May 28, 2013
Host: Ted Simons
Arpaio Racial Profiling
- A federal judge ruled that Maricopa County Sheriff Joe Arpaio’s office engaged in racial profiling. He also ordered the sheriff’s office to stop the practice. JJ Hensley has been covering the story for the Arizona Republic and will tell us more.
| Keywords: arizona
Ted Simons: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. A Federal judge ruled Friday that Maricopa County sheriff Joe Arpaio's office engaged in racial profiling, that the practice must be stopped. Here to tell us more is J.J. Hensley that has been covering the story for the Arizona Republic, and you have been covering this. This is a job I've been doing, give us an overview of what did U.S. district judge Murray Snow rule?
JJ Hensley: The overview is key, it's a 142-page ruling, very detailed. But the take away were the seven particular items, that he prohibits the sheriff's office from doing now, as part of his injunction. And one of them is, they cannot call ice any more, when they have someone detained on the side of the road without an underlying state charge, so, if there is no speeding or, or jaywalking or drugs, then, then there is no, no call to ice. And that's probably the most significant immediate impact. The sheriff's office is trying to figure out what this means for their enforcement operation, and for any patrolling that they mid do on the highways.
Ted Simons: Want to get more of those factors in a second but this trial is, is, and wrapped up eight months ago or something like that? What took so long for this ruling?
JJ Hensley: That's a good question, and a lot of people who I talked to said I was surprised it took that long and when you say, what do you think about the ruling? They were like, man, it was detailed, and I think that that's the key, he took, took point by point, through what they said on the stand, and went to the reference material that the sheriff's office provided, and that the ACLU provided, and then drew on outside resources, and was able to kind of take each issue and, and distinctly discuss it and look at the legal arguments there. And it's thorough and detailed, and I think that that's why it took more than eight months to come down.
Ted Simons: And just to be clear the judge really was the only arbitrator, correct? No jury?
JJ Hensley: No jury. Just a judge and a bench trial. They were asking for injunctive police to prevent the sheriff's office from engaging in this discriminatory policing, and that's what Snow has done.
Ted Simons: What do we know about Murray Snow?
JJ Hensley: He was a Bush appointee. He went to law school and undergrad at BYU, so, I would say that, that his point of view on a lot of issues should mirror that of a lot of Arizonans.
Ted Simons: And you said a detailed and comprehensive, was it a clear ruling?
JJ Hensley: Yeah. I think that it was -- everyone I talked to, who has got a national perspective on this, thinks that it's very, very thorough, a thorough rebuke of this inherent authority philosophy that we have come to discuss in Arizona, particularly in the last six years when it comes to immigration enforcement. Our local law enforcement agencies, do they have the inherent authority to enforce Federal immigration law, Kris Kobach, the Secretary of State of Kansas, the one who trained on this immigration enforcement, he says yes. Judge Snow says no. He took it point by point to say why that's not the case.
Ted Simons: Who are the plaintiffs in this case?
JJ Hensley: Sure, there is a group of, of individuals that started with one person who was here on a tourist visa who got picked up outside of a church in cave creek in 2007 as a day labor work site it, expanded to include five other plaintiffs, and then the judge opened it up to a class of all Latino residents, who were stopped by the sheriff's office since 2007. But, there was no money involved here, they were not seeking any monetary relief, just injunctive relief.
Ted Simons: Exactly what they did, and an equal amendment kind of thing.
JJ Hensley: A 14th amendment, and then a fourth amendment issue on search and seizure.
Ted Simons: So what was the Maricopa County sheriff's office, what were their arguments in this, and how much did the arguments wind up in that court ruling?
JJ Hensley: I think one of their main arguments was this is the way we have been training, and it came directly from ice, that we can use ethnicity as one factor in helping us to develop reasonable suspicion someone's legal status in the country. Judge Snow said, that might have been the training you got but that training was wrong. And it's been the training that you have operated under for number of years. And so, it's going to take some, some corrective action to rectify that.
Ted Simons: And again, can't check on the status of those not charge and you cannot use ancestry or race for law enforcement decisions regarding status. That's kind of the bottom line, right?
JJ Hensley: Right, that's the theme of this, that you should not be making any decision on law enforcement maneuvers based on ethnicity or race. And this came back to issues in the trial where there are letters presented to the sheriff's office from concerned citizens in the southeast valley saying that there are a group of Hispanic men standing on the street corner come do a raid, and with two days there is a raid, and, and so Snow took exception to that. And I think that really came through in this ruling.
Ted Simons: How much it what sheriff's office Joe Arpaio, who has never been shy around cameras and microphones, says a lot and is quoted a lot, how much were those quotes at play in this whole thing?
JJ Hensley: It ended up playing a big role, and that's why we may be haven't heard from him. He has been conspicuously quiet for him. But throughout the ruling Snow would take the statements that Joe Arpaio made in 2007, 2008, 2009 and contrast them with what his deputies or he, himself, was trying to say on the stand, and basically, said that these can't both be true. Is, your contemporaneous statements that this is a pure immigration enforcement effort that is the only one that really targets illegal immigration in the United States when he launched this. That's really what snow kind of hung his hat on and it came back to bite the sheriff.
Ted Simons: So this comprehensive ruling, this detail and clarity, are we like to see an appeal?
JJ Hensley: They promised to appeal. And the legal experts, I guess, who reviewed this say that there is not a lot of room for appeal here, that it's factually based, not on snow's point of view or his judicial philosophy, and so it's going to be tough, but they vowed to appeal, and you know, when you listen to Joe Arpaio's attorney, it sounds like he wants to take it all the way to the supreme court.
Ted Simons: Last question, speaking of the department of Justice case, that's still out here, how does this impact that case?
JJ Hensley: I think that in one, one immediate potential significant way, immediately. There is a hearing coming up on June 14th where they are going to talk about remedies, you know, where the ACLU will come in with its proposed remedies, MCSO will say we can't stand for that, and the judge will determine who is right there. Among those things, he could appoint monitor there to oversee this, and that's an issue that's been the subject of the main dispute between the Justice Department and MCSO on their civil rights' lawsuit. So, let's say Snow appoints a, a monitor and, and suddenly, that issue is resolved with DOJ so, it could be an issue where, where some of the remedies that are ordered here, resolve some of the issues that, that are in dispute in that case.
Ted Simons: So instead of piling on evidence, it, basically, kind of runs the back door here and, and takes care of some of the remedies?
JJ Hensley: Yeah. But, I mean, we have got another what, we waited eight months for this, so, we'll wait another three weeks.
Ted Simons: But we have got to keep busy. Thanks so much, great stuff and good to have you here.
JJ Hensley: My pleasure.
Glendale Casino Legalities
- A proposed casino in Glendale has been challenged in court several times, and each time has beaten those challenges. Heidi McNeil Staudenmaier of the law firm Snell and Wilmer will talk about the legal challenges the casino has faced and explain the laws regulating casinos.
- Heidi McNeil Staudenmaier - Lawyer, Snell and Wilmer law firm
| Keywords: casino
Ted Simons: The Tohono O'Odham indian tribe plans to build a casino on land near glendale have survived seller court challenges, including Federal Court summary that favored the tribe just three weeks ago, we're joined by Heidi McNeil-Staudenmaier of the law firm Snell and Wilmer. It's good to have you here, thanks for joining us.
Heidi Staudenmaier: Thank you.
Ted Simons: What is the status of this dispute?
Heidi Staudenmaier: Well, there is, actually, about multiple prongs going on with this dispute. It's not just one lawsuit, but there have been multiple lawsuits, and there's also a pending legislation so it's not one single thing at this time. So.
Ted Simons: Yeah, and very complicated. As for that ruling three weeks ago in Federal Court, what was that all about?
Heidi Staudenmaier: Um, there is, there's been two Federal Court rulings, the one, the one that you are talking about, it's the Arizona Federal Court. And what happened there was, essentially, the State of Arizona and the Gila River and Salt River tribe, who are all bordering here in Phoenix, brought a lawsuit against the Tohono O'Odham tribe. Essentially, contending that the deal that was struck when the original gaming compacts were negotiated in the State of Arizona for gaming, not just for the Tohono O'Odham tribe but for all the tribes, did not intend that there would be an additional casino built in Phoenix. I mean, there is a lot of, a lot of other legal issues in that, but that was kind of the crux of it.
Ted Simons: What does that say regarding new casinos in the Phoenix area?
Heidi Staudenmaier: And that's what the judge came down on. Ruled specifically that, that the four corners of that contract did not specifically prohibit another casino in the Phoenix area. And that was the whole argument around the case, was that there was intent that the Tohono O'Odham nation, they already knew that they wanted to have the casino built in glendale, but they did not disclose it to, to anyone else, while they were negotiating the compact, but the judge, essentially, said look, I'm going to look at the contract, itself, what does it say? And the contract did not have specific language in there prohibiting it. And he said, based on that, I do not see a claim here. But, he left it open. There is still one remaining issue in that lawsuit. Which he's asked both sides to, submit more briefings.
Ted Simons: And is that the issue what exactly the state understands this compact to say?
Heidi Staudenmaier: Yes. I mean, it really comes down to the intent, what did the state understand it was negotiating in this compact in terms of casinos and where they would be located, and also, who was it that, that was the representative of the state? What -- who is the state? Is it what the Governor understands? Is it what, what the voters understand? Because the voters were the ones to pass proposition 202 approving the compacts so that's part of the argument here is, is what was understood, and when this compact was being negotiated, so the judge is asking for a little more evidence, a little more briefing to go behind what was going on.
Ted Simons: Does it matter what the tribe knew about the state's understanding?
Heidi Staudenmaier: Maybe. That's, that's, also, the judge wanted a briefing in terms of not only what did the state understand and was the state's understanding reasonable. But, also, what did the tribe know that the state knew?
Ted Simons: And again, not to get too complicated but why is understanding so important?
Heidi Staudenmaier: Well, I think that it's important because, because these compacts were proved through proposition 202, which was the voters. And so, I think that the judge really wants to make sure that this is done with some intent about what the people of Arizona wanted.
Ted Simons: Now, I have not heard this, but Glendale’s efforts to annex that land. Is that still in court?
Heidi Staudenmaier: That was one of the lawsuits, that was brought early on, the tribe brought a lawsuit to, to dismiss or to, basically, prohibit the state, or the city from doing that, and that, essentially, was through the whole court process. And the tribe won on that, and it's essentially exhaust all appeals, so I think, I think when I say I think, I think that safely that, that issue, itself, that legal issue is, is now resolved. And dead.
Ted Simons: I was not sure if, if they were allowed, the tribe was allowed to go and put this into trust yet or if that was still hanging.
Heidi Staudenmaier: Well, there is yet a third lawsuit.
Ted Simons: Ok.
Heidi Staudenmaier: There was another lawsuit brought, which is still pending, and that lawsuit was brought by the State of Arizona again, and the Gila river tribe and the Salt River tribe, and against the secretary of the interior. And the secretary of the interior is who has the authority and the power to take land into the trust for tribes. So, they brought a lawsuit saying that you don't have the authority to take this land into trust because this all goes back to the original act. Permitting the land to be taken into the trust in the first place, which is the Gila Bend Act, which was passed by Congress to help the tribe replace traditional lands that were flooded by the U.S. Government dam built in the 70s. And so under the Gila Bend Act there were conditions that had to be met for the tribe to buy replacement land. And one of the conditions was that it can't be land that is within city limits. And the tribe went and bought this land in Glendale. It is surround by three sides of Glendale surround it.
Ted Simons: Right.
Heidi Staudenmaier: So it's, essentially, a county, un-incorporated county island. And in the middle of Glendale. And so, that issue has been litigated where they have challenge the secretary of interior saying that you did not have the authority to take this land into the trust, and because it does not fall within the Gila Bend Act. The Federal Court judge here in Arizona disagreed and said, nope, it falls within the act. It's all appropriate, and end of story. So, of course, that has been appealed to the 9th Circuit court of appeals. And the 9th Circuit ruled, in September, that they agreed with the Arizona judge. And said that we agree with you. The state then asked for reconsideration of that decision, and just in the last week, the 9th Circuit did reverse part of the opinion, and said that, that we think that there is some ambiguity of what is meant by within the city limits.
Ted Simons: Oh, my goodness. And last question here and, and in the grand scheme of things, a 30,000-foot view, why does the tribe keep winning or at least getting favorable rulings and why does the state and the city keep losing?
Heidi Staudenmaier: Well --
Ted Simons: It sieges as though, this issue should be resolved by now because the scoreboard looks like a lopsided game.
Heidi Staudenmaier: You know, I think that the state and the other parties involved in this would probably disagree that it is lopsided, and obviously the Tohono O'Odham tribe would --
Ted Simons: Yes.
Heidi Staudenmaier: --Would contour with you saying that it is lopsided, and but that's the beauty of the law. That's why I enjoy practicing law. There is always different arguments to make, and depending on the judge that, that rules on it, or looks at it, may have a different viewpoint. And so, it has been to date the tribe has been winning a lot of the battles, but, will the war ultimately be won by them? I don't know.
Ted Simons: That's a good way to put it. Great information and good to your you here, and thanks for joining us.
Heidi Staudenmaier: Thank you very much.
IRS, Apple Inc. Problems
- The Internal Revenue Service is facing scrutiny for allegedly targeting conservative groups for audits. Also, Apple Inc. is being criticized for moving profits off shore in an alleged effort to avoid U.S. taxes. Adam Chodorow, Arizona State University Tax Professor and Associate Dean for Innovative Ventures, will talk about both issues.
- Adam Chodorow - Tax Professor and Associate Dean for Innovative Ventures, ASU
| Keywords: technology
Ted Simons: Apple, the High-tech giant being criticized as one of the hyper-profiled U.S. companies moving profits off-shore in an alleged effort to avoid U.S. taxes. Here to talk about the issue of profit shifting is Adam Chodorow, he's a tax professor at ASU and associate Dean for innovative ventures at the O'Connor college of law. Good to have you here and thanks for joining us.
Adam Chodorow: Thank you for having me.
Ted Simons: What is this controversy involving apple and taxes?
Adam Chodorow: Well, what apple has managed to do is to shift its profits overseas, and in a way that actually allows it to avoid paying taxes on a huge portion of the income.
Ted Simons: And apple testified, in an executive that, I think the new Steve Jobs did this or someone close to him, they six paid billion of taxes last year at a 30% rate. Valid?
Adam Chodorow: Not really. So the U.S. has what we call a territorial tax system, or rather, a worldwide tax system where the ideas we're going to tax you on income wherever you earn it. And but, we also have, have this, this deferral system. Where if you earn the income overseas, you don't have to pay tax on it, and until you take the money back to the United States. And, and so, what apple and a number of companies have done, is that, that they have figured out a very clever way to shift income and have it appear to be earned overseas, subject to deferral, and not subject to any U.S. tax.
Ted Simons: Now, subject to a deferral, meaning eventually that's got to come back home, doesn't it?
Adam Chodorow: If they bring the money back home.
Ted Simons: Yes.
Adam Chodorow: But, what happened, I can't remember how many years ago now, about five years ago, is that they convinced Congress to have a tax holiday. Where they were allowed to bring home hundreds of billions at a very low, a 5% tax rate. And so, since then, companies like apple have, have stockpiled something in the hundreds of billions of dollars again in the last five years, and now, they are saying hey, this money is trapped, we would love to bring it home and fix the economy and help hire people but we cannot because of the tax rates so could you give us a tax holiday again?
Ted Simons: They are just waiting on the holiday, and apparently, apple now with this worldwide taxes, only 14%, as opposed to the 30%, something along those lines?
Correct, and what apple has done is more clever than many others. The idea is that you want to shift profits to a country with low taxes. So, let's say that you make an apple phone and it cost you $10 to make, and you sell it for $100, that's a $90 profit. If you do that here, you pay tax on the profit. And but what if you, you, apple, make it through a subsidiary, and say, a low tax country and, and it cost you $ to make but you charge apple U.S. $98 for the phone. So now you have got all this profit occurring in this low tax country. And when apple sells it in the U.S. it reports $2 of profit. So, but apple has taken that further. Because they figured out way to, to, to say, basically, look, the company that is making this profit, it's subject to deferral in the U.S., no U.S. tax, but, they went to Ireland and set it up in a way where the Irish say, well, actually, it's not subject to Irish tax, either.
Ted Simons: Right.
Adam Chodorow: So it's not that they are paying low taxes, on, on this to another country, they are paying no taxes on a lot of the income that they earn.
Ted Simons: How common is this?
Adam Chodorow: It's getting more common because once one person figures out how to do this, there are a lot of copycats, and so what you’ll find is that the CFOs of the multi-national companies, have come to understand that tax management is, is, is, you know, sort of a big part of their job. And they are constant looking for ways to reduce their taxes.
Ted Simons: What are these other -- the Irelands of the world, what are these other countries saying about this? Are they willing partners? Are they tired of it? What's happening?
Adam Chodorow: A number of them are willing partners. Because what they get, it depends on the structure, so, sometimes, what they are getting is U.S. moving manufacturing over to their country. So, say, you know, it's basic tax competition. If you build it in the U.S. you will pay a ton of taxes, if you build it in Ireland, you will pay less. And well, what does what does that mean? That Ireland gets a business, which employs people, and so, if those cases, Ireland has everything to lose. The latest ploy that we're talking about here, where neither the U.S. nor Ireland taxes it, I don't think either of the countries really want that. That, that's a crack in the system that, that apple has found and is exploiting. But Ireland doesn't really gain because that's just a paper gain being played.
Ted Simons: What are some of the other countries involved? Both in profit and expense shifting?
Adam Chodorow: Well, the people use the Netherlands, and there is, obviously, the Cayman islands and tax havens, oddly enough, in warm sandy places. And, and that people tend to go, and, but there are a bunch of countries, a lot of the banks secrecy laws in Europe allow people to, you know, to create bank accounts that people don't know about and, and do all kinds of interesting tax planning.
Ted Simons: How is this all playing on Capitol Hill? Are we going to see the changes afloat here?
Adam Chodorow: You know, it's hard to say. On the one hand, when something like this happens I have hope, I think, oh, finally they are going to fix it. But, one of the solutions being ban tested about the problem is, we're trying to tax people on the worldwide income and we should be territorial, only tax it on, in the U.S. and income earned elsewhere be taxed elsewhere. And that would exacerbate the problems. Because they are going to be more and more these cracks in the system that people will find. And, and there is a lot of talk now about lowering the corporate tax rate. And because the idea is this is happening because our tax rate is so high, and our corporate tax rate is high. The nominal rate is high but the effective rate, is far less. Because, because there is so many ways to game the system, and shift either income overseas or take expenses from elsewhere and apply them against the U.S. income.
Ted Simons: Last question, quickly here, country-by-country reporting so everyone can see what's going on and where it's happening. Is that possibly on the horizon?
Adam Chodorow: It may be. We're making steps now. We're, we're trying to get information reporting automated and, and, and built up. But, it's really hard to get into the financials here.
Ted Simons: All right. Good information, and good to have here. Thanks for joining us. We appreciate it.
Adam Chodorow: My pleasure.