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Unions Battle Verizon-Frontier Deal and $600 Million Tax Break
There is an oddly named tax loophole—the Reverse Morris Trust—that is so big and lucrative Verizon is getting ready to pull $600 million through it if its sale of rural phone landlines in 14 states to Frontier Communications is approved.
Not only does Verizon stand to pocket the $600 million tax break, but a similar deal in New England shows consumers’ phone and Internet services are likely to deteriorate and workers’ jobs may be put in jeopardy.
The Communications Workers of America (CWA) and Electrical Workers (IBEW) are fighting the sale and are backing soon-to-be introduced federal legislation to close the loophole. The law now allows Verizon and other companies to sell assets tax-free to smaller companies such as Frontier, that end up burdened by debt. (For a detailed look at the Reverse Morris Trust, click here.)
Less than three years after Verizon’s sale of its New England landlines to FairPoint Communications, FairPoint has filed for bankruptcy. Now, workers face cutbacks and job losses, customers complain about deteriorating service and the lack of high-speed broadband and other new technologies. Hawaiian Telecom also filed for bankruptcy after Verizon used the same tax loophole to dump its landlines in Hawaii.
If the Verizon/Frontier deal is approved, Frontier would be saddled with some $3.3 billion in debt while consumers and workers in the 14 states would be in the same dire situation as those in New England and Hawaii.
Not only is current service likely to deteriorate, but Frontier’s $3.3 billion debt makes it doubtful it would be able to build out high-speed broadband or provide other advance telecommunications services to consumers.
IBEW President Edwin Hill says if the sale is approved, it would have a
lasting and residual effect on the consumers and quite frankly will be quite devastating. With the broadband deployment, the service quality, the economic development and jobs are all at risk.
The Reverse Morris Trust is “backward thinking and bad public policy,” says CWA President Larry Cohen.
The tax loophole tax means the government is spending hundreds of millions of dollars to subsidize large companies to exit the business of investing in our network.
Rep. Paul Hodes (D-N.H.) says he will soon introduce legislation to close the loophole.
Meanwhile unions and consumer groups in West Virginia, one of the 14 states affected by the proposed sale, are mobilizing. Read more in a story at In These Times, by labor journalist Steve Early and Rand Wilson, AFL-CIO Organizing Department communications specialist.
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THOSE WHO FORGET HISTORY ARE GOING TO REPEAT IT.
The owner of the Western Union Telegraph and the Union Pacific Railroad, Jay Gould who was Quoted : “I can hire half the working class to kill the other half.” Had a poem or song written about Him. JAY GOULD WAS REQUIRED TO DIVEST HIS SHARES IN AT&T BECAUSE OF ANTI TRUST LAWS.
VERIZON’S CEO IS THE MODERN JAY GOULD!
Jay Gould’s Modest Wants
“My wants are few; I scorn to be
A querulous refiner;
I want only America
And a mortgage deed of China;
And if a kind fate threw Europe in,
And Africa and Asia
And a few islands of the sea,
I’d ask no other treasure.
Give me but these—they are enough
To suit my notion—
And I’ll give up to other men
All land beneath the ocean.”
From “Labors Untold Story” by Richard O. Boyer and Herbert M. Morais, United Electrical, Radio and Machine Workers of America UE Press, copyright 1955, page 73.
GREED IS RAMPANT IN THE CORPORATE WORLD AND THE BANKRUPTCY LAWS ARE BEING ABUSED TO DEPRIVE WORKERS OF LIVING WAGES AND BENEFITS. IT IS BAD PUBLIC POLICY TO ALLOW COMMUNICATION COMPANIES TO DEGRADE SERVICE. PUBLIC POLICY SHOULD ENCOURAGE WIDER DEPLOYMENT OF BROADBAND.
DAVID HURLBURT CWA 9410
We now live in a country where the CEO is allowed to make up to 700 times what their workers make.There is no justice in sight.They are pretty much rubbing it in our face and daring us to do something about it but what we have is silence and non-action from our Union Leaders.I have been calling for a MILLION MEMBER MARCH either to DC or WALL STREET or both.Nothing but the sound of crickets.How much longer can I afford my dues if I cant work????
Response to k2kelly: (MILLION MEMBER MARCH either to DC or WALL STREET or both) Sounds like the right idea to me. But when in DC, instead of Pennsylvania ave. or some other traditional route, I’d choose K street, the lobbyist pig thoroughfair. Perhaps showing those (fill in the blank…____) that were going to keep them from enjoying there stolen gains, remaining a thorn in there [side] forever.
Okay, President Obama…time to step in on this potential loss of JOBS and stop it.
If new technology is the answer, then let’s bring it on and send workers back to school to update their skills and information.
This is a perfect test for how serious you are about saving and creating new jobs for the 21st century.
Remember….”Make me do it”?
Taxpayers are paying for an agency to protect them from our crooked politicians, I just heard about it recently. Time to put the squeeze on Raymond Hulser and his team to start kicking butts on greedy politicians who are giving their friends/benefactors the benefit of these sleazy loopholes. So far they don’t seem to be noticing these crooks, so its up to us to let him know loud and clear what is going on…
PUBLIC INTEGRITY SECTION
http://www.justice.gov/criminal/pin/
The Public Integrity Section oversees the federal effort to combat corruption
through the prosecution of elected and appointed public officials at all levels
of government. The Section has exclusive jurisdiction over allegations of
criminal misconduct on the part of federal judges and also monitors the
investigation and prosecution of election and conflict of interest crimes.
Section attorneys prosecute selected cases against federal, state, and
local officials, and are available as a source of advice and expertise to
other prosecutors and investigators. Since 1978, the Section has
supervised the administration of the Independent Counsel provisions
of the Ethics in Government Act.
The current acting head is Raymond Hulser raymond.hulser@usdoj.gov
Thanks Granny on the Warpath, I had not heard of this agency at all either. Proactive information is one of the reasons I signed up for this blog.
Anyone suprised by this should visit DC. Verizon is everywhere, like they own the whole town. No other phone company is in sight. The Wizards play at the Verizon Center. Million Member March to D.C., or Wall Street (maybe better) – count me in. It won’t be the first time — 1969,1971,1981,1983,1991 and 2006. IT IS TIME TO RELEASE THE HOUNDS.
Where do I sign up for the million member march? It’s about time we got off our butts and made some real noise. Maybe one in DC and one in ‘Frisco. I’m tired of worker exploitation by corporations and the wealthy and their government pawns. Letter writing and voting doesn’t seem to do much good.