The New Republic

Not on topic but just wanted to recognize JC's very strong and realistic discussion on WBUR today. Keeps the light on where we actually are versus where we'd like to be. http://www.wbur.org/media-player?url=http://onpoint.wbur.org/2011/08/11/what-happened-to-obama&title=The+Liberal+Critique+Of+Obama&pubdate=2011-08-11&segment=1&source=onpoint - thanks

- Zachsteph

August 11, 2011 at 2:46pm

I would say not. Corporations pay people who work for it, yes. But since a Corporation doesn't have the attributes of a person -- it doesn't have to eat, wear clothing, raise children, maintain a household, educate children, grow old, have medical costs -- in many ways it's NOT a person. So requiring a Corporation to pay taxes on its income is less onerous than requiring people to pay taxes on their income. Because that money doesn't come out of living expenses of one kind or another. So Corporations should pay taxes. Now, the money a corporation pays in wages to its people -- I suppose you can say that money is reduced by the amount the Corporation pays in taxes. On the other hand, a Corporation has a LOT of leeway in how that money is paid to its people -- it can be through corporate cars, stock-options, stock itself, education benefits, medical benefits -- many ways which aren't taxed, or are taxed at lower rates than technical "income". So, even the argument that the money Corporations make is "taxed twice" is pretty bogus.

- AllanL5

August 11, 2011 at 2:56pm

"Romney Is Right: Corporations Are People" This is a legal fiction. Of course, corporation were set up by people and are directed by people, but as an entity it is not a person. Just because a Robot was made by persons and is directed by persons doesn't make it a person. Still, in law corporations are deemed people. But than there was once a law that said that slaves were 3/4 of a person. What a person is or isn't in law doesn't have anything to do with either common sense or reality.

- arnon

August 11, 2011 at 2:57pm

oh man chait, you have gotta be effing kidding me. Corporations are not people, they don't vote and shareholders do not even have to be Americans. So Chait and Romney are out for the welfare of people like Carlos Slim or Saudi princes, because, you know, why should they pay a penny of taxes on income earned in the states. This was a massive blunder by Mittens.

- blackton

August 11, 2011 at 2:59pm

Corporations may be people, but I have my doubts about whether Romney is one.

- GeoffG

August 11, 2011 at 3:03pm

Oh, for the love of... No, corporations are not people. Good god, Chait. Yes, corporations include people. They can also include money, buildings, resources, customer lists, and a lot of other things, none of which has any relevance to whether or not A corporation is A person. A corporation has a profit motive, which the people within it are likely to share; those people are also likely to have consciences, which the corporation is very unlikely to share. The U.S. Army, while not a corporation, is an organization that also contains people; would anyone like to try to make an argument that the U.S. Army is a singular person and should be treated as such?

- janus

August 11, 2011 at 3:07pm

I'm with Chait (and Reagan) on this one. Raising corporate taxes generates revenue from individuals. I asked an economist friend of mine how the cost of corporate taxes are distributed. He said that roughly a third of the costs are passed on to consumers (as a kind of hidden sales tax - regressive), roughly a third are passed on to workers (regressive) and a third to stockholders (by reducing the bottom line). I think a much more direct way to get at wealthy stockholders would be to make short term capital gains the same as income and pro rate long term gains according to the length at which the assets are held and then tax them as income. And then go for a more progressive income tax and, of course, keep the estate tax. The bottom line is this: You can't tax things, you can only tax people.

- poldpf

August 11, 2011 at 3:11pm

But this does reveal that Romney holds Corporations in high regard. So a little of the Corporatist attitude was allowed to slip past the Republican Populist mask. Even better -- a Corporation isn't a 'person', it represents a whole group of people! Except as has been stated above, a Corporation is really controlled by a small group of people, who (for a large Corporation) control a vast amount of resources. Treating Corporate income the same as individual income gives that small group of people way more power than I'm comfortable with.

- AllanL5

August 11, 2011 at 3:17pm

(Large) corporate earnings are greatly expropriated by executive management, so it's not really just the owners who endure the tax burden. And, anyways the favorable tax rates on cap gains and dividends coupled with the very low real rates corporations pay through various shelter shenanigans gives the whole double taxation complaint dubious weight.

- subterran

August 11, 2011 at 3:24pm

Perhaps Mitt Romey's interlocutor was somewhat inarticulate (did you ever try to be articulate when yelling things out of a crowd)? But the guy had a good point, and Mitt's response is not all that eminently reasonable when you get down to it. You can get money to run government from land, labor, capital or consumption. Some chunk of Federal revenue comes from Federal ownership of land (including oil and gas royalties and similar), but in general the Federal government doesn't derive its operating revenue from land ownership and is not set up to derive most of its revenue from land taxation (unlike state and, especially, local governments). The Federal government also doesn't have much in the way of tools to derive money from taxing consumption (again unlike state and some local governments). So that leaves labor (i.e., wages of working people) and capital (i.e., money made from business). Romney was arguing that we should not raise money from capital in order to pay for social insurance programs, but rather fund those out of money raised from labor (and, if you won't raise the amount of money derived from labor to pay for them, then you cut the benefits those programs pay out). His interlocutor disagreed. Romney came down on the side of taxing labor or cutting benefits. That's never been a popular policy, and Republicans like to obscure it when they can, but he said it. Somewhere, Michael Kinsley must be smiling.

- wildboy

August 11, 2011 at 3:33pm

Actually, tax incidence concerning corporations is a murky matter. There is much disagreement among economists on this subject. Right on, Mitt; I have met Walmart and they is us.

- liberalref

August 11, 2011 at 3:44pm

Hmm. Methinks Mitt Romney tried to do an Obama and parse out legalities. That would be fine if he weren't also on top of a bale of hay in a loud, open-air environment. It would also be fine if his views were consistent. Either corporations are reductively people or they are not. If they are, then they probably should be paying the top income tax rate levied on people, which is 35%, instead of being on their own schedule of taxes that goes from 15-35%. By the same argument, churches are people too, so why aren't they paying taxes? Maybe because the framers of the Constitution didn't buy this line of argument that any association of people should be considered a person.

- chaitless

August 11, 2011 at 4:12pm

Soylent Green is people, too.

- aboufade

August 11, 2011 at 4:20pm

Romney didn't say or even imply that "raising taxes on corporations is raising taxes on a certain category of people." He said it's raising taxes on people, period. He was deliberately obscuring the difference between the wealthy and regular workers. Chait, you've shoveled a pile today.

- polcereal

August 11, 2011 at 4:36pm

I think the point is a bit more subtle than Chait admits. Of course, if we assume that corporate profits are all returned to shareholders or employees, then yes, in the sense Romney was using, corporations are people. But are they? You don't think corporate profits go into stock buy back schemes that may in fact NOT raise, dollar for dollar, the valuation of the corporation? You don't think corporations might ship dollars overseas for investments there beyond the reach of American taxation? Or, maybe just leave them sitting in the bank to write off against some lousy investment later? It's just not as simple as Chait and Romney suggest.

- IowaBeauty

August 11, 2011 at 4:57pm

Chait got one right for a change. Incontrovertible that taxes on corporations are in fact borne by people.

- mr_rationale

August 11, 2011 at 4:57pm

"Incontrovertible that taxes on corporations are in fact borne by people." Incontrovertible "people" who can afford to pay more taxes which would be their fair share for doing business in our country.

- arnon

August 11, 2011 at 5:05pm

Corporations may be juridical persons, but they're not people. Only humans, dogs, cats and certain other living species are people. Corporations are legal entities created by the government to allow their shareholders to shield themselves from corporate liabilities. The incidence of corporate taxation is a matter of substantial controversy, but if human beings want the protection of operating in corporate form, then they ought to quit whining and live with the tax consequences. Otherwise they can do business as partnerships.

- BillW

August 11, 2011 at 5:18pm

"Only humans, dogs, cats and certain other living species are people." Yea, snakes too are people. This planet is getting more crowded by the hour.

- arnon

August 11, 2011 at 5:22pm

In an ideal world, corporate taxes should be low: the cost of a tax (or lack thereof) would be reflected in the price of a product. In this ideal world, a "corporate" tax is equivalent to a "consumption" tax, and there'd be a minimal profit that is subject to tax. However, we don't inhabit an ideal world, and many companies seem to funnel an excessive amount of profit to well-connected stakeholders. A politician who claims that "we" bear the brunt of corporate taxes and that "we" would benefit from corporate tax cuts is either smoking something, or has a different view of who "we" is. Perhaps this is redistributionist. I say it compensates for unfairness in the system.

- desperjm

August 11, 2011 at 5:31pm

JC, with respect I think you have lost this argument:) Corporations employ people but they are not people, period. And, they're beginning to wield extraordinary, outsize power. A book I didn't understand until recently: Lawrence Durrell's "Tunc."

- Sophia

August 11, 2011 at 6:39pm

I, incidentally, am so wealthy I paid more taxes than General Electric this year. Rolls eyes.

- Sophia

August 11, 2011 at 6:41pm

Arnon, according to the Dineh (Navajo) living things are people, ditto elements such as wind and lightning, but not corporations:) The end.

- Sophia

August 11, 2011 at 6:44pm

Good for the Navajo, Sophia. Do they charge the the elements taxes? Is that why they are so rich?

- arnon

August 11, 2011 at 8:15pm

Sophia, thanks for the opportunity to plug the latest book by our own John McWhorter, What Language Is, which I read yesterday, and which contains the amazing fact that in the Navajo language there are no regular verbs. Could you imagine? Also, there are some six thousand languages in the world, but only about two hundred of them are written. Buy McWhorter's book and enjoy.

- liberalref

August 11, 2011 at 9:02pm

The Supremes have ruled that corporations are persons in 1819 (Dartmouth College v Woodward); and in 1886 (Santa Clara County v Southern Pacific Railroad), the former in terms of contract rights, the latter in terms of the 14th Amendment. Sucks, but it's the law.

- Robert Powell

August 12, 2011 at 7:32am

RP, it sounds as if you know what you're talking about here. Was the 1819 case about whether a contract could be entered or voided by individuals within an institution, and the SCOTUS said, no, the institution is to be regarded as a contracting party as if it were an individual itself? To that extent, it seems like a useful decision as my cable TV agreement is with Comcast, not with the guy who initialled the paperwork when he fixed up the connection in my apartment.

- ironyroad

August 12, 2011 at 10:37am

The Supreme Court's decision in Citizens United was not that a corporation CONSISTS of persons, but that it IS a person. Unlike partnerships or associations, which consist of their partners or members, a corporation does not consist of its shareholders, but is an abstract legally constructed entity that is owned by the shareholders. It can sue or be sued, but the shareholders generally cannot be sued for the acts of the corporation. The corporation's profits can be taxed, but shareholders can only be taxed based on increase in the corporation's (shares') value (capital gains), or on payments they receive from the corporation (dividends). To be fair to Romney, I'm sure his reasoning is that increased taxes on corporate profits affect individuals, e.g.: shareholders to the extent the increase in taxes reduces the value of the stock; corporate officers to to the extent the increase in taxes results in less compensation (though I'm not sure why that would be so, given that executive compensation would be an expense that reduces taxable income); and consumers, to the extent the increase in taxes is "passed on" to consumers in the form of higher prices. But surely not all of the increase in taxes would be "passed on" to consumers. Prices are set not only by the cost of sales, but by market demand and competition. To be fair to the heckler(s), I'm sure their thinking is that corporations are not people in any concrete sense, and that the wealth and power possessed by corporations are quite distinct from the wealth and power possessed by individual persons. And corporations do indeed have "pockets" that are not the "pockets" of individuals. Dhurtado

- NR143296

August 12, 2011 at 11:51am

That's right irony. They held that corporations have legal rights to contracts, and to have those contracts honored the same as contracts entered into by natural persons. See also Dhurtado.

- Robert Powell

August 13, 2011 at 8:34am