In one of his weekly addresses earlier this year, President Obama asked that the public put pressure on Congress to “give America a raise.”
The President would like to see the federal minimum wage raised to $10.10 an hour, a nearly $3 an hour from the current $7.25, that would take a full-time worker from making roughly $15,000 annually to over $20,000.
Tsedeye Gebreselassie, a staff attorney at the National Employment Law Project, says while that may not seem like a lot of money, it can make a big difference.
“$20,000 a year is still not a princely sum, but it’s a significant increase for the roughly 28 million workers who will benefit,” Gebreselassie says.
And Gebreselassie argues that it isn’t just individual workers who benefit from the wage hike. The economy could benefit, too.
“When you put more money into the pockets of low-income workers, they’re going to go out there and spend it immediately because they have to on basic necessities like food [and] clothing. And that helps local businesses that rely on that business to stay afloat,” she says.
John Arensmeyer, founder and CEO of the Small Business Majority, supports the hike. He says that the increase in pay would directly benefit small businesses along with the rest of the economy.
“[Raising the minimum wage] would ensure that there’s more money in our economy so that people can buy small business products and services. It’s the old Henry Ford adage. He wanted to pay his employees enough so that they could buy his cars,” Arensmeyer says.
In a poll conducted by the Small Business Majority, 57% of small business owners said that they supported an increase to the federal minimum wage to $10.10 an hour, with 82% reporting that they already pay more than the minimum wage.
Arensmeyer says that there is no real evidence that raising the minimum wage would decrease the number in jobs, but that studies do show that increasing the minimum wage would put billions of dollars into the economy and reduce the need for public assistance.
“In order to maintain a thriving middle-class based economy, you have to have money circulating through the economy and you have to pay people enough so that they can buy products and services,” Arensmeyer says.
Not all small business advocacy groups agree with Arensmeyer on the proposed minimum wage hike, including the National Federation of Independent Business. We reached out to the NFIB for comment, but as of now, they haven't responded. This page will be updated to reflect their response if they do so.
Caterpillar Inc, an American company specializing in the design and sale of construction equipment and machinery, will appear before the Senate next month, according to Bloomberg News. A Senate committee will call Caterpillar as part of its investigation of possible tax evasion by multinationals like Apple. Caterpillar is under the spotlight because it was the subject of a lawsuit in 2009, in which the company was accused by a former employee of dodging US taxes by setting up shell companies in Switzerland and Bermuda. Little evidence exists that Caterpillar did this; the original lawsuit in 2009 was settled, and Caterpillar denied the charges.
Multinationals can (and do) set up subsidiary companies in countries which have relaxed tax laws to avoid paying taxes within the U.S. Over time, the complicated maneuvers that multinations indulge in to wriggle free of the taxman's grasp have picked up nicknames that sound like the special menu in a deli:
- A Shell Company: no, this isn't the company Cally set up to sell seashells by the seashore. A shell company has no operations or significant assets, and as such, is an empty vessel or "shell." A parent company can assign nominal responibilities to it with a pen stroke, and even though nothing actually happens at the subsidiary, the parent company can use it as a store or a conduit for funds.
- A [country name] structure: Quite simply, the name of the country in which the shell company or other scam is created. Caterpillar was accused of setting up companies in Switzerland and Bermuda, known as a Swiss structure and a Bermuda structure. If they had set up in the Caymans, they would have called it a Cayman structure.
- A Double Irish: the case when two Irish subsidiary companies are set up by a U.S. entity. A Double Irish is a tortuous but profitable structure, through which money flows like soda through a crazy straw. It takes advantage of loopholes in Irish tax law that do not tax transfer pricing or the assets of subsidiary companies.
- A Dutch Sandwich: An embellishment to the Double Irish: add an additional shell company in the Netherlands, which acts as a middle step between the two Irish entities, and you get ... something that sounds tastier than it actually is.
So the next time you order lunch in Bermuda, why not try a shell in a double Irish with a Dutch sandwich? Add in a Swiss structure on the side -- and tell us what you get in return.
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