1. an association of individuals, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members.
I am not one to hold corporations inherently evil. There is a lot to be said for the limitation of liability to foster an environment of entrepreneurship, invention and innovation.
But the concept of rights for corporations really needs to be reconsidered. For starters, there is the concept of personhood – this is the legal fiction that places the corporation on the same footing as an individual person, despite the fact that any thinking person could identify the difference.
But the concept of personhood is important, as it means that laws that protect people, protect corporations as well. Laws like the Equal Protection clause in the 14th Amendment. Don’t know what that is? This might be why you don’t, but you should go look it up.
This has already been used to facilitate rights regarding protection from search (OSHA!), and free speech, though corporations play both sides of that coin in trying to claim that as a fictions person in general, lying (false advertisement) is part of their free speech, while trying to mute bad publicity with libel suits.
Then there is the money.
Financial liability is one of the main benefits of corporations. If the business fails, the founders and stockholders have limitations on levels of personal responsibility.
There is no similar structure in place for those that succeed. No point at which the corporation is deemed to be an “adult” and able to therefore be self-sufficient.
As an adult, my taxes are determined on the remedial formula of gross pay, minus a handful of tax allowances for supporting my kid. There are no subsistence allowances, I do not get to deduct my mortgage, utilities, transportation or food.
But a corporations taxes are different.
To make this is simple as possible, I paid around $5000 in taxes for 2010. Or I am paying $5000, over the next five years. Because after I compensate for our existence, I don’t have 5 grand left in any one year to drop in the collective bucket (and I believe in the collective bucket!)
And just to head off the argument, we are not talking about luxury items or frivolous spending when I say “compensate for our existence” – we have one vehicle (used), I create a twice monthly menu program that rigidly dictates food shopping, we don’t have a playhouse in the yard, or an extensive iTunes library. We didn’t even have a cell phone until one became necessary for work.
So where do the corporations stack up against this?
From 2008-10, here are some figures from Fortune 500 companies.
Company Profit Tax Rate
Boeing 9.7 billion -1.8% (yes, that is a negative sign!)
Dupont 2.12 billion -3.4% (hope those -s don’t mean refunds!)
GE 10.46 billion -45.3% (my favorite!)
Why are they so low? Lots of reasons.
- Just about everything except for breathing is considered a business expense, and an expense is not taxable income.
- Offshore subsidiaries – funds channeled through them are often exempt from taxes.
- Accelerated depreciation, active financing exemptions and other loopholes allow corporations to claims so many dollars as not taxable, that the rates they are taxed on is absurdly low.
So a bit more perspective, in terms that make sense.
With my 5k, the government could lay out a single semester’s tuition loan for a single student.
What could be done with 15% of GE’s profits?
According to H&R Block, it costs about 138k to educate a child from k through grade 12.
So at 1,569,000,000 tax, divided by 138,000 – that’s 11369 kids, completely educated, k-12.
So being a corporation is awesome. But fictitious personhood does have its limits – you still can’t take the car pool lane.
Because that would be illogical.