While visiting Iowa, Mitt Romney calls corporations "people"--then goes on, amidst heckling, to elaborate, as best as I can figure, that his point is that corporations are made up of people, that all the money they make goes into the pockets of people, that really they're just all about people, if you know what I mean, etc. Judge for yourself.
There's a lot I could say about this--in particular, regarding the appalling Citizens United decision that forbade legislatures, on First Amendment grounds, from treating corporate bodies any differently from, you know, actual citizens when it comes to contributing to political campaigns, which is where the whole "corporations are people too!" meme really got its legs--but I'm too exhausted and frustrated and brain-dead right now to do a lot of writing. Suffice it say simply this: even if you think Romney is substantively correct in defending the rights and interests of corporations by seeing them solely in terms of the citizens who own stock in them, work for them, and buy products from them, and ignoring the structural power they exercise and the warping effects they have throughout any capitalist economy (and as should be obvious, I don't), at the very least it ought to be acknowledged that the "people" whom the large corporations Romney is talking about are mostly identified with happen to be, generally speaking, quite wealthy, quite powerful, and quite privileged people, legally and socially and economically. Hence, defend corporations as "people," and all you've really done--leaving aside the theoretical and moral puzzles which that equivalency poses--is defend rich people as "people" too. Which is all right, I suppose, but not generally the sort of thing that plenty of ordinary folks during a continuing economic recession really want to hear.
I hope he also believes that government is people.
ReplyDeleteOh, and Soylent Green, of course.
ReplyDeleteYou're taking him out of context, Russell. He wasn't saying that corporations are people, in the sense of having legal rights association with "personhood." He wasn't addressing "structural power" or "warping effects." He was responding to an audience member who suggested that we should raise taxes on corporations, not on people. This is, as Romney pointed out, an idiotic thing to say, since corporations represent the collective commercial action of individual people--some of whom may be rich (as you say), but most of whom are not. Raising taxes on corporations takes money out of the pockets of individuals, in the form of decreased profitability, share value, and lower dividends. It is not a victimless act, any more than raising individual tax rates would be.
ReplyDeleteGoing back and taking a look at the whole transcribed conversation, I take your point that he was making an argument against the easy assumption that taxing corporations doesn't mean taxing "people", which is obviously false. However, I would push back against the idea that, in framing his defense of corporate bodies in the way that he did, Romney was exposing the "idiocy" of the fellow's comment. Yes, of course, as you and Nate Oman (on FB) point out, much corporate wealth exists in the form of shares bought and traded by institutions (like my retirement fund) that are made up of anything but wealthy people. But that fact elides a more important point: that many powerful corporations (and leaders of corporate boards) enjoy enormous pre-tax incomes that avoid taxation entirely. (Examples here: http://www.businesspundit.com/25-corporations-that-pay-less-taxes-than-you-do/.) Yes, rectifying the tax code so as to close off such huge bonuses and advantages in this would way would hardly be painless; in some cases, it might well affect a corporation's entire business plan. But implying that making "victims" of such individuals and businesses is of a piece with any other type for tax increase is, I think, more than a little evasive; the world of corporate taxation involves loopholes and escape hatches mostly far out of the reach of the majority of American wage-earners.
ReplyDeleteI think to some extent you're making the same mistake that Romney's interlocutor did, Russell. When any individual gains from involvement with a corporation--e.g., receiving a salary as an employee, receiving stock dividends, realizing a capital gain on sale of stock, etc.--they pay taxes on it. Corporate taxes are cumulative in nature.
ReplyDeleteAre there "loopholes and escape hatches" involved in corporate taxation? Sure, just as there are in personal income taxation. That's because, as a society, we want to encourage certain behaviors (e.g., home ownership, charitable giving, research and development, etc.). Those judgments are certainly debatable, though it'll always come down to whose pockets are emptied or filled by a change in policy.
I'm all for plugging loopholes in the tax code. (And I think too much of the tax code favors massive corporations and hurts small corporations - like the change in the depreciation schedule from a few years back) I'm glad you acknowledge many (most?) owners of corporations aren't wealthy. (I own several and am far from wealthy) I wish Krugman in his column was nearly as understanding.
ReplyDeleteThe problem is that for many people there is an assumption that to speak of a corporation is to speak of billionaires. There is a nearly class-warfare mentality to it that is quite counterproductive I think.
An other problem is that taxes on corporations often end up passed on to consumers (or stockholders) in hidden ways. I think the nation would be better off if taxes were a bit more apparent. But I recognize that's tricky to do - and the nation would revolve if we moved to a national sales tax to replace corporate taxes. Still I never quite understand people wanting higher corporate taxes when so much of Europe has much lower taxes.
I see the issue as being what is actually paid out in taxes. Even President Obama has entertained the idea of lower corporate tax rates, but in doing so, tax loop holes would be closed in order to increase revenue.
ReplyDeleteRegarding class warfare, it is almost humorous to me that the minute Obama discusses the idea of closing some of these loop holes there is a cry of class warfare.
It is truly amazing to me that there is not a greater understanding that the wealthy have never had it better (check Warren Buffett, Jacob Hacker, Paul Pierson, Frederick Strobel). Regarding personal tax rates in the U.S. the wealthy have not had such low rates basically since the 1920s (check http://www.taxfoundation.org/publications/show/151.html).
As discussed earlier, yes, it is true that there are tax loop holes for everybody to take advantage of. The point is that in moving forward to reduce our deficits, it is ridiculous that there are individuals who refuse to look to do away with loop holes for those that would be inconvenienced in order to help sure up programs for those that have been hurt so much by the recession.
I wish the video had more context, but there is no doubt that corporations as a whole, does include people. I would have no problem in this view if the corporation structure was more based on increasing the spending power of the mass that works for it. The problem is not simply taxing people, it is in dealing with the structure. Not to mention that there are many ways to avoid taxes, which the IRS does not have enough resources to deal with all of them. Finally, increasing taxes would mean pushing corporations to other countries, and cause start up or small businesses more trouble.
ReplyDelete