If Corporations Are People, They Should Pay Taxes Like The Rest Of Us

Image via businessweek.com

Image via businessweek.com

This morning, I came across an article by Jonathan Alter over at The Daily Beast that makes a lot of sense in regards to the practice of corporate inversions. In this piece, he argues that American companies should have to sign a contract, or “non-desertion agreement” in order to keep receiving federal contracts. In addition, we should also consider a public shaming campaign for companies that move offshore that do not partake of federal money.

Recently, Walgreens has come under fire from Bernie Sanders and others for considering moving their corporate headquarters to Switzerland in order to save about $800 million in taxes annually through a process known as a “corporate inversion.” Other companies have already used corporate inversions by moving to Switzerland, Ireland, the Cayman Islands or other tax shelter havens, and yet still continue to receive federal dollars.

As an example, Walgreens wanted to make this move to save $800 million annually. After all, who wouldn’t jump at the chance to save that kind of money? The only problem is that Walgreens makes about $18 billion each year from Medicare and Medicaid. $800 million is a lot of money, but when you stack it up against the $18 billion they get from the government, it’s only a fraction of that – like a mere 4%.

Under Mr. Alter’s proposal, Walgreens could conceivably move to Antarctica if they wanted to, and they could continue selling to the American public. However, they would just have to give up that $18 billion they make each year from the government.

Some people would ask why can’t we just pass a comprehensive tax reform bill? Puhleeze, have you seen Congress lately? These shmucks couldn’t even pass a resolution recently congratulating the Pope, of all people. Besides, even if a tax reform bill did pass without being loaded full of additional loopholes and unrelated amendments, you have this problem:

Even if comprehensive tax reform miraculously passes, it wouldn’t reduce the corporate tax rate enough to stop the desertions. That’s because other countries have slashed their corporate taxes or eliminated them altogether.

What’s the solution? It’s actually pretty easy. Make every company that receives federal money through contracts or subsidies sign something like an NDA (Non-disclosure agreement), except it would be a Non-desertion Agreement:

So it’s time for red-blooded Americans to take matters into our own hands. My answer is to make every corporation sign something…

Because oaths and pledges are a little creepy, this effort needs something else—something that comes out of the legal and business worlds: a contract. More specifically, an NDA.

Non-disclosure agreements are common in corporate America, where tens of thousands of senior managers and employees sign contracts promising to keep all sorts of information confidential. It’s often a condition of employment. (Source)

Why not? Conservatives sure love to make people who receive federal assistance jump through all sorts of hoops and red tape to get a few dollars worth of food or medical care. Want unemployment insurance? Better piss in this cup to make sure you aren’t a pothead. Why? Because everyone knows that the only reason you’re poor and in this predicament is because you’re lazy and do drugs – at least that’s how their logic goes.

However, when it comes to corporations, these lawmakers and pundits argue that we have to give them subsidies, tax breaks and loopholes in order to remain competitive. They also think it’s OK for companies to use corporate inversions, because the law currently allows them to. But if Mitt Romney is right and “corporations are people, my friend” then shouldn’t they at least be subject to the same proposed rules as the rest of us when it comes to public assistance?

Some people want to argue that we should make our tax code competitive with other countries and that will fix the desertion problem. As Mr. Alter points out, these countries have extremely low or no corporate taxes altogether. So how does that work and why can’t we do the same thing?

Here’s the difference: through corporate inversions, only the headquarters ends up being based in these countries, often only as a post office box or a small office in a building. It costs a country like Switzerland or Ireland little to nothing in infrastructure to have one of these corporations set up their headquarters there. They don’t need to build new roads, educate workers for the factories or provide extra public safety – all because the bulk of the operations remains in the country the corporation is moving the headquarters from. In other words, the company saves billions while the host country has none of the cost and gets maybe a few million in tax revenue in exchange. Sounds like a great deal, right?

Meanwhile, back here in the United States, we still have to maintain the roads they move their products on. We also have to educate their workers, provide government assistance for those who aren’t paid enough to survive otherwise, and public safety personnel to show up in case of a fire or robbery.

Then how about the companies that don’t get federal money? If they’re not getting money from the government via Medicare or other contracts, legislation or an executive order wouldn’t affect them. However, there’s another alternative: public shaming.

Believe it or not, public shaming does work. In the era of the Internet with Facebook and other forms of social media, it isn’t hard for a company to end up with a public relations nightmare on their hands in a very short period of time. Just look at Walgreens, which seems to have finally bowed to public pressure and decided, at least for now, not to move to Switzerland.

If companies want to use corporate inversions to shirk their tax responsibilities, then go ahead. However, they shouldn’t be able to receive any sort of contracts or subsidies on our dime. It’s only fair.


Comments

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  • Nemisis

    Corporations are people and should file taxes like people.
    These “people” fall in the 39% and above tax rates.
    Welcome to the “We The People” club. Shut up and pay your taxes.

    • William Fite

      You do know what the corporate tax rate is in America? Some people do file tax returns like corporations, I do. Then of course there are those who don’t file tax returns or don’t pay any taxes. What about them?

      • Nemisis

        Well, the point was that since corporations are now people they should pay taxes exactly as if they are people.
        I like this better. Since people are now like corporations they should be allowed to file like corporations and pay at the business tax rate. I would fall into the 15% bracket, so would most Americans who are in the fleshy people bracket of around 23%. As for those that don’t file taxes.
        Well nothing is perfect, we all can’t be like GE.

  • Matthew Reece

    Corporations are legal fictions created by the state to shield business owners from civil and criminal liability. This is antithetical to a free market and should therefore be abolished.

    • Jennifer Elisabeth

      It must be interesting to live in the fantasy world you are an occupant of.

      • Matthew Reece

        It must be sad to live without the knowledge of how to properly argue a point.

      • William Fite

        Great comeback. She could not argue your point so the only response was to attack you personally. Typical liberal strategy.

    • Theresa Jackson

      These corporations need to pay their fair share like all of us. They get a better tax rate than a lowly taxpayer like myself. They didn’t do it by themselves. They need to use our infrastructure. They need to pay their fair share. They have to pay their fair share!!!!!!!!!

      • Matthew Reece

        Taxation is robbery, slavery, trespassing, receiving/possessing/transporting stolen goods, and conspiracy to commit the aforementioned crimes. There is no such thing as a fair share of victimization.

        They only need to use government infrastructure (it is not “ours” because it does not belong to “us”) because the state maintains a violent monopoly on infrastructure.

        Also, corporations never pay taxes; they pass the added cost of doing business on to their customers in the form of higher prices. The customers are the people who actually pay the taxes.

  • Matthew Reece

    “Meanwhile, back here in the United States, we still have to maintain the roads they move their products on. We also have to educate their workers, provide government assistance for those who aren’t paid enough to survive otherwise, and public safety personnel to show up in case of a fire or robbery.”
    This is exactly wrong. In the absence of government, private business owners will have to pay to build the roads on which their products and customers move to and from their businesses. Education can be provided in a free market, possibly through company schools that teach workers everything they need to know to work at the company. With no government assistance, people would have to be paid a living wage because logic dictates that they cannot work for a living at wages that do not allow them to survive. Lastly, police and fire protection can be provided by private insurance companies.

    • Sandy Greer

      >Education can be provided in a free market, possibly through company schools that teach workers everything they need to know to work at the company.

      I can see why company schools would benefit the employer – just as company towns, and company stores, did once. But where is the incentive for an employer to teach any skills that would enable a worker to change employers? Or enter another field, entirely?

      Taken to extremes, it would seem children in coal mining towns wouldn’t need to learn anything of music, or art – or much, beyond coal.

      • Matthew Reece

        It is true that children in coal mining towns wouldn’t *need* to learn anything of music, or art – or much, beyond coal. But the natural curiosity of children is such that almost all of them will want to learn such things. To actively deny them the opportunity would almost certainly be considered child abuse. Also note that company schools would face competition from other educators, meaning that they would need to provide a good service at a good price or go out of business.

      • Sandy Greer

        Well, but – I don’t see that company schools would face competition. Exactly my point.

        Some towns – all they have is the one employer. Everybody in town works at the mill, or the mine, or the plant.

        Company schools “that teach workers everything they need to know to work at the company” – benefit nobody but the company. There is no incentive to teach skills that enable workers to move on – to other towns, other employers, other fields of enterprise.

        No music or art. No history or geography. No math or science. And certainly – no medicine or law. Not from company schools, in company towns. No ‘trade’ – but their own.

        Workers are stuck there, in that company town – practicing what they’ve been taught, at the company school.

      • Matthew Reece

        The Internet (or whatever better thing replaces it in the future) should provide ample competition to company schools if nothing else does.

      • Sandy Greer

        An internet education is no defense of company
        schools. Au contraire.

        People forced to go outside the ‘company school’ for a proper education – one that enables workers to choose a life beyond that of the ‘company’ in a ‘company town’:

        Probably explains why company towns, with their company stores, and company housing, and even – company education – have fallen by the wayside.

        Company towns are not large enough for dreams. There is no future there.

    • Theresa Jackson

      So you can only work at the company store. You act like you’re so intelligent but you’re talking out of your ass.

      • Matthew Reece

        Ad hominem and ad lapidem are admissions of defeat and ignorance.

      • Theresa Jackson

        Someone’s been reading a dictionary! Lah de dah!

      • Matthew Reece

        Someone is logically literate in this conversation! But it is not you.

    • Cemetery Girl

      Living in company towns, shopping at company stores, and any education provided supplied by the company did not work. Coal mining saw deadly protests over this.

      • Matthew Reece

        A few people who do not know history might repeat the mistakes of the late 19th century, but I think most people would know this and do things differently this time around.

      • Cemetery Girl

        Greed wouldn’t trump knowledge of history? I don’t have as much faith that it won’t, especially if areas are pretty much owned by corporations.

      • Matthew Reece

        In the absence of government, there are no corporations.

      • Cemetery Girl

        Fine, the large privately owned business. It still won’t go well. You won’t even be able to count on the knowledge of history to stop it. If the large businesses in an area run the school, do you think that history regarding changes in labor laws will be covered? Let’s be real. Early education will be to give the basics and evaluate what labor a child will be best suited for. Upper grades will be for training in those specific areas. (Added perk for the companies, they can put people to work as early as middle school age as “hands on learning”!)

      • Matthew Reece

        If people take no responsibility to seek out truth and verify what they are being told, then there is no system that can prevent their eventual subjugation.

        I have no problem with child labor in principle. I just don’t want them doing sex work or operating dangerous machinery. Hands-on learning and work experience would benefit many children more than their current indoctrination does.

      • Cemetery Girl

        How exactly would people seek out truth and verify? Public libraries would probably become a thing of the past. Where would the funding come from? The library system would have to rely on business contribution or become a system where membership would require payment. It boils down to either libraries would be owned by businesses (allowing control over the materials allowed) or being something only accessible for those that have the money for it. Businesses already control the Internet access of employees, if big business outright runs our communities do you really think there wouldn’t be controlled by companies? Lacking regulations pay would drastically decrease, along with labor safety. Welcome back to the gilded age!

      • Matthew Reece

        I think people will see the danger of letting one company have control over everything, and if they don’t, then they take their own risk and suffer their own consequences.

        Lacking regulations, pay would increase because the money currently spent on compliance costs can go toward profitable activities, thereby increasing profits.

      • Cemetery Girl

        People would have no forms of education beyond what the companies in control in their area are willing to provide. Job options will be what companies are willing to provide. Safety while at work will only be what the companies decide to provide. But we will be free to make educated choices while education is denied and free to use the free market system to allocate power to companies even though will be running everything.

      • Matthew Reece

        This is unlikely to happen because most people do not want it to happen, and will accordingly support competitors who do not treat them this way. Failing that, they can form unions to combat such abuses.

  • rossbro

    We need to remove all tax regulations concerning companies and Corporations. Then install a minimum tax they can’t weasel out of. No company not located in this Country should be able to do business with ANY Government agency. All Defense Contractors must be located here. Even those making uniforms for soldiers.

  • rossbro

    All I keep hearing on TV is how General Electric paid ZERO taxes last year. This crap has to stop. Too many deductions available.

  • Michael Siever

    Induce the Tobin tax. Overseas accounts will have shit taxed out of them. Boom. Problem solved.

  • mcalkirer

    If they are people they should loose their ability to not be sued personally, because now they are a person.