Tuesday, February 7, 2017

The Left’s Insatiable Lust to Soak American Business

An NJ.Com article GIVING GREED A HAND by Rutgers University’s Linda Stamato with the sub-heading “America’s tax policies lets corporations skirt their civic obligations, leaving us with a bigger bill to maintain society” gives you a pretty good idea of the political leanings of the author. The essence of Stamato’s article, which appeared in the 4/15/16 New Jersey Star-Ledger, is that business corporations exist only to pay taxes for the sake of “society,” have no right to exist for their own sake, and that no level of taxes is ever enough.

Even if there were no corporate income tax, corporations would still be responsible for virtually all taxes collected by the government; taxes paid by employees of the company and its suppliers, on sales of their products, on property owned by employees, on individuals working in public jobs supported by taxes, by the business’s owners (investors and shareholders) etc. Government gets its tax revenue from productive citizens, and business is the institution that organizes production. Corporate taxes are nothing more than government double-dipping on productive individual citizens. No business corporations, no production above a hand-to-mouth existence—and very little tax revenue. Even before paying a single dollar in tax revenue, successful businesses give by far more to society than any other segment of society, including public universities like Stamato’s Rutgers, which wouldn’t exist without taxes. Stamato owes her job to business corporations, and all they get for their taxes is smears.

An April 2016 NJ Star-Ledger letter put it nicely:

Does the writer not realize that corporations employ millions who pay taxes, provide dividends to stockholders who also pay taxes and have helped to create the greatest country the planet has ever seen? Do they not realize that the stock from corporations provide monetary value to millions of people’s retirement plans? Do they realize that the products from these corporations are actually wanted by customers? It that were not so, the corporations would not exist.

To Stamato and her ilk, “society” can never get enough value from corporations. Despite—or perhaps because of—business corporations’ immense value to Americans, Stamato demonizes them. This irrational anti-business hatred, whatever her motivations, is one of the great injustices in America today.

And what does Stamato contribute? She is co-director of the Center for Negotiation and Conflict Resolution at the Edward J. Bloustein School of Planning and Public Policy, which seeks ways to avoid war. This, from a statist. Given that statism, which is a state of war waged by government against the people, is the fundamental cause of war between nations, one has to wonder what she actually contributes to society—unless you consider bashing productive corporations a “contribution.”

Once you get past Stamato’s irrational bias against business, you get to something I can agree with her on. It took most of the article to get to the real issue—the desperate need for corporate tax reform. But here, too, Stamato demonstrates her bias—toward government’s insatiable appetite for and, apparently, “right” to take whatever it wants from its citizens. No matter how much government confiscates, it’s never enough for the Stamatos of the country.

Stamato’s version of tax reform is to grab more by closing “loopholes” that enable corporations to keep more of what they earn. She lauds New York for raising taxes through “loophole” closing, then rails against “tax-haven shopping”—companies seeking lower-tax states—by urging New Jersey, Massachusetts and Connecticut to raise their taxes in order to funnel $billions more into government coffers. Stamato is right that the current corporate tax code is a preference-ridden mess. But her solution is to close all loopholes, yet says nothing about lowering rates in return. It’s all about soaking business.

And her insatiable appetite for ever more looting of productive corporations doesn’t end at the U.S. border. She demands that lower tax countries like Ireland “do their part to devise tax policies that maintain a sane global economy”—i.e., raise their taxes to the same confiscatory levels as “sane” countries like the U.S.

America has the highest corporate tax rate in the world. Granted, many corporations pay a lower rate, if they meet certain conditions imposed by politicians. But the 35%, which does not include state corporate taxes, is the starting point. And that’s not the only egregious element of America’s corporate taxes. America is the only major industrial nation that taxes foreign profits of its domestic corporations.

Stamato dishonestly portrays tax inverting corporations as evaders of U.S. taxes. But nothing could be further from the truth. Tax inversion does not enable businesses to escape American corporate taxes on profits earned inside the United States. The purpose of inversion is to escape taxes collected on profits earned outside the United States, but which corporations want to invest back in the States. This money held abroad has already been taxed by the country in which it was earned, so U.S. corporations face double taxation from their own government if they want to reinvest it in the U.S. In other words, American companies are punished for reinvesting foreign-earned profits in America—tax inversion wouldn’t be an issue if they didn’t! There’s greed alright; the government and the supporters of its confiscatory corporate tax policy.

Sadly, the Obama Administration—in Trump-like fashion—got his Treasury Department to use its regulatory powers to block Pfizer from inverting. Such is the state of “the rule of law” under which American business must operate. Stamato concludes:

There is a fundamental issue here, too. Do corporations have no sense of responsibility, no sense of obligation as corporate citizens, for, let's put it plainly, the welfare of the nation? If corporations are people — the Supreme Court has told us they are — and people are citizens, we should expect corporations to act like citizens — good citizens, that is — those who pay their taxes to support the nation's needs, shouldn't we?

Yes, and they are no different from homeowners claiming the mortgage interest deduction.

Contrary to Stamato, corporations are not distinct people. They are associations of taxpaying individual citizens, which includes stock holding investors for whom corporate taxes are a form of unfair double taxation. And contrary to Stamato, American citizens are not subjects that have a duty to “the welfare of the nations” and “the nation’s needs”; i.e., the demands of the collective, which means, the state. America is a nation founded on the opposite principle; that each individual has the right to live for herself, and the government’s job is to protect that right. Individualism, not collectivism, is America.

Kudos to American corporations’ legal tax avoidance. Corporations are not subjects of society or of the state. Like everyone else, they, as associations of individuals, have the moral right to pay only what they are legally obligated to pay, and use every legal means available to minimize the government’s take—including robust tax-haven shopping.

Related Reading:

Toward Less-Unfair Corporate Taxes

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