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August 04, 2014

Corporations Are People, Too!

Progressives seem to be very confused about whether or not corporations should be treated as people under the law. In the wake of the Hobby Lobby decision, they ridiculed the notion that owners of closely-held corporations (businesses whose shares are owned by a small group of people - generally 5 or fewer) are entitled to the religious protections provided by the Constitution to pretty much every other citizen or business owner.

"Corporations aren't people!", they sneered. Why the very thought is ludicrous!

Fast forward to last week, when the President of the United States (who, before his position mysteriously "evolved", had both feet firmly planted in the "corporations aren't people" camp) proceeded to talk about corporations as though they were living, breathing human beings:

President Barack Obama attacked companies that use cross-border mergers to escape U.S. taxes, accusing them of being “corporate deserters who renounce their citizenship to shield profits.” In remarks at a technical college in Los Angeles today, the president called for a new “economic patriotism” from companies. He also decried those that use corporate inversions to benefit economically by being in the U.S. while adding to the tax burden of middle-income families.

You shouldn’t get to call yourself an American company only when you want a handout from American taxpayers,” he told an audience gathered between palm trees on the campus green.

The President's sudden volte face was confusing: "You" is a personal pronoun ordinarily used to address human beings. And how can corporations be citizens if they're not people? The Constitution and federal law are quite clear on the requirements of citizenship:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside."

Citizenship confers certain rights upon those entitled to it:

The right to live and work in the US.

The right to enter and leave the US freely.

The right to vote in the citizen's state of residence and in federal elections (subject to certain restrictions).

The right to run for public office.

Did the President really mean to suggest that corporations - those soul sucking, heartless, non-living entities - possess the rights that usually attend citizenship? If so, then they already have the right to enter and leave the US freely. Do citizens forfeit a right by merely exercising it?

If businesses don't possess these rights in the first place, then in what sense can they be said to have given them up?

Then there's the term, "deserter". Last time we checked, deserters are also people. We don't ascribe human motivations to escaped guinea pigs or inanimate objects that move from one place to another. We don't feel betrayed when they no longer want to live here or stay in one place. They don't owe us anything.

Certainly not loyalty. Or patriotism. Those are emotions generally reserved for humans.

Perhaps inspired by the President's continually evolving logic on the pressing question of corporate citizenship, a Daily Beast writer has declared corporations really *are* people, too!

So far, 47 American-based companies have renounced U.S. citizenship ...

It's nothing short of miraculous that all it took was a decree from Barack the Magnificent to confer citizenship on not-human corporations and then - without so much as a by-your-leave from Congress or the Supreme Court - take it away again! Truly, this must be the most transformational presidency ever.

Our intrepid columnist's reasoning is every bit as impressive as the President's:

1. Almost everyone agrees that high corporate taxes make it hard for US firms to compete with foreign firms that pay far lower taxes.

2. But there's no hope of passing tax reform legislation because Republicans will never support any bill supported by Obama.

3. Oddly, despite the aforementioned impossibility of tax reform, US firms are leaving because of... wait for it... the threat of tax reform. The thing we just argued can't happen because... Republicans!

4. OK, maybe... just maybe tax reform *could* happen. But even if it did, US companies would *still* be paying far higher taxes than their global competitors because lowering corporate taxes to globally competitive rates would drain the Treasury.

So we're back in "It will never happen" land. Corporations are lying about paying higher rates than their competitors, but without all this glorious money they're not paying in taxes, the Treasury will be left penniless and will have to beg on street corners for pocket change. It's all very simple, really. Businesses are paying too much to be globally competitive, but less than they should be paying because of all the "loopholes" in the system. Which means we've got to make them pay more, somehow, than their competitors without rendering them unable to compete or tempting them to send "our" jobs overseas:

A decade ago, soon-to-be Democratic nominee for president, John Kerry railed against “Benedict Arnold CEOs.” That was his term for American executives who moved their business operations offshore. To equate offshoring with something as evil as treason is over the top even by the perfervid standards of political campaigning, but hey, “All’s fair…,” right? Well, not exactly. It turns out that the very corporations Kerry was excoriating were leaving the States due to policies adopted or perpetuated by the very Congress in which Kerry himself then sat.

Take, for example, the iconic candy manufacturer Lifesavers and their venerable competitor, Brach’s. Both companies had moved abroad (Lifesavers to Montreal, Brach’s to Mexico) not long prior to Kerry’s incendiary remarks. They did this not for the purpose of hurting America, but to improve their odds of survival in a very competitive global market.

These companies decided to leave the U.S. because the domestic price of sugar was twice as high as the world price due to Congress’s protectionist policies. It’s difficult for a business to survive if it has to pay significantly more than its competition for one of its principal factors of production. I’m sure the executives would have preferred to stay in Holland, Michigan (Lifesavers) and Chicago (Brach’s) than go to the expense and disruption of moving, but the congressionally-imposed cost disadvantage they faced drove them away. For Kerry and other opportunistic pols to condemn those CEOs for leaving after they themselves had virtually driven them out takes a lot of chutzpah. Isn’t that what liberals call “blaming the victim?”

Lest you become distracted or confused by all this talk of deserters, traitors, or Benedict Arnolds stealing "our" jobs, the Editorial Staff should spell it out for you. When American businesses merge with foreign firms (an entirely legal process known as corporate inversion) to lower their tax bills while still paying taxes on income earned in the United States, they are being unpatriotic and stealing jobs and money from their fellow citizens.

When the Obama campaign, while talking about high unemployment and selfish, traitorous businesses, deliberately hires foreign workers to do jobs struggling Americans could easily perform, this is called ... foreign aid. No American jobs were "stolen".

Code words are important here, because they suggest duplicitous behavior and malicious intent:

...two words used by the critics of corporate inversions that stood out to me: “loophole” and “unfair.” The Obama administration, Mr. Stein, et al., say that Washington needs to “close a loophole” in the tax code that allows businesses to move offshore—even though such a move wouldn’t shield them from paying taxes on their U.S. based operations. Such phraseology bears the stench of tyranny. It implies that businesses shouldn’t be free to leave this country without the government’s permission. By what principle of justice are businesses to be held captive by the government? For what crime have they forfeited the right to go where they want? Yet, Team Obama is now publicly floating plans to erect a sort of financial Berlin Wall to keep these alleged “unpatriotic deserters” from leaving. How sad: for generations, people wanted to come to America to be free; now, some Americans feel like they need to escape a predatory government with an insatiable thirst for revenue.

Whereas talk of "fairness", social justice, economic patriotism, helping people fairly radiate pureness of heart and only the very best of intentions. It's impossible for someone who feels your pain to send "American" jobs to Canada or the Philippines. A President who cares about the middle class can't possibly be suspected of an arrogant power grab that bypasses both Congress and the courts.

And if you're a loyal and patriotic American, you'll get behind whatever he does. Or risk forfeiting your citizenship.

Posted by Cassandra at August 4, 2014 07:52 PM

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Comments

Even I am fair enough to understand, the President is engaging in rhetorical exaggeration. Clearly it is neither treason nor desertion for a US company to move offshore. He just is trying to score points with his base by using those terms. Now, of course he's going to claim they're "citizens" and "traitors" when it suits him to do so, and at the same time mock the concept that they have "religious exception rights" when it doesn't. You certainly don't expect a politician to be honest, do you?

Posted by: MikeD at August 5, 2014 11:07 AM

Your 'enter and leave freely' is not quite right. What is being discussed is not the ability to physically enter or leave the country while remaining a citizen; it is the existence of the corporation as a legal entity under that country's law. We don't have, as citizens, the right to pass in and out of existence as citizens. You're always a citizen, whether you enter or leave or not (unless you renounce your citizenship, as more and more Americans of even the human variety are doing for tax reasons).

Corporations are treated as legal persons with a kind of citizenship that expresses what laws they intend to be bound by. Corporations therefore do have something like a citizen's interest in the structure of those laws, although like all citizens they don't always use their powers wisely or well:

The issue here is the insanity of our current corporate tax structure, which is both more burdensome and more Byzantine than most other Western nations. Some of that can be chalked up to cronyism, as large corporations lobby for special carve-outs and benefits to the disadvantage of others, especially smaller and more entrepreneurial competitors.

Still, the point is that corporations do have an interest in how our laws are structured; and if we want them to remain "American citizens" and paying American taxes, we have to recognize that legitimate interest. They should have some sort of voice. To avoid cronyism, we should want that voice to be the same for smaller and more entrepreneurial corporations as for larger, established ones. What is wanted is something more like 'one man, one vote' than the current system.

Now we don't actually let corporations vote, although we might. It would require a constitutional amendment, and what's to stop everyone from creating 10,000 corporations to give himself extra votes?

Still, say in theory we can solve those problems, perhaps by establishing a minimum value that a corporation must own to be considered a real person and not a falsehood. The effect would be something like the old property rules on voters, except without stripping anyone of the franchise. A family business that incorporated (with the head of the family keeping 51% ownership) would mean that the family would get one vote for each adult in the household, plus one more vote for the company. Since owners of family businesses tend to be middle class to upper-middle-class Republicans, this would slightly alter the voting public in a conservative direction.

What the Left wants to do instead is to impose speech limits (overturning Citizens United), but not issue voting rights. The Left wants speech limits on everyone, except 'credentialed' journalists, but especially corporations (except journalistic ones).

That, though, seems to fail to recognize the genuinely legitimate interest of the corporation in the laws under which it is incorporated. If you really want the corporation to show loyalty, you have to show it a kind of loyalty in return: you have to respect its right to advocate for its interests, even if you want to constrain its power such that it is more of a peer with other citizens (or at least that larger corporations are politically more like the peers of small ones).

I don't know. I think the concept has some value. Corporations might be usefully thought of as citizens with interests we ought to consider, because they and we are bound up in a kind of common good for our whole society. It might be reasonable to ask them to consider the good of our fellow citizens (as for example by not hiring illegal immigrants when there are needy American workers); but it must then be reasonable for them to ask for a tax structure that allows them to be competitive.

Posted by: Grim at August 5, 2014 11:55 AM

Shorter Obama: You scumbag, how *dare* you not let me abuse you more!

Posted by: Yu-Ain Gonnano at August 5, 2014 12:44 PM

You know what I find just fascinating?

During the Bush years, progressives read all sorts of things into pretty much everything he said. Even saying, "I've got some political capital and I'm going to spend it" was viewed as an announcement that he was going to retake the Sudetenland and that the 4th Reich was imminent.

But Obama can talk about people (or corporations) forfeiting citizenship, accuse them of being traitors/deserters or thieves who steal jobs and money with impunity?

Posted by: Cassandra at August 5, 2014 12:56 PM

We don't have, as citizens, the right to pass in and out of existence as citizens. You're always a citizen, whether you enter or leave or not (unless you renounce your citizenship, as more and more Americans of even the human variety are doing for tax reasons).

Sure we do. I could move to Phrance like Alec Baldwin is always threatening to do, apply for citizenship there, and surrender my American citizenship.

You are conflating incorporation with citizenship (as the President is trying to do). But they're not the same thing. A corporation is a legal entity owned by one or more people. Usually by more than one person, that being one of the major advantages of incorporation, as opposed to sole/joint proprietorship.

FWIW, I don't think corporations are people.

I *do* think that business owners are people. Citizens, even! :p

And I think that if business owners choose to incorporate, they don't surrender their citizenship rights. Business owners can merge with other businesses (foreign or domestic) subject to the laws of the respective states or nations involved. This is all perfectly legal right now, Obama's grandstanding aside.

I don't think businesses need voting rights, but this is the kind of silliness that occurs when you have our Constitutional-Law-Prof President using personal pronouns to describe businesses (or maybe he's "targeting" business owners?) and unilaterally declaring that they have renounced their "citizenship".

When he starts dropping his final consonants, you know the BS meter just went to eleventy.

Posted by: Cassandra at August 5, 2014 01:00 PM

On the voting thing, why do corporation owners require more than one vote?

It's not clear to me that they do.

Posted by: Cassandra at August 5, 2014 01:02 PM

Sure we do. I could move to Phrance like Alec Baldwin is always threatening to do, apply for citizenship there, and surrender my American citizenship.

Sure, but then you lose the right to enter and leave the United States freely. It's probable you'll still be able to do it -- we normally permit citizens of France to visit -- but the right of entry is tied to the maintenance of citizenship. You can't renounce your citizenship and then claim it back when it's convenient (which is why Baldwin et al fail to follow through on their threats).

You are conflating incorporation with citizenship (as the President is trying to do). But they're not the same thing.

Sure.

I'm not trying to collapse categories of thought -- that's very rarely something that appeals to me. I'm trying to explore what strikes me as a useful analogy between the kind of citizenship a human person has, and the kind a corporate "person" has. It strikes me as a useful analogy for several reasons, one of them being that we don't want corporations to be free riders on common goods. Another is that, in enforcing the non-free-ride, we are often taxing them; and if they are going to be taxed by us, they might deserve representation in our legislature.

The way we do this now is not by giving corporate "persons" a vote, but by letting them lobby in a largely unlimited way. But that leads to bad results, like richer corporations getting favorable rules enacted so that our tax code becomes the Byzantine problem that it is. That's a demonstrable harm to the common good, both because it creates the problem they are now wanting to fix by reincorporating outside the legal system they helped create, and because we as a polity have an interest in encouraging new, smaller, entrepreneurial companies to form and prosper.

So our system has some problems. Is there another way to address the legitimate interest in representation, without empowering the rich (corporate person) more than the poor (corporate person)? Well, a traditional way we have done that is by one-man-one-vote schemes, which allow both to be represented, but tend to favor the poor because there are more of them.

I'm not wed to that idea; I'm just exploring it. Maybe there's a better way.

Still, I think this idea of mutual loyalty and citizenship has advantages -- even if we mean that corporations are persons in an analogous way, i.e. a limited way, not that they are actually persons. We should have some loyalty to American corporations, because they are an important part of our national prosperity. It is fair that they should have a kind of voice in the way that they will be taxed, and as they are contributors thereby to our common goods, they should be able to receive a fair share of them.

Loyalty is a two-way street, of course, so we should feel free to ask some things of corporations in return. Corporations claim that their only duty is to their shareholders, but that can't be right -- if it were right, then there would be nothing immoral in their violating the laws of the nation if they could get away with it and it was profitable (i.e., because they would be fulfilling their only duty). But we do criticize corporations that operate on illegal business plans, and I think we are right to do it. Not only the individuals who make up the corporation, but the corporation itself, has a kind of moral duty to obey the law. But if it has a duty to obey the law, and a reasonable right of representation in at least the tax-making part of our legislation, then there's some kind of relationship similar to citizenship going on.

It may not be exactly citizenship, of course. It may be that they aren't exactly persons, too. But there is some value to the analogy for clarifying our thoughts about what their role in our society should be. It shouldn't be antisocial "I can do whatever I want as long as it's profitable and I get away with it" entities; but neither are they tax slaves who should be expected to shut up and take abuse. They both partake of our common goods, and contribute to their upkeep. So there's something here worth exploring.

Posted by: Grim at August 5, 2014 01:20 PM

Passports are free? When did that happen?

Posted by: htom at August 5, 2014 01:48 PM

It's instances such as this that makes me think the President actually got his law degree from the Acme Rocket Powered Roller Skate Company.

The problem is everyone else has to keep an eye out for the anvil dropping from the sky.

Beep beep.

Posted by: Allen at August 5, 2014 02:19 PM

You know, what's changed is that passports didn't used to be required for international travel. As late as the early 20th century, you could just get on a ship and go where you wanted. Passports were generally used only where there was conflict, or for diplomatic personnel -- Froissart mentions them several times, usually in the context of a knight from an opposing faction who has been granted the right to travel freely for a time in what would normally be enemy lands.

Between the World Wars and the Cold War, international travel became much more controlled.

Posted by: Grim at August 5, 2014 02:23 PM

... in enforcing the non-free-ride, we are often taxing them; and if they are going to be taxed by us, they might deserve representation in our legislature.

Every corporation is owned by one or more persons who all (under normal circumstances) would get to vote. So I don't think we necessarily need to allow double voting. I don't know if foreign citizens can incorporate in the US - if so, we'd be letting them vote in our elections and I don't care much for that idea. It was bad enough letting foreigners contribute to Barack the Magnificent's campaign coffers :p

Who gets to vote "for" the corporation? Surely not every shareholder - 1 entity, one vote.

Administering that strikes me as a bureaucratic nightmare likely to make voter fraud worse rather than better. And we'd have to allow sole/joint proprietors extra votes, too.

We have sales tax, but not everyone who pays sales taxes gets to vote. So surely taxation doesn't entitle one to representation in all cases?

Posted by: Cassandra at August 5, 2014 04:03 PM

As late as the early 20th century, you could just get on a ship and go where you wanted.

That was a different world.

Now, travel is far faster. You can hop on a plane and be halfway around the world in less than 24 hours. More people traveling greater distances generally means more paperwork and IDs. There's less time to stop the bad people.

Posted by: Cassandra at August 5, 2014 04:05 PM

It's instances such as this that makes me think the President actually got his law degree from the Acme Rocket Powered Roller Skate Company. The problem is everyone else has to keep an eye out for the anvil dropping from the sky.

Allen, you just won comment of the day :p

Thanks for the laugh!

Posted by: Cassandra at August 5, 2014 04:06 PM

I don't understand popular opinion of corporations at all. I think of them as a system in which people cooperate for a common purpose. Their special characteristic in our legal system has been that their organizers can put up a certain amount of money and limit their losses to that amount in they don't choose to invest more. Limited partnership have the same privilege.

How that changes the fact that the people involved in the corporations are human beings, often citizens, is a mystery to me. For some purposes it is convenient to treat them as a legal "person." All kinds of entities are treated as a legal person, such as agencies and cities. What's the big deal? It should be fairly straightforward to figure out which social and constitutional precepts may sense when applied to corporations and which do not, but it's a highly emotional and irrational issue.

It's also a complete mystery to me why a corporation should pay any tax at all. It would make much more sense to impose the tax on individuals at the point when the money gets into their hands.

Posted by: Texan99 at August 5, 2014 04:07 PM

Clearly it is neither treason nor desertion for a US company to move offshore. He just is trying to score points with his base by using those terms.

Mike, you ignorant, stupid white male (OK, that was redundant)....

The problem here is quite simple: you are incapable of thinking at the advanced level I do every single day. I am so smart that even accomplished legal scholars often find they can't follow my train of thought over the cliff of cogitation.

[yawn]

This job is so much less challenging than I thought it would be. The tedium is well nigh unbearable at times.

There are days when I long for something - ANYTHING! - to tempt me. A *real* problem I can sink my mental teeth into (now there's a disturbing visual). Unfortunately, even though I am so brilliant that no one can keep up with me, I'm utterly incapable of fixing all the problems I inherited from that pretzel-munching cretin, 43.

Of course when he couldn't figure them out, that meant he was an incompetent idiot. Whereas my inability to solve them is clearly a sign of my vastly superior brainpower. And my wholesale adoption of so many of the Bush policies I harshly criticized just proves my innate brilliance beyond all debate or dispute.

It literally *hurts* to be this good.

Frankly, I've always suspected that 43 was actually Bush's IQ. Certainly it is a puzzlement how such a moron managed to defeat towering intellects like Al Gore and John Kerry.

Posted by: Barack "The Lightworker" Obama at August 5, 2014 04:20 PM

How that changes the fact that the people involved in the corporations are human beings, often citizens, is a mystery to me. For some purposes it is convenient to treat them as a legal "person." All kinds of entities are treated as a legal person, such as agencies and cities. What's the big deal? It should be fairly straightforward to figure out which social and constitutional precepts may sense when applied to corporations and which do not, but it's a highly emotional and irrational issue.

Exactly, little lady :p You don't mind if I call you that, do you? I'm all that's standing between you and The Patriarchy and their pointy, penetrating pitchforks of priapism, you know.

*Your* opinion is highly emotional and irrational.

Mine is.... well, just brilliant.

Posted by: Barack "The Lightworker" Obama at August 5, 2014 04:25 PM

Cass:

I don't care about the voting thing. It's just one suggestion. I do care about "No taxation without representation." It was an important principle of the Revolution, although I suppose we violate it regularly now just as we do most of our founding principles.

Still, set that aside. The conservative position is generally that you shouldn't muck with things that work. Now the way we relate to corporations' interest regarding the taxes they pay is via lobbying of legislatures. But that system is just what has given us this horrid structure that the corporations say (and I don't dispute it) renders them unable to compete. It seems to me that it fails in two different ways:

1) Rich corporations are highly successful at getting the legislature to adopt their interests, but they use that success to carve out special deals for themselves only. This is one reason the tax code is so Byzantine and hurts start-ups and small businesses to such a large degree.

2) Corporations as a whole have not been successful at representing their interests in a tax system that is less expensive (not only in terms of taxes paid, but in terms of how much time and money has to be spent complying with it). Instead, viewed as a unified group with this common interest, corporations have had their interests trampled by Congress.

So the conservative argument that we shouldn't mess with success fails here. We should mess with this situation. What we should do is try to devise a system in which the corporations' legitimate interest is represented, while the tendency of individual corporations to lobby for special deals is constrained.

Pushing it to a democratic vote is one way, so that corporations would have influence as a group with common interests rather than according to access to wealth; but probably it's not the only way. Still, the place to begin is by thinking about what kinds of things we expect corporations to contribute, and what -- given that we will be making these demands on them -- they have a right to expect from us in return.

Posted by: Grim at August 5, 2014 09:51 PM

I do care about "No taxation without representation." It was an important principle of the Revolution, although I suppose we violate it regularly now just as we do most of our founding principles.

Again, you're assuming owners of corporations aren't represented. But that's not true - they can vote already, and if they have any sense they'll vote in a manner consistent with their interests as business owners (as well as their interests as citizens).

Conservatives get outvoted all the time on policy issues. So do progressives who want America to look much more like a worker's paradise.

That doesn't mean either group "isn't represented" or needs extra votes.

Posted by: Cassandra at August 6, 2014 12:06 AM

Owners of corporations may not be US citizens, even if the corporations are organized in the US. Say you have a company whose stock is owned very broadly; but the firm still pays US taxes, and has an interest therefore in the shape of the US tax code.

Giving them a vote in general elections may not be the answer, but it's not obviously worse than the lobbyist solution we have now. If there's a better way of addressing the problem, I'm certainly open to hearing it.

Posted by: Grim at August 6, 2014 07:18 AM

... the firm still pays US taxes, and has an interest therefore in the shape of the US tax code.

Giving them a vote in general elections may not be the answer, but it's not obviously worse than the lobbyist solution we have now. If there's a better way of addressing the problem, I'm certainly open to hearing it.

Well, we could do away with the corporate income tax. That would take care of the "no taxation without representation" issue. It might also have a few other beneficial effects.

Posted by: Elise at August 6, 2014 08:43 AM

If we're going to talk about economic patriotism, I think we should talk about it for everyone. Reportedly there are large numbers of people in this country who are working here, taking advantage of the protections, laws, and opportunities afforded by the United States and yet they are sending money to relatives in other countries.

That money is not available to our economy: it is not being used to purchase goods and services here nor is it being saved here where it is available for investment in American companies. Therefore it is not contributing to our economic health. Imagine how many more jobs we could create if all the money individuals make in this country has to be either spent or invested in this country.

Surely this is economic treason of the highest order. We must immediately act to make it impossible for people to send money they make in the United States to anyone outside this country.

Posted by: Elise at August 6, 2014 08:52 AM

Or maybe we can just deny any foreign corporations from operating in the US. I'm sure that will work out just fine. Or perhaps just only those American Corporations that transition to being Foreign corporations.

We can start with [strike]Chrysler[/strike]Fiat.

Posted by: Yu-Ain Gonnano at August 6, 2014 09:13 AM

A corporation that operates in the U.S. is doing plenty to satisfy whatever its obligation is to our country, by (1) supplying goods or services that we want to buy and (2) creating jobs here. I think it would be nice if we could dispense with the curious notion that generating a profit is something a corporation (whether domestic or foreign) needs to apologize for.

Posted by: Texan99 at August 6, 2014 11:04 AM

Nobody here is saying that corporations should apologize for profits. But eliminating the taxes doesn't alley make sense. A corporation likely makes use of our common infrastructure, quite likely heavier use than the ordinary citizen. I can ride my motorcycle on the highway a thousand times and not produce the wear and tear occasioned by FedEx semis in one day.

So if a community has a FedEx lot, it might ask for some taxes to help keep up the roads FedEx is using. That isn't unreasonable, but in return, FedEx should be part of the process of negotiating those taxes.

Posted by: Grim at August 6, 2014 11:33 AM

In the specific, the FedEx truck uses a ton more fuel. And roads are paid for by fuel taxes. So FedEx does actually contribute more to the upkeep of roads from their trucks than you do from your motorcycle.

Of course, FedEx pays those taxes through the price they charge me for shipping something. So while FedEx may be physically on the road, I'm the one getting the use out of the roadway infrustructure.

FedEx is merely the fuel tax collection agency.

Posted by: Yu-Ain Gonnano at August 6, 2014 12:18 PM

I don't think we need taxes for that case, Grim. It's in FedEx's interest to see to it that the roads near its lot are maintained; otherwise it loses money through lost time, extra wear and tear, damage to carried goods, etc. Perhaps FedEx negotiates a contract with the municipality, county, or state to contribute so much to road maintenance in exchange for certain guarantees of road quality. Then FedEx is part of the process via a contract negotiation which can be done as part of its decision on where to locate its lot.

Posted by: Elise at August 6, 2014 12:25 PM

The notion that our tax system is seriously designed to ensure that the people who use services also pay for them strikes me as hilarious. However, if we actually had such a system I wouldn't mind charging user fees to corporations. That would be very much like charging corporations for their utility bills, which is a far cry from an income tax.

Whether or not anybody here today is taking the position that profits are something to be apologized for, it's a notion that crops up often, here and in politics generally, and is at the heart of the heated debate over whether "rich" and "multinational" corporations are paying their "fair share" of taxes or otherwise shouldering their fair share of various communal obligations.

Posted by: Texan99 at August 6, 2014 03:01 PM

The notion that our tax system is seriously designed to ensure that the people who use services also pay for them strikes me as hilarious. However, if we actually had such a system...

Well, that's the problem in front of us. The tax structure is so badly written and arcane that corporations have to reflag to be competitive. Partially this is due to the lobbying system; partially it's due to Congress' malfeasance. But that's the real problem that needs to be fixed. One principle for fixing it is "no taxation without representation" -- not only is it just not to have to pay taxes created by a system in which you have no input, but such a system is more likely to be rational.

"People who use services should pay for them" is generally a good principle too, although there may be some exceptions to it. For genuinely common goods like roads, it's helpful if the system collects the pay in proportionate ways.

YAG -- regarding fuel taxes, I think that there is some variation there from state to state. We often pay for roads partially that way, and partially by other means such as sales taxes or, rarely, tolls. Now tax increases in Georgia have to be passed by popular referendum, so that you have to lobby not only the legislature (or county commission), you have to convince the citizenry who will pay the taxes directly. I like that system. These things often go down in flames.

Posted by: Grim at August 6, 2014 03:39 PM

We can have a user-fee-style system, or a redistributionist one, but not both at the same time.

Posted by: Texan99 at August 6, 2014 07:19 PM

What we have now is both at the same time. The systems is not, in fact, principled at all: anything that can be taxed is usually taxed, and often over and over again.

Posted by: Grim at August 6, 2014 07:28 PM

I suppose I meant to say that, if you attempt to have both at the same time, you have neither. It's a bit like filling the tub with both hot and cold water. Two different people may be at cross-purposes, and there is hope that one will prevail while the other leaves off. But if the same people simultaneous pursue policies directly at odds with each other, they are spinning their wheels.

Posted by: The admiring (and ravenous) public at August 7, 2014 11:25 AM

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