributed to repeated biennial deficits between $1 and $2 billion dollars and $4 billion in cuts to K-12 and Higher education. Yet, the state is using its resources to aggressively target the heart of Seattle’s music scene with bizarre tax legislation.
It works like this: If the state believes that you give your patrons the opportunity to dance, then you pay the tax even when people don’t dance. That’s according to Mike Gowrylow, with the Department of Revenue. Gowrylow: “You could have somebody go into a nightclub, or a bar, or tavern, and they pay cover charges. Unless you followed every person around, you wouldn’t know if they actually danced or not, so the only simple way we could have of defining this is if you give them the opportunity to dance, then the tax applies.”
It gets better:
Gowrylow says auditors search the Internet to find out whether people dance at specific clubs. One clubowner reports an auditor told him: “You have the opportunity to dance, and we verified it by 8 or 10 different references on Yelp.” - Dance Tax Causes Confusion Among Seattle Venues
From The Stranger:
“My auditor… came in with an obituary of a girl who committed suicide,” says another club owner. “When I argued that we aren’t primarily a dance club—we have ‘No Dancing’ signs up everywhere—she flashed this obit that said the girl liked to dance at [our club]. The auditor said, ‘I know this is ridiculous, but I have to do this.’”
Also from KUOW:
One club discourages dancing when it charges a cover, says owner Jason Llorin. “You put things where they think it’s a dance floor — you just put a stool, or you put a tabletop with stools all around it. That’s, you know, that’s all you can do.”
Since it gave away more than $100 million in annual taxes to shareholders of the country’s wealthiest, most profitable corporations, the Department of Revenue is now using its powers to target tiny little dance halls and night clubs – to find $880,000 in annual revenue. The Century Ballroom’s fundraising efforts are essentially paying for Microsoft’s Nevada tax dodge.
Related Links
- Dancers Protest Washington ‘Dance Tax’
- A New Tax on Dancing
- Dance Tax Causes Confusion Among Seattle Venues
- Business owners struggling to pay so-called ‘dance tax’
- Dummies Guide to Microsoft’s Nevada Tax Dodge
- The Third Anniversary of Washington State’s Big Tax Gift to Microsoft
- Microsoft Won’t Release Royalty Tax Payments
- Hunter’s Promised Royalty Tax Revenue Never Materialized
Hunter’s Promised Royalty Tax Revenue Never Materialized
In 2010, Hunter said apportioning the royalty tax would actually generate more revenue for the state (up to $11.8 million more by 2012) and “encourage companies to remain in Washington and perhaps even move some of their royalty operations back here.” (the latter from talking points Hunter circulated in 2010 to debunk my reporting.) Today, Mr. Gowrylow sent me actual data since Hunter’s bill passed in 2010 … royalty tax revenues actually declined from $6.8 million to $6 million (see table at right). And, as of yet, Microsoft’s Nevada lawyers and accounting teams are still skiing up at Squaw, not Snoqualmie.
| Year | Royalty Tax Collections |
|---|---|
| 2005 | $6,627,534 |
| 2006 | $5,720,708 |
| 2007 | $5,995,049 |
| 2008 | $7,365,650 |
| 2009 | $5,873,563 |
| 2010 | $6,813,949 |
| 2011 | $6,041,744 |
| 2012 | $6,253,309 |
But the point of adding only royalty tax apportionment (out of scores of other B&O classifications) to the 2010 services apportionment bill was never meant to generate additional revenue, it was meant to eliminate the issue of Microsoft’s worldwide licensing revenue being taxable. Hunter’s apportionment of the royalty tax shielded all of Microsoft’s licensing revenue (except sales to Washington State customers) from taxation.
Here’s a visual summary of what Washington State’s royalty tax revenues would have been if the Department of Revenue had challenged Microsoft’s Nevada accounting – the red bars represent the magnitude of our generous corporate welfare program to Microsoft shareholders. These figures are based on Microsoft’s actual reported licensing figures (and estimates after they stopped providing the raw figures in annual reports). The figures do not include interest and penalties. All of these back taxes are now shielded by Hunter’s “field audit” amnesty in the 2010 bill.
In September 2010, Microsoft Nevada ran a job listing on its site ”Are you interested in leading the vision and strategy of an organization which processes in excess of $30B annually?” The ad implies that half of Microsoft’s revenue is from licensing (much more than than the 31% I used in estimates above). In fact, if you use that estimate, Microsoft’s savings from lobbying and tax dodging exceed $6 billion. “It’s amazing what you can do here indeed” – especially with friends like Rep. Hunter leading the budget deliberations.
The Third Anniversary of Washington State’s Big Tax Gift to Microsoft
Wednesday will be the third anniversary of the biggest corporate tax break in Washington State history. On April 10, 2010, the Legislature changed the definition of the state’s royalty tax and effectively granted amnesty to Microsoft, helping the company lock up $1.51 billion in savings from its thirteen-year Nevada tax dodge. The changes were led by Rep. Ross Hunter, Chair of the Finance Committee and a 17 year ex-Microsoft veteran. If you include the impact of the company’s 1997 lobbying to cut the royalty tax rate by 2/3, Microsoft’s Nevada accounting has saved the company more than $4.37 billion.
Coincidentally, Washington State has had to cut $4 billion from K-12 and Higher Education in the last five years.
So, as Governor Inslee and the Legislature look for $1.2 billion in court-mandated funding for education, let’s not pretend that we don’t know where the money went. Washington State slowly gave away critical funds to Microsoft’s global shareholders through non-enforcement of the state’s pre-2010 royalty tax, which required the company pay .484% of its licensing revenue on worldwide sales. The company claimed the revenue was earned in its Nevada office, a state with no corporate revenue tax.
Dummies Guide to Microsoft’s Nevada Tax Dodge tells the whole story and includes audio of my 2004 interview with Microsoft’s General Counsel Brad Smith (mp3), where he acknowledges the company’s Nevada tax haven.
There are three ways to look at this story:
1. Ethical Issues: Microsoft Chairman Bill Gates, CEO Ballmer and General Counsel Brad Smith have all called for the state (and taxpayers) to step up and fund education. Education is also a key priority of the Bill and Melinda Gates Foundation. Microsoft’s recorded more than $579 billion in revenue since 1998. Why aren’t we calling these community leaders to account for the difference between their rhetoric on education and their actions on tax dodging?
2. Corporate Influence in Olympia: Should we have concerns about transparency and Microsoft’s influence in Olympia given the impact of Rep. Hunter’s 2010 legislation and his 17 year history with the company? State law treats Microsoft as a corporate person, entitled to the same privacy of other taxpayers – its actual royalty tax payments are secret. Shortly after signing Hunter’s bill, former Gov. Gregoire appointed another Microsoft Executive, Suzan Delbene (now in Congress), to run Washington State’s tax department. Delbene is married to Microsoft President Kurt Delbene. And, Gregoire regularly praised Microsoft for its $5 million annual scholarship fund saying it helped mitigate all the unfortunate cuts to higher education – while failing to mention Microsoft’s been saving $100 million annually through its Nevada tax office and the changes Hunter made to the law.
3. Legal Issues: The Department’s Communication Director Mike Gowrylow used to assure me that DoR audits large taxpayers like Microsoft regularly; so I knew right away why Hunter’s 2010 bill included language granting amnesty to companies “that were included in a completed field audit conducted by the department [before 2010].” If there was no legal exposure to Microsoft, why grant it amnesty? Recently, when Microsoft-owned Skype was accused of helping the chinese government eavesdrop on dissidents, it responded that it was acting under “established procedures to meet its obligations under local laws.” Similarly, when reporters ask it about its Nevada tax dodge, it says only ”[it] pays all due taxes in all jurisdictions in which we operate including our home state of Washington.” Should the Department of Revenue been more aggressive in enforcing the state’s worldwide royalty tax on Microsoft’s licensing revenues? I’ve made my case here and here that it should have.
In the past the company has told reporters that I’m spreading misinformation but I continue to stand completely behind my reporting on Microsoft’s Nevada tax dodge. If the company would like to refute these claims, it should just release its actual state royalty tax payments from 1998 – 2010 and settle the issue once and for all.
In Closing
I often say Washington State doesn’t have a budget deficit. It’s just that it’s given its tax revenues over to a variety of corporate benefactors. In Microsoft’s case, this has amounted to all the money the state’s cut from our education system.
So, as you read the standard coverage of legislative handwringing over the budget and finding money for education this spring, don’t fall for it. The legislature knows where the money is.
Just as Microsoft’s used Nevada to dodge state taxes, it uses a variety of means to dodge federal taxes. In 2011, the Institute on Taxation and Economic Policy found Microsoft’s federal filings so laughable that it had to exclude the company from its reports: ”We [had] to leave out from the study companies whose geographic allocations were obviously ridiculous (e.g., almost all or even more than all of their pretax profits were reported as foreign, even though most of their revenues and assets were in the United States). Google and Microsoft are two examples of such apparently ‘liar companies’ that we left out of the study. For such companies, it may be that they reported in their annual reports how they misallocated their profits on their tax returns, rather than where their profits were really earned.”
On April Fools Day 2010, just before the legislature voted on Hunter’s tax bill, Microsoft gave $125,000 to save the Fourth of July Fireworks in Seattle. This year there’s no tax break on the table … and apparently there will be no fireworks.
Links and Resources
- Dummies Guide to Microsoft’s Nevada Tax Dodge (Summary)
- Audio mp3 clip of my 2004 interview with Microsoft’s General Counsel Brad Smith, where he acknowledges the company’s Nevada tax haven
- Summary of Media Coverage of Microsoft’s Nevada Tax Dodge
- Financial History of Microsoft’s Nevada Tax Dodge - My Google Drive spreadsheet detailing Microsoft’s revenue history, licensing revenue and it’s Nevada tax dodge
- Washington State Doesn’t Have a Budget Deficit - describes how I calculated the $1.51 billion and $4.37 billion tax dodge figures
- Summary of the Impact of Budget Cuts on Washington State’s Education System, by the Economic Opportunity Institute – shows the $4 billion in cuts to K-12 and Higher Education
- Corporate tax-dodgers Microsoft, Boeing throw colleges a bone, by the Economic Opportunity Institute’s John Burbank – discusses Gov. Gregoire’s praise of their $5 million education scholarships
- Bread & Circus: Microsoft Donates $125,000 to Save Seattle Fireworks Show
- Microsoft chooses key time to remind Olympia of its clout (Seattle Times)
- Rep. Hunter Makes April 10th Tax Freedom Day for Microsoft
- Microsoft Wins Nevada Royalty Tax Cut and Tax Amnesty; Reports Record Revenue
- The Case Law Against Microsoft and its Nevada Tax Dodge is Extremely Clear
- To Refute Claims, Microsoft Should Disclose Its Royalty Tax Payments
- Microsoft Won’t Release Royalty Tax Payments
- Corporate Taxpayers & Corporate Tax Dodgers 2008-10 (ITEP)
- Gov. Inslee’s Press Packet on the 2013 Budget
- Citizen Microsoft (Seattle Weekly) by Jeff Reifman
Disclosures and Contact Information
I’m a former employee of Microsoft and one of its multi-millionaire alumni. I also used to work with Suzan Delbene and for Kurt Delbene at Microsoft. You can read more about me and my full list of disclosures. I am willing to to brief reporters or officials on the history of Microsoft’s Nevada tax dodge. Please contact me for more information.
Is it time for the U.S. Treasury to provide digital cash?
Update: I originally posted this piece about the weight of credit card fees on our economy to TalesofChange.org in 2010 and was reminded of it today by Kim Dotcom’s tweet above. See also the Guardian’s Bitcoin: more than just the currency of digital vice.
The New York Times Credit and Debit Card Series raises a lot of interesting consumer questions, namely whether the emerging electronic currency system is simply a hidden private tax on commerce that largely benefits the big banks (yeah, those same ones we recently bailed out with taxpayer dollars):
For the financial year ended in June, Visa handled 40 billion transactions….While the cost per transaction may seem small, at Best Buy … “these skyrocketing fees add up to hundreds of millions of dollars every year,” said Dee O’Malley, director of financial services. “Every additional dollar we are forced to pay credit card companies is another dollar we can’t use to hire employees, or pass along to our customers in the form of savings.”
…some merchants are infuriated by a separate, larger fee, called interchange, that Visa makes them pay each time a debit or credit card is swiped. The fees, roughly 1 to 3 percent of each purchase, are forwarded to the cardholder’s bank to cover costs and promote the issuance of more Visa cards. - How Visa, Using Card Fees, Dominates a Market (NYT)
Most notably, credit cards have enabled online commerce. And, credit and debit cards offer tremendous advantages to carrying cash. However, as more and more transactions move from cash to the credit and debit card network, we’ve carved out a tiny portion but extremely large aggregate revenue stream for the private sector:
In the United States alone, banks that issue credit cards get an estimated $40 billion to $50 billion in income annually from interchange fees, which are the biggest single component of fees charged to merchants. – U.S. Looks to Australia on Credit Card Fees (NYT)
With debit transactions forecast to overtake cash purchases by 2012, the model has investors swooning: Visa’s stock traded at $88.14 on Monday, near a 52-week high, while shares of MasterCard, at $256.84 each, have soared by more than 450 percent since the company went public in 2006. - How Visa, Using Card Fees, Dominates a Market (NYT)
We all appreciate the convenience of ATMs but instead of passing along the savings of fewer bank tellers and branches, the banks created a whole new set of fees for themselves. Americans increasingly have to pay to get access to their money. I once dated a girl who withdrew $20 at a time from her ATM despite the $2 transaction fee.
Want to travel abroad? Getting cash from an ATM or using your credit card may cost you up to 3% (BoingBoing). Even just buying international travel tickets from inside the U.S. can incur these fees. Note: here are some ways to avoid this and here is a way to find better cards.
One of the duties of the U.S. Treasury is “effectively, promoting economic growth and stability”. The Times series implicitly asks: is the electronic credit and debit card network creating a drag on our economy?
The prevalence of privatized digital payment systems is raising the prices of consumer products on pretty much everything we buy:
…the 1 to 3 percent or more of every transaction that merchants pay to accept the cards is a significant cost, and the small local retailers that make neighborhoods vibrant often pay a higher percentage. Stores then build those fees into higher prices, so people who aren’t earning any rewards can end up subsidizing those who do. – The Damage of Card Rewards (NYT)
Just as there are calls for the Treasury to stop minting pennies that cost more to produce than they’re worth, I think it may be time for the government to recognize that providing secure, U.S. backed digital currency without the privatized tax imposed by MasterCard and Visa:
“A dollar is no longer a dollar in this country,” said Mallory Duncan, senior vice president of the National Retail Federation, a trade association. “It’s a Visa dollar. It’s only worth 99 cents because they take a piece of every one.” - How Visa, Using Card Fees, Dominates a Market (NYT)
There was a day and age where MasterCard and Visa provided a service of convenience that consumers were free to pay for. Today, having a credit card is a necessity – you can’t rent a car without one.
Just as the government moves information and services online, it’s time for it to provide digital options for our currency. Cash is a pre-Internet era currency.
In the United States, the Government Accountability Office last week issued a report showing that consumers who did not use credit cards “may be made worse off by paying higher prices for goods and services, as merchants pass on their increasing card acceptance costs to their customers.” - U.S. Looks to Australia on Credit Card Fees (NYT)
“Merchants say they cannot refuse Visa cards because it would result in lower sales.” - How Visa, Using Card Fees, Dominates a Market (NYT)
We could choose to regulate MasterCard and Visa, but given what we’ve seen this year with healthcare, can we really trust Congress to legislate a fair take?
The free market seems to be producing a cartel which is fixing prices and placing a drag on our economy. I want a public option.
If Medicare administrates for 6% what the private health insurers charge 20 – 30% to administrate, just think how ridiculously inexpensive our great country could make a public digital currency.
Phonebook Lawsuit Cost Seattle $264,503 in Legal Fees
Update: Seattle Weekly reports that the city has announced a $517,500 settlement with the phonebook companies. The total cost of the settlement and legal fees to the city therefore is $781,503. City says phonebook opt-out service will be taken offline soon.
In response to my public records request, the City of Seattle reports it has paid $264,503 in outside counsel fees during the Yellow Pages Lawsuit.
Cost of Third Party Seattle City Legal Fees in Phonebook Lawsuit
The Seattle Times report of a rumored $500,000 settlement did not include these costs. Neither do these costs account for the city’s own in-house legal/oversight. Thus, we can say that the Yellow Pages ruling may cost the city more than $764,503.
While the City may be restricted in how it can appeal the Court’s ruling to the U.S. Supreme Court, this might be an opportunity to lead a national challenge of corporate personhood, corporate constitutional rights and the standing of foreign companies to seek equal protection rights. Similar precedents are at issue in the city’s inability to pass laws that regulate escalating coal train exports.
I believe the Court of Appeals decided this case on the wrong basis and issued an obtuse, narrow-minded ruling. I’d personally be happy to have the city spend my tax dollars on a broader appeal. Tell the Mayor and Council what you think.
Related Links
- Why You Should Care About Seattle’s Phonebook Debacle
- City of Seattle Response to Public Records Request: Invoices Paid to Summit Law Group for Legal Representation in Yellow Pages Lawsuit
- Court Rules Yellow Pages Are Protected Speech (TechDirt)
- Seattle will pay $500,000 to settle yellow pages lawsuit (Seattle Times)
- Seattle’s stand against treating corporations as people (Crosscut)
- Seattle’s Perkins Coie Secures Victory in Ninth Circuit First Amendment Case (Perkins Coie Website)
- Seattle’s Phonebook Opt Out Site
Why You Should Care About Seattle’s Phonebook Debacle
Update: In response to my public records request, the City of Seattle reports it has paid $264,503 in outside legal fees during the Yellow Pages Lawsuit.
Reading through the comments on BoingBoing about Seattle’s proposed $500,000 settlement with phonebook companies highlighted for me how misunderstood the issues of corporate influence are and how predictable our responses are as concerned citizens and activists.
This case has national implications. Other cities have been watching Seattle’s lawsuit before implementing their own regulations. San Francisco’s phonebook law is already on hold. Since Seattle’s program is preventing 2 million pounds of waste annually, we can guesstimate that the Court’s decision to allow deliveries of unwanted phonebooks may affect over 100 million pounds of waste per year nationally.
Littering is speech. – Commenter CW
Corporate Personhood is at issue because the core of the phonebook companies legal complaint stated that they have First, Fourth and Fourteenth Amendment Rights under the Constitution. In the suit, the phonebook companies assert corporate personhood and claim phonebooks are free speech and their right to equal protection under the Constitution has been violated.
Surprisingly, the legal concept of constitutional rights for corporations has its roots in the activist work of abolitionists who fought to end slavery:
[Corporations] were not considered 'persons' until after the Civil War, when business magnates began to avail themselves of the 14th Amendment's antidiscrimination protections. – When is a Corporation Like a Freed Slave (Mother Jones) http://www.motherjones.com/politics/2006/10/when-corporation-freed-slave
Since then, corporations have been suing and winning a variety of corporate constitutional rights. In other words, the anti-discrimination laws of the post civil war era are the legal foundation which corporations routinely use in court to overturn local regulations such as Seattle’s phonebook law.
If the Constitution doesn’t give you a ‘right not to be bombarded with garbage’ in exactly those words, you don’t have one. — Antonin Scalia – Commenter Antinous
The Courts consider corporate constitutional rights “settled law” and show no concern that these fictions are rooted in amendments whose original purpose was to end the dark damaging abuses of our nation’s history including slavery and the three-fifths compromise.
The Court’s ruling focused almost entirely on whether the yellow pages constitute free or commercial speech rather than whether corporate phonebook publishers have the same Constitutional rights as individuals.
Some of the companies in this suit aren’t even American, they’re Canadian. One of the key litigants is the Yellow Pages Integrated Media Association which represents Yellow Media Inc., a Canadian corporation. Even if you agree with the folly of corporate personhood, I challenge any lawyer to explain to me the basis by which foreign corporations can sue for United States constitutional rights.
Neither are these companies economic stalwarts or entrepreneurial visionaries that we might want to incent for economic growth. Canada halted trading in The Yellow Pages group in December as its value plummeted and the company had to be re-capitalized. Both DexOne and SuperMedia trade for less than five dollars (and this includes the valuation of their Internet marketing businesses). The markets have written down the value of the yellow pages business model but the courts have not.
Even on its merits, the narrow-mindedness of the Court of Appeals’ ruling is confounding:
Ultimately, we do not see a principled reason to treat telephone directories differently from newspapers, magazines, television programs, radio shows and similar media ... A profit motive and the inclusion or creation of noncommercial content in order to reach a broader audience and attract more advertising is present across all of them. We conclude, therefore, that the yellow pages directories are entitled to full First Amendment protection.
In the past 10 years, there is only one thing I have _ever_ used a phone book for. I’ve used it to call my ISP when I cannot connect to the internet. – Commenter dmatos
The difference is obviously that Seattle residents and apartment managers don’t want phonebooks delivered in mass, consider them a nuisance and taxpayers are having to fund the disposal of two million pounds of paper waste annually. Newspapers are for the most part opt-in and other media generally don’t generate the same level of waste. The Courts ignored the environmental impacts of phonebooks and they ignored the myriad of other ways phonebook companies can make their “speech” available e.g. kiosks or coffeeshops, as alternative weeklies do.
Also, the Court showed no concern with requiring residents to provide their personal information to participate in the company’s private opt-out programs when these kinds of direct marketing corporations have a history of misusing personal and private information.
Corporations Overturning Community Wishes is The New Normal
The phonebook settlement illustrates the widening arsenal that corporations use to control legislation in our communities.
Seattle carefully crafted its opt out program to survive legal challenge. The city constantly tiptoes to avoid lawsuits because of their potential expense. The $500,000 settlement figure doesn’t include the city’s own legal costs incurred over an 18 month lawsuit which included written and oral arguments to the Federal Court of Appeals managed by a private law firm. City officials won’t comment but I’ve made a public information request and expect to have this information soon. It will be a sizable figure. (It’s $264,503) In 2012, the city council issued only advisory resolutions against escalating coal exports and Citizens United because it feared similar lawsuits.
Furthermore, the Court showed no awareness of the growing pattern of corporations wielding economic power to fuel referendums that overturn local law. In Washington State in 2011, Costco spent $22 million to privatize Washington State’s liquor sales. In 2009, the Seattle City Council’s tax on plastic grocery bags was overturned by a $1.4 million referendum campaign led by the so-called “American” Chemistry Council, whose members include Japan’s, Mitsubishi Chemical Corporation, Germany’s Evonik and Dutch Akzo Nobel.
The significance of the phonebook lawsuit is that it’s no longer clear what lawmaking authority the actual residents of Seattle have left. Lawsuits and referendums are just forms of corporate speech and power that control government aspirations and strike at it when it “gets out of (corporate) line”. This is the new normal.
This ruling represents a lot of what’s broken with America and its legal system:
- We allow corporations (foreign and domestic) to intimidate, limit and overturn the lawmaking capacities of our local elected bodies, even when we’re trying to preserve our quality of life
- We allow ongoing environmental harms regardless of public nuisance or value and allow corporations to externalize the resulting costs to taxpayers.
- We allow corporations to parlay human rights victories from the Civil War-era to bend communities to their will.
Drop them all at the doorsteps of the company executives, and invite the press – Commenter Ballard206
Many commenters wanted to respond emotionally in ineffective ways typical of a lot of American-style activism. It’s tempting to want to respond to the phonebook companies directly. My personal favorite is a massive phonebook burning in the middle of the street at Pine & 3rd by Westlake Park.
But, American-style activism silos itself. It fights one-off battles in a system rigged for corporate dominance. It rarely wins significant fights and its victories aren’t usually leverageable by other causes.
Dumping, burning or taxing phonebooks or boycotting advertisers won’t likely provide either short term or long term solutions to the issues that face us.
The legal framework of corporate personhood, corporate constitutional rights, corporate speech and corporate money in politics must end. And, until it does, none of the issues we care about will be resolved. As long as we as citizens and activists continue to respond in one-off, disparate ways to each individual fire, we will lose. All advocacy organizations regardless of size need to unite around this cause.
I’m really trying to come up with a plausible slippery-slope argument that starts with, ‘A corporation is not allowed to dump trash on my front porch without my permission’ & ends up with ‘jackbooted thugs’, but it’s really not happening over here – Commenter Xof
I think it’s also important to note that the ACLU and liberal dignitaries such as Glen Greenwald are pro-corporate personhood and pro-free speech for corporations. They ignore the overwhelming power that corporate money has to upend the system. They are not on the side of communities when it comes to democracy.
What We Can Do
I do think there might be value in asking the City of Seattle to appeal this case to the Supreme Court on the basis of Corporate Personhood and Corporate Constitutional Rights, including rights of foreign corporations such as Yellow Media, Inc.
While the current Supreme Court is likely to rule against the city, I think there is value in raising these issue into the national spotlight. It might be the best million dollars the city will ever spend.
You can email Seattle Mayor Mike McGinn and our city council here:
mike.mcginn@seattle.gov, sally.clark@seattle.gov, sally.bagshaw@seattle.gov, tim.burgess@seattle.gov, richard.conlin@seattle.gov, jean.godden@seattle.gov, bruce.harrell@seattle.gov, nick.licata@seattle.gov, mike.obrien@seattle.gov, tom.rasmussen@seattle.gov.
Furthermore, when you talk with friends and colleagues about politics, I encourage you to highlight corporate personhood and corporate constitutional rights as defining issues of our time.
Withhold financial support from political organizations unless they are part of a strategy which includes reforming our legal framework of rights. Stop supporting ineffective, one-off organizing.
I do believe we can win. But I believe we need a new kind of resistance that’s more focused on dismantling the actual source of the harms we’re fighting. That source is the legal foundation for corporate power and influence in this country.
Related Links
- City of Seattle Response to Public Records Request: Invoices Paid to Summit Law Group for Legal Representation in Yellow Pages Lawsuit
- Court Rules Yellow Pages Are Protected Speech (TechDirt)
- Seattle will pay $500,000 to settle yellow pages lawsuit (Seattle Times)
- Seattle’s stand against treating corporations as people (Crosscut)
- Seattle’s Perkins Coie Secures Victory in Ninth Circuit First Amendment Case (Perkins Coie Website)
- Seattle’s Phonebook Opt Out Site
Corporate Personhood to Cost Seattle $500,000 to Settle Phone Book Lawsuit
Update 2: There is now a followup: Why you should care about Seattle’s phonebook debacle?
Update: This post did not include an estimate for the city’s own legal fees. The city retained Summit Law Group as outside counsel on the case which has lasted nearly 18 months and included written and oral arguments to the Federal Court of Appeals. City officials have no comment at this time on the cost of the city’s legal fees.
The Seattle Times is reporting that the City of Seattle will spend $500,000 to settle a lawsuit it lost with phonebook companies over its sensible opt-out program for residents.
Beginning in May 2011, Seattle began allowing residents to opt out of unwanted phonebook deliveries. The program was so popular, the city reports that more than 2 million pounds of paper are saved annually as a result. The phonebook companies sued the city and lost, but won on appeal. The city has chosen not to appeal to the Supreme Court.
The phonebook companies alleged in their complaint that the phonebook ordinance, “denies [their] rights guaranteed by the First and Fourteenth Amendments to the United States Constitution.” (free speech and due process). If not for the legal concept of “corporate personhood“, the phonebook companies wouldn’t be able to sue Seattle to assert Constitutional rights originally written only for people.
The rules of our legal system are now rigged to favor corporations. Rather than ask the question, “are the phonebook companies people?” and “do they have the right to free speech?” the courts have focused largely on whether the content in the phonebooks (advertisements and phone listings) represent free speech which can’t be regulated or commercial speech, which can be.
The phonebook lawsuit is ridiculous on its merits: The companies claim, “The First Amendment to the United States Constitution prohibits government from … enforcing the desire of citizens to avoid communications [and] from prying into citizens’ preferences regarding communications they seek to avoid.“
These kinds of cases put the city council in a defensive posture concerned that its actions could provoke other expensive lawsuits. What kind of democracy do we have when the city council is afraid to regulate local nuisances and environmental harms?
Over the past few years, we’ve seen corporations take several approaches to influence what happens in Seattle:
- When the Seattle City Council created a 20 cent fee on plastic bags in 2008, the American Chemistry Council spent $1.4 million dollars sponsoring a referendum to overturn the law.
- When Costco wanted to privatize liquor sales in Washington State, they spent $22 million promoting Initiative 1183.
- When Chris Hansen wanted to build a new NBA arena, he secretly lobbied Mayor McGinn for months to garner a pledge for $200 million in city funds.
The phonebook lawsuit is just one more way corporations leverage “corporate personhood” and free speech “rights” to sue the city or spend money on elections to manipulate the law in their favor.
