The Drunken Race to Hook Africans on Beer

New Orleans  In Nariobi the question in a bar that always made you step back and think if you ordered a beer was whether you wanted it cold or warm, meaning at room temperature.   Given the state of refrigeration and the cost of electricity in the country, so many people had gotten used to drinking beer warm that it had become a matter of choice.   Now it seems things are changing because fierce competition among big international brewers has led to the introduction of cheaper beers in order to try and grab more money from the poor by hooking them on the lower prices.  Unbelievably, this push has government support.

Today, legal beer sales are only about 1% of total consumer spending in Africa and the Middle East, but two brewery giants, SABMiller and Diageo, have set their sights on making Africa where they will see their big expansion in coming years.   To do so, according to a surprisingly good article in the Wall Street Journal, they had to solve two problems:  “packaging and price.”   By negotiating agreements with seven different African countries to reduce taxes on beer, allowing the companies to make up the lost revenues through increased volume in sales, they won their tax breaks.  On packaging they started serving beer right out of the kegs rather than the bottles.  In a country like Kenya this has moved Senator, a beer that luckily for the company was introduced the same year that Barack Obama was elected U.S. Senator, to the top of the heap, costing only about a quarter a beer, as opposed to traditional favorites like Tusker or the ubiquitous home brews in the slums of Nairobi and the countryside.  The companies also claimed or conned the governments by saying more beer consumption would increase demand for farmer’s crops.

Sure this all sounds crazy, but as I have talked about in Citizen Wealth, there are lots of companies that have made billions by focusing on how to separate the poor from their few pennies.  In Africa the lineup of course includes fast food companies as well like Yum Brands and of course Walmart.

The health impacts are horrendous.  Regulation is nonexistent.   The exploitation is stark.

It is frightening to watch a disaster unfolding, even at a distance.

Beer in Africa Audio Blog


Aaron is Right, Aviv is Wrong: The Wealthy Cannot Keep Escaping Taxes

Aaron Dorfman

Quito   A number of the big dog, nonprofit charities trooped over to visit with Congress to try to protect every dime of their tax breaks, especially the blanket deductions that favor the rich and superrich.   They were led by Diane Aviv, the longtime head of Independent Sector, the big nonprofits trade group that has recently been squealing like a stuck pig about any change in their favored loophole status.   Having run nonprofits for decades, I have to say it’s an embarrassing spectacle.  There is no way that Aviv and the mega-charities speak for progressive nonprofits.

Luckily, Aaron Dorfman, head of the National Center for Responsive Philanthropy, does, or at least tries to, according to the statement his organization released that was quoted in the New York Times:

 “If nonprofit leaders don’t want changes to the charitable deduction, it is imperative that we get behind the president’s call for higher tax rates on the wealthy,” said Aaron Dorfman of the National Committee for Responsive Philanthropy in a statement. “The majority of nonprofits know this is true,” Mr. Dorfman said, “and I urge the hundreds of nonprofit leaders who have traveled to our nation’s capital for visits with members of Congress today to clearly advocate for higher tax rates on the wealthy in addition to their advocacy in opposition to any changes to the charitable deduction.”

Ok, well he doesn’t quite speak for all of us, since the deduction does need some changes, as I argued a couple of days ago in these pages.   Nonetheless, Aaron, whom I have known back to his days as an ACORN organizer in Minnesota and Florida knows better and still has to work with these people and get invited to their club meetings from time to time, so this was clearly the best he could do by at least siding with the White House on the need for reform and more taxes on the wealthy, which was miles farther than the rest of these folks and the Independent Sector seem willing to do.

Their position is becoming a shameful case of self-dealing in the face of the clear and obvious need for equity and justice in the country.  How can so many of these big timers like Catholic Charities stand for that?  United Way, who is surprised, since they have been a business plaything for years in countless communities, but jeez!

And, for what?  Even Mitt Romney’s position was better than theirs!

There’s also pretty clear reasons to believe that Aviv and the Independent Sector are fudging on the potential impact of even the White House’s modest proposal to lower the cap on the deduction from 35% to 28% for families with incomes over $350,000 per year.   Also from the Times:

Capping the value of the deduction, as the White House has suggested, might reduce giving by as much as $7 billion a year out of $300 billion over all, according to an estimate by Independent Sector.  But other estimates have proved more moderate. For instance, the Center on Philanthropy at Indiana University last year analyzed the Obama administration’s proposal to increase marginal tax rates and cap the value of charitable giving. It estimated that itemized giving would have declined just 0.4 percent in the first year after being put in place and 1.3 percent in the second. “This suggests a relatively small direct impact, but combined with the weak economic climate, funding reductions and increased demand for services already affecting some nonprofits and their constituents, these changes are likely to have an additional negative effect in the long term,” Patrick M. Rooney, executive director of the Center on Philanthropy, said in a statement.

So, not only is Aaron right and Aviv wrong.  Aviv may be gilding the lily for her big time  backers and padding the facts, when we need a clear and united voice for nonprofits that it is time for more equity and justice for all Americans not just protection of special benefits and deals for Aviv and her buddies.

As Aaron says, “…it is imperative that we get behind the president’s call for higher tax rates on the wealthy.  The majority of nonprofits know this is true…”

Aaron speaks for us.  Please listen to him, not Aviv, and give us tax reform, including reform on charitable deductions!


Nonprofit Deductions, DREAMing, Facts, Live-In Wages, Tax Justice, and Twitter Access

Quito     With 80% of the United States households earning, and therefore paying, taxes on incomes of less than $100,000 per year, that means that the vast majority of us are filing “short forms” on IRS 1040A.  Independent studies regularly establish that the most generous Americans, when measured as a percentage of income, are those making the least money, which means the vast 80%.  For most of us there is no real tax break and therefore reason to file a “long form” and itemize deductions, because there are not enough loopholes for us.  A lot of the generosity of the vast majority of American families is simply not driven by the chance of a tax break but by the size of their heart, the needs of their neighbors, family, and community.

All of which is somewhat depressing, if not downright pathetic, to read of the efforts of big-time so-called charities lining up with oil companies and others to make sure that their tax loopholes are protected in the current negotiations on creating a more equitable tax system in the United States.  These charities and their lobbyists seem to be lining up mainly as tools of the rich, rather than servants of the public interest, which is actually the basis of their 501c3 exemptions anyway.

It seems clear many of them are indeed playing “Chicken Little,” regardless of Diane Aviv’s statements below to the contrary, even when the impact on most of them is relatively minor.  Why can nonprofits defend standing in the way of a more equitable tax system, including one that eliminates at least some of the huge number of breaks for the 20%, when the 80% are getting so few?  Seems unconscionable.

“Charities Maneuver to Keep Tax Breaks on Donations,” 11/30/12, Wall Street Journal

There is no specific plan to eliminate deductions for charitable giving in current talks. Instead, proposals that have been floated focus on capping overall deductions.  The White House in the past has proposed limiting deductions to no more than 28% of income for families making $250,000 or more. Republicans including former presidential nominee Mitt Romney have suggested limiting deductions to a specific dollar amount. Others have suggesting a “haircut” option, letting taxpayers claim, for example, 80% of their current deductions.

Nonprofit leaders say that if deductions are limited, taxpayers will cut back their giving. Diana Aviv, president of Independent Sector, a coalition of nonprofits, cited studies suggesting Mr. Obama’s plan would lead to $1.7 billion to $7 billion less a year in charity giving. The impact of a dollar cap on deductions, she said, would be even greater.

That is a small part of the roughly $300 billion Americans donate yearly, but Ms. Aviv said certain charities would be hit disproportionately. “This is not a Chicken Little situation,” she said. “Something is going to happen unless we are able to persuade lawmakers that the charitable deduction is different from other deductions.”

Activists are descending on Capitol Hill next week. They have written letters to the president and congressional leaders. They are urging their supporters to contact congressional offices.

Under the tax code, a person can claim a charitable deduction that matches his tax rate. A taxpayer in the 18% bracket who donates $1,000, for example, would have tax savings of $180.

For some more uplifting news, here is a quote from the article in today’s Times from the critical United We Dream conference of young immigrants in Kansas City over the weekend:

On Sunday, six immigrant parents, also here illegally, joined a “coming out” ceremony where they spoke in public for the first time, as many youths have done in recent protests.  One father, Juan Jose Zorrilla, 45, who is from Mexico, recounted how he had entered the United States several times by swimming across the Rio Grande. “For parents, there is no sacrifice so large that we won’t make it for our children,” Mr. Zorrilla said. A mass of youths jumped up from their chairs to embrace Mr. Zorrilla and the other parents.

Nate Silver, FiveThirtyEight Blog, New York Times continues to try to administer bitter information by sharing “just the facts, ma’am” with the rest of us though:

“…the seeming inaccuracy of Mr. Romney’s internal polls ought to present a warning to future campaigns. The problems with internal polls may run deeper than the tendency for campaigns to report them to the public in a selective or manipulative way. The campaigns may also be fooling themselves.  Our self-perceptions are very often more optimistic than the reality; 80 percent of people think they are above-average drivers, for example.These problems can be worse when we join together to form businesses or organizations.”

Speaking of the facts, Editorial on Domestic Workers, Times

The study, by Nik Theodore, an associate professor of urban policy at the University of Illinois at Chicago, and Linda Burnham, research director of the National Domestic Workers Alliance, surveyed 2,086 workers in 14 cities. It found that 23 percent of workers made less than their state’s minimum wage, which must be at least $7.25 an hour. Live-in workers had it worse: 67 percent of them earned less than the minimum, 65 percent had no health insurance and about 82 percent had no paid sick days.”

Live-in workers are still not covered by the minimum wage in the Fair Labor Standards Act the last time I checked.  Why is that so hard to correct?  Seems like an easy fix?  Is it because most of them work for the rich or richer?

Will creating a more equitable tax system be the end of the US economy as we know it?  – Not So Much Really – Times

While data on the tax status of all stockholders is hard to come by, many economists agree than an increasing proportion of the entire equities market is now held by retirement investors whose holdings are not subject to current tax law; by foreign investors who don’t pay American taxes, or by institutional investors like insurance companies and pension funds that are exempt from taxes.  Among the stocks that are held in the United States, 48 percent are held directly by households, down from 65 percent in 1988, according to Federal Reserve figures. And 40.7 percent of households have mutual funds in tax-exempt accounts.   But only some of these have income over $250,000 a year, and a portion of those people have their money in accounts protected from taxes. Eric Toder, a co-director of the Tax Policy Center, said as a result market prices should have little to do with the taxes paid on gains because prices are largely “being determined by tax-exempt investors and by foreign investors.”

For a humorous – and more realistic – perspective from someone who clearly makes enough to use the “long form,” David Carr, Media Columnist for NTY on John Huey leaving Time, Inc. as Editor-in-Chief:

Now Mr. Huey is packing his stuff to prepare for a fellowship at Harvard. “I’m looking forward to getting back closer to the keyboard than I have been,” he said. Before he goes, he will probably slip Merle Haggard’s “Big City” into the CD player, an album whose title track frequently kept him company in his corner office.

I’m tired of this dirty old city.

Entirely too much work and never enough play.

And I’m tired of these dirty old sidewalks.

Think I’ll walk off my steady job today.

Gesturing at the magazines on the table, Mr. Huey said: “We still make a great deal of money because consumers pay us money for the products that we give them.”

“But I can’t look anybody in the eye who is coming into the business and tell them that they are going to end up in an office like this,” he added, with a wave at its expanse. “But who is to say that anybody should live like this anyway?”

Finally, we are going to leave all of this in the hands of Congress, which sounds fine, until you remember there are big time crazies among us.  Here’s a quote in NYT from Texas Republican Congressman Ted Poe:

“We freeze terrorist organizations’ bank accounts, and we ought to freeze their Twitter accounts, too,” he said.

Dude, censor this!