Remember

Anybody who thinks this is unjust is a communist bent on destroying our Wealth Creators.  The rich can be trusted and should be thought of only as the object of pity.

  • Thomas R

    Not a Communist, but probably not a person who has an understanding of actual economics in the real world.

    • MattyD

      Thomas R, are you sure you mean “actual economics”? As opposed to “propagandized economic theories”? Don’t confuse the two. Just because hyper-free market ideologies have become *popular* in business schools, think tanks, etc., thanks to generous corporate funding, that doesn’t make those ideological assumptions more *actual*.

    • Sean O

      Thomas R

      Please explain your point. Why is it that an actual and working system of Capitalism in 1950′s America is “unreal” or untenable today?

      • http://chicagoboyz.net TMLutas

        In the 1950s we had an unsustainable view of the corporation as a sort of benevolent dictatorship that would suck up small companies and make them more efficient. It was unsustainable because large corporations:
        A) have proven not to be the best place for innovation, which often works out initially much better at the small and medium company level
        B) have proven not to always have the highest of efficiencies, which is why we have repeated cycles of growing and shrinking businesses
        C) we’ve figured out that corporations go through lifecycles and when big ones fall they are highly disruptive wherever they have an outsized local prominence (example: rust belt).
        D) can be nearly as abusive and tolerant of little moral hitlers as big government is. Their one grace note is that they don’t have the direct right to apply force which government does which serves as an important brake on their injustice.
        E) often seek to gain unjust privileges by buying/renting politicians, a practice that is much easier with 1950s style, large, few competitor industries, than with a plethora of nimble, smaller competitors.

        1950s capitalism was ok when compared to 1940s capitalism but the free market is always a work in progress. What makes it *better* than the progress we’ve made since?

        • Sean O

          I agree with much of what you said, but taxing Corps at a higher rate is fine in my book. They receive enormous benefits operating in the US and should pay more like citizens do. The fact that large Corp interests have captured our govt at the local, state and federal level makes this impossible until we truly clean up election financing.

          I’m not just for ‘throwing’ more money at the federal govt. The fed gov needs to clean up massively: slash the defense budget and eliminate fraud and waste everywhere. But it does need money to operate its legitimate functions. And those benefitting the most and most able to pay should pay the most to support govt. That is a reasonable operating principle. The “trickle down BS” we have been following the last 4 decades is not.

          And yes we know there are few easy or simple solutions and our world has changed and continues to do so. But our current form of Capitalism is gravely disordered. We must rein in Capitalisms gross excesses and recreate one guided by a sense of fairness, proportion and an eye on the common good. Basically a Capitalism with a more Christian ethos. Our current system is at risk of running off the rails.

          • http://creativefidelity.wordpress.com Dan F.

            Considering that our corporate tax rate is one of the highest in the developed world I think we’ve missed something here.

            The problem is that large corporations are usually able, through various paid-for loopholes, to avoid much of that tax rate so the smaller ones get stuck paying high rates thus reducing their competitiveness. If instead of a tax rate on corporations of 35% (approximate current rate) we eliminated all of the loopholes and taxed them at say 20%, the system would be more efficient AND we would probably collect more in revenue.

          • dpt

            “We must rein in Capitalisms gross excesses and recreate one guided by a sense of fairness, proportion and an eye on the common good”

            Will consumers (us) allow this to happen?
            We love our computers, smart phones, etc. to be low cost. This trend exists across other sectors too (restaurants, hotels), thus we hear calls for a “living wage.”

            The consumer will need to lead the drive towards a common good, though I do not see it in our materialism and consumerism.

            • http://chicagoboyz.net TMLutas

              I have an entire blog series (on my group blog chicagoboyz.net) on the creation of a genuine worker’s movement that would further that in a way more compatible with the Church than our current system of labor membership clubs. Part VII is in the works right now. Like all things human, it’s just one more iterative step towards a society that truly follows Him. I think that all roles, entrepreneur, landlord, laborer, need constant thought, prayer, and reform to improve the production system. Consumption needs to be the realm of individual choice and a well formed conscience that passes judgment on it all.

              Remember, economic systems are production systems. If consumption is to be the focus, you’re going to have to be able to manipulate it. That tends to play out in very creepy ways (think Mao suits). I’m not quite sure how you’re going to improve that.

          • http://chicagoboyz.net TMLutas

            Corporations, unlike individuals, can off themselves without moral consequences. If the rate of return is insufficient, a corporation can simply hand out its capital to the shareholders and dissolve, something done usually through the bankruptcy system because we actually have enough capital to fund all the profitable corporations and a good number of unprofitable ones. If you hit a corp with too high taxation it will leave. If you don’t let it, it will suicide and suiciding corporations are themselves a warning signal for everybody with money to bury it or get out.

            We could entirely eliminate defense (~$690B) and still be fiscally out of balance because our deficit is twice that. And entirely eliminating defense is just not practical because defense *is* a core government function. Entitlement spending is a big part of the disordered government we both see.

            We create a more ordered capitalism by increasing our feedback loops so that our values are better expressed through our purchases. Socialism in all its forms including the soft euro-socialism so in vogue in Democrat circles reduces on net the feedback loops available to modify behavior and are thus a step backwards.

        • Ted Seeber

          I fail to see any progress since the 1950s for the Average American- and a lot of regress.

      • http://austrolibertariancatholic.wordpress.com Martial Artist

        @Sean O We haven’t had a free market in over 100 years. It wasn’t attained in the 1950s, although the sheer volume of government intervention in the latter era was less than it is now by many tens of thousands of pages of Federal law and regulations. That is a part of the reason that none of us has seen any progress in our lifetimes—we simply aren’t old enough, nor likely to attain the necessary age, to see the kinds of improvements we expect. That prognostication is based on the simple fact that both represenetatives of both major parties have found a way to game the system in order finance their reelections, and see no benefit to themselves in terminating the government intervention.

        T.R. and the Progressives did quite nicely for themselves in engaging in mythical “trust busting,” so all of the alleged progress toward a truly free market, which necessarily requires a government environment focuses exclusively on the strict enforcement of:

        • the Rule of Law, a key condition of which is that every person is equal before the law;
        • property rights characterized by enforcement of title traceable in a continuous chain of ownership and transfers back to an original legitimate appropriator,
        • the right of free association (one can choose to do business with whom one wants from among the willing) and,
        • the right of free exchange (one can exchange one’s property with a willing party of one’s choice).

        Absent any of those conditions, you are not talking about a free market, but rather a hybrid that is part socialist!

        Pax et bonum,
        Keith Töpfer

  • Michaelus

    In a fascist economy such as ours large corporations cooperate closely with the Government. These corporations are reward because the Government creates regulations and taxes that make it difficult for new and smaller corporations to grow and compete. One way to do this is to create a massively complex tax code. GE and Goldman Sachs can legally pay very little corporate income tax because they have gigantic tax accounting departments. Smaller companies pay the full rate.

    Big companies also really benefit from all the other regulations (OSHA, EPA, EEOC etc) for the same reason. This has absolutely nothing to do with the free market.

    Of course the more important fact is that in 1950 Federal Government spending was c. 20% of GDP whereas today it is over 40%. Add in State and local and you will see that government controls most of our spending.

    • Dan C

      Federal government spending is little more than 20% of the GDP.

      • http://creativefidelity.wordpress.com Dan F.

        since 2008 it’s 24%

        • Ted Seeber

          And in 1942 it was 120%.

      • http://chicagoboyz.net TMLutas

        Fascism in the economic sense is not detectible by gross government spending. You have a point but you’re using an unreliable metric so it can get you. Besides, the fascism of an economy in a federalized system is the totality of the spending and regulation of all levels of government. Counted top to bottom, I believe this currently exceeds 50% on the spending side and is actually unmeasured on the regulatory side.

  • http://www.likelierthings.com Jon W

    So what’s everybody’s point?

    • Sean O

      Jon W

      The point is that things used to be very different. Corps paid much more taxes and the top tax rate for the rich was 90%. And there was general prosperity throughout the country. 1950 was part of a golden age for working people from after WW2 until the early 1970′s.

      In the last 4 decades wealth has flowed to the top, the richest cohort of society, large corporations have shed their tax burden and most Americans have seen their.economic prospects dim and their financial stress rise. This undermines social stability.

      • http://chicagoboyz.net TMLutas

        You’re doing cargo cult economics here by ignoring some very large economic factors that were one offs. In the 1950s, much of the 1st world was still rebuilding their economies. We smashed up a lot of infrastructure and capital goods in WW II. The US at the time was the only major power that wasn’t economically rebuilding and naturally dominated during the rebuilding era. That train’s left the station and may we never see so much carnage again, even if we gain power because of it.

        The regulatory state is strangling ordinary americans’ prospects. We are also running an experiment between the EU states which specialized in less visible taxation and the US which specialized in more visible taxation. The shift from corporate taxes to individual taxes was the US staking out a position that making taxes visible by making them individual would produce superior results. I think that the US is winning this argument on the economic front and so some dime store eurosocialists are putting out that direct taxation shifts like this are “unjust” and Mark Shea’s bought it.
        Ultimately, corporations are funded by their rates of return on capital for a particular level of risk. Add taxes and money moves to the best remaining portions of the yield curve and such investment very easily cross borders.
        Corporate taxes are a way of making taxes indirect, hiding the consequences of tax policy in complexity. They offer hefty bribery possibilities as well in the form of creating loopholes. I do not like them and would prefer my taxation to be as direct and simple as possible so the payment pain will prompt the proper level “do we really need to be doing this?” questioning. Earlier this morning, I read a story about how the state of New York is spending a quarter of a million dollars per autistic student per year to send them to a school that has, at best, discipline techniques so dubious (electroshock) that new students can no longer be put under the regular regime. Existing students, they remain on the shock list.
        Reigning in the state from doing monstrosities like this by making us all more careful with how the state spends tax money is a good thing.

        • Ted Seeber

          “Add taxes and money moves to the best remaining portions of the yield curve and such investment very easily cross borders.”

          Only because we’re stupid enough to let other nations use our money.

          • http://creativefidelity.wordpress.com Dan F.

            That train left the station a long time ago and it’s not ever coming back. Money is fungible and only banana republic dictators force money to stay in their countries with the predictable results of runaway inflation and economic collapse.

            • Ted Seeber

              “That train left the station a long time ago and it’s not ever coming back.”

              Just because it left the station a long time ago (and it certainly did, it’s in Article I Section 10 of the US Constitution, even if it wasn’t enforced until 1873- both are a long time ago) all it would take is the guts to push through an Amendment to repeal Article I Section 10 of the US Constitution, and let the states stand on their own two feet. Let the federal dollar stay the defacto international money supply- but let states print their own money for in-state commerce, thus giving our real citizens a buffer against the scams of Wall Street, Globalization, and Socialism.

              • http://chicagoboyz.net TMLutas

                You are grossly underestimating the problems of resurrecting intra-state commerce but I like the cut of your jib. Currently several states are preparing moves along the lines you outline. It will either take a massive crisis or a very long time to do this and I have been watching the initiatives with interest.

        • dpt

          “regulatory state is strangling ordinary americans’ ”

          I know a high-tech company that built a new plant in Singapore instead the US.
          One reason was Singapore moved quickly with permitting construction. Too bad, that plant could have been constructed in the US if permitting, etc. did not mean a longer planning cycle.

  • Jacob Yoder

    A lot more corporations are multi-national now – and it saves money to pay taxes in Ireland instead of the U.S.

    • Amy

      And you can pay workers a lot less in China and India than you pay them in the US. And corporations generally provide health insurance, which they didn’t in the 1950′s (huge cost to the company, but not counted as wages).

      That’s not to say the disparity between CEOs and workers isn’t a major problem…

  • Scott W.

    I’m all in favor of returning to the 3-1 corp/worker ratio of taxes paid. Just like I am in favor of America returning to their undisputed industrial production and technological dominance like in 1950. Chicken or egg first?

    • http://austrolibertariancatholic.wordpress.com Martial Artist

      @Scott W.,

      You write:

      I am in favor of America returning to their undisputed industrial production and technological dominance like in 1950.

      You wouldn’t like the result, which would be massive un (and under) employment. The steady introduction of industrial automation over the intervening 5 decades means that the productivity of the average American (or Canadian, or British, or German, or etc.) industrial worker is so far beyond what it was in the 1950s that to employ a comparable number (let alone a comparable percentage) of the working population would imply either that the rest of the world would have no industrial output, or that they would continue to have some, but our industrial unemployment would increase to an unsustainable level. The third alternative would be job sharing, but as soon as we start employing lots of people part time at current wage/salary levels, our prices would be uncompetitive in the world markets and that would be the end of your utopian solution.

      Pax et bonum,
      Keith Töpfer

  • MarylandBill

    I think we should keep in mind that the issue here is not really how much corporations pay in taxes relative to the average worker, but rather how much of the wealth is concentrated at the top. I have less problem with Exxon paying a smaller share of its income in taxes than I do with the the concurrent very small portion its stock holders pay in capital gains taxes. Heck, I would have no problem with corporate tax rate of 0% as long as the stock holders had to pay a tax rate similar on their income from stocks as workers have to pay on their wages.

    As for returning to the 1950s tax rates, lets also remember the world economy is very different now. No more Breton Woods, Gold Back money or American dominance in manufacturing. If we don’t have those first, then returning to 1950s tax rates would probably be a disaster.

    • Telemachus

      QFE regarding the world economy. One thing I will say about capital gains taxes, however, is that such taxes don’t make a heck of a lot of sense. The “wealth” being taxed is not liquid, so it can’t be used. I could be a millionaire on paper, but until that money is in the bank why should I be taxed on it? I could go broke just paying the taxes.

      The reason I bring this up is that I resent the fact that my parents, having been responsible, began investing money for their retirement. Yet they are being punished for keeping that money in the market instead of blowing it on vacations, cars, and TVs. That isn’t right. We can complain about the people having wealth on paper, but try to think about who those stock-holders are.

      God bless,
      Tele

      • Beadgirl

        As I understand it, capital gains tax is not payable until it is realized, i.e. no longer on paper.

      • MarylandBill

        Until the stocks are sold, the only Capital Gains that would counted would be for dividends (which people often have directed to buying more of the stock).

        Now if your parents were investing in managed mutual funds it makes sense; even though they don’t ever hold the cash in had, they are responsible for any capital gains accrued through trades the mutual fund makes… as well as their dividends.

      • Ted Seeber

        The “market” being that great con job that is the stock market that only financial investment banks actually get rich off of.

    • http://austrolibertariancatholic.wordpress.com Martial Artist

      @Maryland Bill,

      You write [emphasis added]:

      I have less problem with Exxon paying a smaller share of its income in taxes than I do with the the concurrent very small portion its stock holders pay in capital gains taxes. Heck, I would have no problem with corporate tax rate of 0% as long as the stock holders had to pay a tax rate similar on their income from stocks as workers have to pay on their wages.

      You seem inherently confused about taxation. The corporation pays income tax on its income. The shareholders pay income tax on their dividends (assuming the corporation declares a dividend). Shareholders pay capital gains tax on the net gain in share values between the date(s) of purchase and date(s) of sale of the shares. If they sell all of their shares in a corporation they have chosen to “realize” their gains in that corporation and will henceforth cease receiving income from that corporation, unless and until they again purchase shares in it. The other factor, about which your comment is silent is that dividends from the corporation are paid on an after tax basis (i.e., the corporation pays them to the shareholders out of the remaining profits after paying their corporate income tax to the government. The shareholder then gets to pay income taxes on the remaining value that they receive from the corporation. This amounts to double taxation of the gain achieved by the corporation through its (presumably legal) activities during the preceding year. This is, to at least some degree, equivalent to requiring a retail establishment to pay sales tax to a manufacturer and subsequently requiring the consumer to pay additional sales tax on the sale price (which will now be higher than it otherwise would because of the imposition of the first sales tax on the retailer.

      We don’t have a taxation problem in today’s America, per se, we have a government spending problem. Too many recipients of special treatment (inequality before the law) are being privileged by the government with monies that should be spent on activities specified in the Constitution, rather than on the various government programs each of which was too often created to favor one or another group of taxpayers/industries/special interest groups/etc., in order to ensure the sponsoring politicians were reelected to their seats so that they wouldn’t have to perform productive labor!

      Pax et bonum,
      Keith Töpfer

  • Telemachus

    Mark,

    Do you REALLY want more money going to the federal government at this point? I’ve read your blog long enough to know that you don’t really think that taxes = The People’s Money for Doing Good Stuff. The money that the federal government receives today is used against us and against the world. I’m all for “starving the beast” at this point.

    Then again, if you’re purpose in posting this is to slap knee-jerk free-marketeers in the face, point taken, although I’m pretty sure that what the picture implies — that taxation and prosperity are positively correlated, or at least that taxation does not harm prosperity — is not accurate. And anyways, so what if taxation didn’t harm prosperity? Just because you can do something without “harming” someone doesn’t mean you should.

    I’m not opposed to taxation, but I do think it is immoral to tax anybody more than is necessary to maintain the standard purposes of government (namely, law and order).

    God bless,
    Tele

    • Amy

      I’m guessing the solution Mark’s interested in isn’t “pay more taxes” so much as “pay workers more”

      • MarylandBill

        Or at the very least, change who pays the taxes.

      • http://chicagoboyz.net TMLutas

        The solution to “pay workers more” is to vastly increase the number of companies and jobs created by making company formation easier, thus increasing labor demand and therefore price. If he wants workers paid more he should say so. Increasing corporate taxes sucks up money, part of which goes to worker compensation, and actually results in lower net wages.

        • Fr. Josh Miller

          Exactly.

          TMLutas, thanks for your comments here. I’m not much of an Economist, but these principles really aren’t all that complicated.

          The amount of envy I see in these threads makes me cringe.

    • Sean O

      Tele

      How’s your friend Grover Norquest doing?

    • Ted Seeber

      So, Tele, you’re against the intersate highway system?

      • ivan_the_mad

        While I’m not a libertarian, this objection is often raised in my presence to libertarians, and it’s a pretty bad objection, i.e. it’s hard to argue for a differential tax policy, the proper role of the state, etc from the interstate highway system. It’s putting the cart before the horse.

        • Ted Seeber

          Well, given that the fact that in most states 12.4% of the Interstate Highway system is actually funded by an alternative to the income tax; and federally, at least an additional 22% is funded by alternatives to the income tax (the 5% gas tax being the largest federal sales tax we have) and even a sales-tax-unfriendly state like Oregon has a 25% fuel tax; I’d say it’s a great place to start for the discussion between consumption taxes and income taxes- as well as being a great example of a federal project that the founders would never have dreamed of even needing, let alone accomplishing.

          From my point of view, it speaks well of the possibility of an additional tariff on the shipping industry being levied system wide to end the influence of the criminal practice of globalization.

          • ivan_the_mad

            Ok, but I’m not talking about taxation or the interstate highway system per se. I’m saying that the when you go to talk about the scope and role of government, or whether and how to tax, you don’t start off by saying “interstate highway system”. The interstate highway system is a consequence of the government’s role and taxation policies, not the cause of them. Again, cart before the horse.

      • http://chicagoboyz.net TMLutas

        I believe that the interstate highway system was a huge advance for its time but advances in economics mean we can do better now and neither Eisenhower fetishism nor cargo cult behaviors should stop us from improving transport service delivery and financing. Specifically the idea of funding transport via gas tax is dying on the rocks of vastly increased variability in gas mileage. It is just to charge for wear and tear and a usage fee and you used to be able to approximate that with a gas tax. You really can’t anymore.

  • math_geek

    So, I as a “progressive” and a Catholic have always had a lot of suspicion of free-market Economics, be it Austrian or Chicago school. My first Economics class came as a sophomore in college after some snobby Republican sniffed at me “You just don’t understand Economics.” My plan was to make sure no-one could tell me that with a straight face again. So I took an Economics class with an extreme libertarian professor (who currently writes at this blog:

    http://www.thebigquestions.com/blog/.

    I couldn’t help it, I liked him (still do). He would indulge me after class in long conversations about trade, taxation, redistribution, utility theory, etc. I also discovered that I really liked Economics. One Economics class became two, two became a double major, and a double major in Math and Economics became a three year stint in a PhD program in another “conservative” Economics department. Now I would call myself a “supply-side liberal.”

    http://blog.supplysideliberal.com/post/23959666073/what-is-a-supply-side-liberal

    I still believe strongly that our society has a basic responsibility to minister to the poor, provide health care for the sick, educate the young (all of them!), and so on. However, I now believe (and the evidence for this appears overwhelming) that taxation and regulation have real manifest costs to economic growth, which is necessary for social welfare for rich and poor alike. I think it’s irresponsible to consider a policy without considering those costs.

    I am also quite irritated with the self-entitled attitude so many wealthy people appear to have. Accusations of “class war” from the wealthy to the poor are absurd. The wealthy in this country have it great. They will continue to have it great no matter who runs our government. Their concerns have no relevance to me, it’s how our policies impact their actions that I consider relevant. As one more link (and beware of profanity), I think this video sums up their point of view quite well.

    http://www.youtube.com/watch?v=ej7dfPL7Kho

    • Ted Seeber

      What I can’t bring myself to quite believe is that economic growth and prosperity is worthwhile in a country that kills a million unborn a year. To me, the priorities are downright disordered.

      • ivan_the_mad

        I completely agree. The worst thing I’ve ever heard is the argument that abortions are good because they reduce crime rates, poverty, and the number of welfare dependants, thereby raising the level of material prosperity for the rest.

      • MarylandBill

        They are only disordered if prosperity replaces ending abortion. I know Mark wants an end to abortion as much as anyone, but the fight to end abortion does not absolve us or the political parties of our obligation to work for a decent standard of living for all men.

        • Ted Seeber

          “They are only disordered if prosperity replaces ending abortion.”

          Which, given the priority of bills placed before Congress under Republican and Democratic legislatures, it HAS. Pro-life bills very rarely make it to the floor, but if some crony capitalist wants a special interest tax break, both the Democrats and the Republicans are falling over each other to pass it.

          ” I know Mark wants an end to abortion as much as anyone, but the fight to end abortion does not absolve us or the political parties of our obligation to work for a decent standard of living for all men.”

          The problem being of course that NEITHER of the two major political parties want that either.

      • http://austrolibertariancatholic.wordpress.com Martial Artist

        @Ted Seeber,

        You write:

        What I can’t bring myself to quite believe is that economic growth and prosperity is worthwhile in a country that kills a million unborn a year. To me, the priorities are downright disordered.

        I could not agree with you more strongly. God needs to place this nation under judgment until it stops killing the innocent! And we need to be the voice of those killed.

        Pax et bonum,
        Keith Töpfer

      • http://chicagoboyz.net TMLutas

        Economic growth is worthwhile. It is our ammunition in all our causes.

        The more money sloshing around in the system, the more able people with well formed consciences are to bribe mothers with poor formation to not kill their children. Money lets you attack problems from more angles and try more alternatives faster which will lead us to cracking the code of forming a durable pro-life majority faster.

  • Kirt Higdon

    I’m not quite sure the significance of this stand alone statistic. Corporations are just legal entities created by the state, even if the Supremes call them persons. The question is – when you tax corporate profits, who really pays the taxes? Is it the shareholders in the form of lower profits, the workers in the form of lower wages or less employment or the consumers in the form of higher prices? Of much greater concern is the maldistribution of income among real people, as some have pointed out above. And where does this come from? Hint – a survey just published within the last week or so shows that ten out of the 15 counties in the US with the highest median income, up to double the national average, are in the area surrounding Washington, DC. Four are in the area surrounding NYC and there is one outlier in Colorado. Most of the big bucks these days are going to government contractors as even the actual work of government is being outsourced and privatized. Private jails and State Department mercenaries are just the tip of the iceberg. And then there are the banksters (NYC area) and maybe a lot of these people have ski chalet vacation homes in Colorado. The 1950s are long gone and to be honest, no one considered them the golden age at the time; they only seem to be in rosy hindsight.

  • Maiki

    I don’t see how it is an improvement to have a company pay 80,000$ to give its employee a salary of 20,000 vs. paying 24,400. It seems like that enables them to hire 3 employees for the price of one. Or pay one employee a lot more. If that money could be given to the government to reliably build a retirement pool for all employees, ok, but seeing as how the government loots SS, I’m not sure that was a good scheme. I think in 1950, we were trying to rapidly pay off WWII debt, an action (even with immoral actions within) taken in defense of the nation.

    It isn’t just “corporations” that pay these taxes, but every business that employs anyone in the US.

  • Ted Seeber

    I think it is unjust- and I still only think of the rich as an object of pity *because* this is unjust.

  • MasterThief

    Here’s an idea… let’s get rid of the fiction of “corporate taxes” altogether. All a corporation is is a group of people who have pooled money and property for some common purpose (usually, to make more money), who are protected by an off-the-rack legal relationship (e.g. incorporation, S-Corps, LLCs, LLPs, partnernships etc.) created under state law that allows them to partition off their own personal assets from that of the corporation so that they don’t lose everything if the corporation goes under.

    The idea of corporations having assets or owning taxes, like the idea of the corporation itself, is a “legal fiction,” a useful shorthand for a network of contractual relationships between shareholders, managaers, and employees. Corporations do not “make money.” The individuals who manage and work for them “make money.” It is only that money which is “income” (i.e. a net increase in wealth) which is subject to taxation. Corporations also have the ability to move money around between states and even foreign countries without liability. Individual human beings, by and large, do not.

    The problem with our current tax system is not that tax rates are too low, or too high. It is that our current tax system taxes income differently based on whether or not the actions behind it are popular or unpopular in the eyes of our ruling class. That is inequitable, unjust, and a source of economic waste.

  • MarkM

    All should pay their fair share.

    • http://chicagoboyz.net TMLutas

      What is fair? There have been studies done about this and when asked people tend to create taxing systems that are actually less progressive than current law. Are we in the main grossly in favor of plutocrats with our preference for a less progressive tax system? I tend to think not. Instead I think that there is a sense that it is fair that most everybody should kick in something and we absolutely do not have that in current law.

  • RUs

    Question:
    What is the ratio of average employee numbers per corporation? My hunch is that it is much, much greater per corporation.

    Also, corporate money isn’t in any individual’s pocket. It only becomes someone’s wealth when it gets transferred to a person through payroll, dividends, etc. Dividends are already taxed *twice*. Once when they come in as revenue, and again when they are allocated to the share-holders.

    The propensity to just accept these grossly over-simplified numbers and start screaming at Mammon is not helpful, and it can have an eroding effect upon credibility–even if you do have a point. Things are more complicated than that–probably a lot worse than you think.

    • Ted Seeber

      Like I said before, the whole bloody mess of modern crony capitalism just sounds like a scam to me- a way to transfer wealth away from the gullible to those people running the scam.

      • http://austrolibertariancatholic.wordpress.com Martial Artist

        @Ted Seeber,

        You are absolutely correct that crony capitalism is a scam. It is a scam run by (a currently quite large segment of) the legislators (state and federal). The legislators pass laws favoring certain businesses/industries via some mechanism which allows them to enrich themselves relative to their competitiors and in exchange, the favored heads of the businesses/industries make large contributions to the campaign funds of the legislators. This is no secret. What is amazing is when it is discovered and also prosecuted.

        The sole problem with calling it “crony capitalism” is that it isn’t capitalism. Rather it is a form of socialism, or if you insist it is a hybrid between capitalism and socialism (socialism because it is the representatives of the society—legislators—interfering in the marketplace to favor some participants over others. But the very act of government interference is what defines socialism, so calling it crony capitalism disguises the reality. Call things by their real names if you want them to be recognized. Using a euphemism simply perpetuates the confusion of the typical voter. It is this last observation that explains why I refuse to call people who are pro-abortion by the misnomer pro-choice. It isn’t about choice, it is about terminating (aborting) the life of an innocent unborn child. If I can’t call something by its real name I am deprived of speaking unvarnished truth.

        Pax et bonum,
        Keith Töpfer

  • The Deuce

    I’m not sure that’s unjust, since a corporation isn’t a person, and whatever wealth a corporation gives up to the government can’t go to its employees. And even if that money not paid to the government goes to something other than employee salaries (like R&D or something), it seems to me it would still be generally bad for employees for more of the money that their company makes to go to the government rather than keeping itself (and by extension them) in business.

    • Ted Seeber

      “I’m not sure that’s unjust, since a corporation isn’t a person,”

      Since Southern Pacific Railroad sued Santa Clara County over corporate property tax rates in the late 1800s, corporations have been people legally.

      • http://chicagoboyz.net TMLutas

        One major remaining difference is that there is no moral or legal consequence for a corporate suicide (dissolution). Suck all the value you want out of a corporation by creating a foreign entity and starve the domestic one into penury. It’s perfectly legal and not immoral.

      • The Deuce

        Legally, but not actually. In actuality, a corporation is a legally-defined abstraction, not a concrete thing. I would say it was clearly unjust if the government were to tax employees and poor people more harshly than employers and rich people, because then we’re comparing individuals to individuals. Comparing the tax paid by corporations to that paid by employees doesn’t strike me as a legitimate apples-to-apples comparison, though, especially since the employees themselves are part of the concrete reality that’s being abstracted when we define a corporation. And abstractions can’t actually pay taxes, so when we tax a corporation, we’re actually taxing the individual people behind that abstraction, which includes the employees themselves. There may well be a lot of injustice going on in the corporate world (indeed, I think there is), but pointing to corporate taxes vs employee taxes to make that point is a category error, imo.

  • Dan C

    A just entity does more than avoid performing abortions (by the way, most of these uber-defended corporations may be doing that by the standards now set by the HHS mandate debate). A just entity (like a corporation) must have at its core human flourishing. If it does not, Christian defense of its activities is insane.

    Corporations and the language of the theological defense of their actions comes largely centered from a few sources, most of them conservative. Not one uses the language of responsibility or community. Each one of these sources has pursued and invested its intellectual efforts to create the economic versions of libertinism. This has been a waste.

    The discussion remains impoverished by the absence of any sense that these individuals and entities have communal responsibilities.

    The best shorthand assessment of the Catholic theological support of these arrangements is that it is God’s will that these men and corporations be as free as possible to pursue greed. And that humans and families (never will communities be mentioned) will flourish from this greed.

    I fail to see how this basis differs from libertinism’s sexual philosophies of freedom. The consequences of libertinism and libertarianism of society over the past 25 years has increased personal luxury and sexual freedom. I suspect human flourishing is at a minimum.

    • Sean O

      Well said Dan C.

    • http://chicagoboyz.net TMLutas

      I take exception to the idea that better ordering of the work of production of goods and services to increase efficiency is inherently greedy. The genius of capitalism is to be indifferent to the motivation of the economic actor in order to harness as wide a variety of motivations as possible to the common task of making our daily bread. Those who view economy as their mission field work side by side with the greed heads and both profit.

  • quasimodo

    Corporations pay no taxes. They can’t. Only people can pay taxes.
    Corporations collect tax money that is actually paid by other people. Every dime of taxes “paid” by corporations is money not going to shareholders, employees, and suppliers … or money charged to customers in the form of higher prices.
    This complaint is another red herring raised on high by the economically illiterate.

    Become an English major so that you too can eloquently complain about all the money you’re never going to make.

    • Dan C

      Corporate entities of contractually bound individuals have communal responsibilities. Sometimes such responsibilities are fiscal.

      So, yes, taxes are the beginnings of meeting some of these responsibilities.

      I do not fear to say-”pay your taxes, it is your just duty.” I don’t go to the “Taxes are Against the Ten Commandments Church of God.”

    • Ted Seeber

      Apparently your English Major didn’t include Supreme Court precedents, such as Southern Pacific Railroad Vs Santa Clara County. Look it up.

      • Greg V.

        Todd,
        If I understand Quasimodo correctly, he is not arguing that corporations *cannot* be taxed because they are juridical persons – as you point out, the Supreme Court has held otherwise in Southern Pacific RR and other cases. Rather he is saying that economically it doesn’t make sense because if a corporation can’t make a sufficient profit it will not engage in business. IOW, revenues earned – which come ultimately from natural persons such as you and I – must be sufficient to provide a suitable return after all expenses, including taxes. In essence, the people who buy the corporation’s goods and services are actually the ones paying the tax anyway.

        In any event, I am not certain if the figures quoted are correct, at least for 1950. According to usgovernmentrevenue.com, the following were the actual revenues of the federal government for 1950 and 2010 (in billions):
        1950: Total Revenue: 43.5 Individual income tax: 15.7 (40%); Corporate income tax: 10.5 (24%)
        2010: Total Revenue: 2162.7 Individual income tax: 898.5 (40%); Corporate income tax: 191.4 (9%)
        Thus, individual income tax has remained steady as a proportion of total revenue and corporate income tax has decreased. However, individual income tax collected has always been higher than the amount of corporate income tax; it would be helpful to know how the creator of the graphic gets the notion that corporations paid three times as much tax as individuals in 1950. The current 1:5 ratio appears correct.

        And after putting on my asbestos suit I will say perhaps this is not such a dire situation, since over 90% of income tax is paid by those with the top 50% in income.

    • http://chicagoboyz.net TMLutas

      I get and support your point but I think that you might want to add in a disclaimer on the bundling of use fees with what is commonly viewed as taxes. Taxes, as they are currently structured, contain an awful lot of collectivized use fees, for instance for police services. Corporations can and should pay their use fees just like they pay for any other service. Corporations should also not get away with externalizing their costs and internalizing their profits. This is difficult to date but increased use of information technology is making it easier to actually bill for what has been up to now unbilled externalities.

  • Ted Seeber

    If taxes are theft, then so is profit.

    • Merkn

      How? A tax is compelled by force by the state. In our capitalist society a profit can only be earned when someone makes a free choice top buy goods or services from another free actor? how can a profit ever be theft in the absence of fraud or violation of law?

      • http://disputations.blogspot.com Tom K.

        I think Ted’s point is that taxes aren’t theft.

        Though, if you want the groundwork for the argument that profit is theft, read St. John Chrysostom. “Not to share our wealth is to steal from the poor, ” etc.

        • http://chicagoboyz.net TMLutas

          I believe you are doing St. John Chrysostom a disservice with that construction.

          • Mark Shea

            What construction? it’s almost a word for word quote.

            CCC 2446 St. John Chrysostom vigorously recalls this: “Not to enable the poor to share in our goods is to steal from them and deprive them of life. The goods we possess are not ours, but theirs.” “The demands of justice must be satisfied first of all; that which is already due in justice is not to be offered as a gift of charity”:

            When we attend to the needs of those in want, we give them what is theirs, not ours. More than performing works of mercy, we are paying a debt of justice.

            ****

            If there is any modern economic idea under criticism in this quote, it is “excess profits going to the capitalist for the labors of the worker” not “excess taxes going to the state”. (Not that I favor heavy taxation. It’s just that I’m pointing out that Tom is right about Chrysostom’s insistence that those with more than they need are stealing from those with not enough.)

          • http://disputations.blogspot.com Tom K.

            My construction was intentional. In teaching that excess wealth is theft, St. John lays the groundwork for arguing that profit is theft.

            He doesn’t (as far as I know) argue that profit *is* theft — but then, to return to Ted’s comment, taxes aren’t theft either.

            And to follow up on Mark’s point: There’s more condemnation in the Christian tradition of personal wealth than of taxes — as countercultural a thought during Jesus’ public ministry as it is today.

  • Greg

    You know something is wrong when a tax return gets this big so that a corporation can get out of taxes.

    Read: “GE Filed 57,000-Page Tax Return, Paid No Taxes on $14 Billion in Profits” 1from 1-17-2011

    http://www.weeklystandard.com/blogs/ge-filed-57000-page-tax-return-paid-no-taxes-14-billion-profits_609137.html

  • Greg

    GE is not a very good corporate Citizen.

    For Example.

    Read: GE Will Suck Your Blood

    http://dad29.blogspot.com/2011/10/ge-will-suck-your-blood.html

  • John H.

    The moral of this story is not that corporations pay too little (for they don’t), but that individuals pay too much, which we do. The last thing government needs is more of ANYONE’S money. Do you really think having corporations give more money to the government will do a bit of good? The government needs gutting, not fattening.


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