Under U.S. law, the corporation is a legal person, whose wealth can constitute political speech protected by the first Amendment. It is no matter that the corporation is an artifice constructed by the state for economic purposes: to concentrate wealth in order to produce goods or provide services. That such an entity would lobby and spend money (or “speak”) for political purposes may from this standpoint seem strange, or out of place. To be sure, political influence can indeed help the bottom economic line, but is a corporation a political actor if the purpose is economic?
Large corporations arguably tend to have a strong arm in Congress, but if that arm is so strong that it dictates the law, even literally, then entities that are part of society are de facto standing as government for the whole. For some parts of something to control the whole is problematic because those parts will naturally put their own particular interests above those of the whole (e.g., society, or the people).
Even a dominant role in setting the terms of the debate in the public media during a political campaign can sway or tilt the whole to favor the part. If sustained long enough, pro-business values can become salient in a society's culture. That deregulation could have come out as a major winner in the 2010 election following the financial crisis in 2008 is mind-boggling, and yet the scores of new Republican representatives in the U.S. House had precisely deregulation as one of their main objectives. That unregulated financial derivatives based on risky mortgages had almost brought the economy down two years before was strangely forgotten. The debate was not on whether banks that are too big to fail should be broken up. Instead, the public got to talk about whether the existing regulation on businesses in general should be discarded in favor of economic growth. Such is the power of self-interested money in setting the terms of debate at the societal level.
Accordingly, debate on whether the corporate statutory tax rate of 35% should be lowered never bothered with the inconvenient truth that the weighted effective corporate tax rate (taxes as a share of profits) was 27.1% in the U.S. in 2012, hence below the 27.7% average rate of O.E.C.D. members. The weighted average marginal tax rate on corporations in the U.S. was only 20.2 percent.[1] A U.S. Treasury Department report concluded that 82 percent of the corporate tax was borne by capital, while 18 percent was borne by labor. Either American society was tilted in favor of the interests of capital or the electorate was duped into the false narrative that raising the corporate rate would hurt labor.
General Electric, the sixth largest corporation in the U.S., had profits of $14.2 billion in 2010 and yet the mammoth company did not have to pay any corporate income tax. Even so, the political mantra that large American corporations pay too much income tax resonates in the political culture. Moreover, taxes are inherently bad, or even theft. It is as if American society has had a blind spot concerning the nature of and need for public goods like roads and airports. The competitive market, excellent in allocating goods and services, so eclipses the value of even esteemed public goods.
In short, where the corporate advertising and lobbying dollars have already had such a significant influence in shaping the values people hold dear, the very society can tilt in favor of its business sector such that its advantages become invisible to large segments of the electorate. The corporate realm lives under democracy's radar, and thus conveniently beyond the reach of real accountability.
Large corporations arguably tend to have a strong arm in Congress, but if that arm is so strong that it dictates the law, even literally, then entities that are part of society are de facto standing as government for the whole. For some parts of something to control the whole is problematic because those parts will naturally put their own particular interests above those of the whole (e.g., society, or the people).
Even a dominant role in setting the terms of the debate in the public media during a political campaign can sway or tilt the whole to favor the part. If sustained long enough, pro-business values can become salient in a society's culture. That deregulation could have come out as a major winner in the 2010 election following the financial crisis in 2008 is mind-boggling, and yet the scores of new Republican representatives in the U.S. House had precisely deregulation as one of their main objectives. That unregulated financial derivatives based on risky mortgages had almost brought the economy down two years before was strangely forgotten. The debate was not on whether banks that are too big to fail should be broken up. Instead, the public got to talk about whether the existing regulation on businesses in general should be discarded in favor of economic growth. Such is the power of self-interested money in setting the terms of debate at the societal level.
Accordingly, debate on whether the corporate statutory tax rate of 35% should be lowered never bothered with the inconvenient truth that the weighted effective corporate tax rate (taxes as a share of profits) was 27.1% in the U.S. in 2012, hence below the 27.7% average rate of O.E.C.D. members. The weighted average marginal tax rate on corporations in the U.S. was only 20.2 percent.[1] A U.S. Treasury Department report concluded that 82 percent of the corporate tax was borne by capital, while 18 percent was borne by labor. Either American society was tilted in favor of the interests of capital or the electorate was duped into the false narrative that raising the corporate rate would hurt labor.
General Electric, the sixth largest corporation in the U.S., had profits of $14.2 billion in 2010 and yet the mammoth company did not have to pay any corporate income tax. Even so, the political mantra that large American corporations pay too much income tax resonates in the political culture. Moreover, taxes are inherently bad, or even theft. It is as if American society has had a blind spot concerning the nature of and need for public goods like roads and airports. The competitive market, excellent in allocating goods and services, so eclipses the value of even esteemed public goods.
In short, where the corporate advertising and lobbying dollars have already had such a significant influence in shaping the values people hold dear, the very society can tilt in favor of its business sector such that its advantages become invisible to large segments of the electorate. The corporate realm lives under democracy's radar, and thus conveniently beyond the reach of real accountability.
1. Bruce Bartlett, “Some Big Corporations Don’t Pay Taxes,Either,” The New York Times, September 18, 2012.
