Despite not being persons, corporations are recognised by the law to have rights and responsibilities like actual people. Corporations can exercise human rights against real individuals and the state, and they may be responsible for human rights violations. Just as they are “born” into existence through its members obtaining a certificate of incorporation, they can “die” when they lose money into insolvency. Corporations can even be convicted of criminal offences, such as fraud and manslaughter.
The Government Accountability Office (GAO) examined samples of corporate tax returns filed between 1998 and 2005. In that time period, an annual average of 1.3 million U.S. companies and 39,000 foreign companies doing business in the United States paid no income taxes – despite having a combined $2.5 trillion in revenue.
The Outstanding Public Debt as of 13 Aug 2008 at 01:03:59 AM GMT is: $ 9,577,193,968,603.71
I think the average person would consider that corporations, having been granted the same rights and privileges as a real live human, should pay similar taxes would be appalled by the figures above. The individual who works for a living – who earns wage by selling his or her time – is paying a disproportionate share of the burden of the war(s), social security, medicare and the myriad frivolities that make up our federal budget. Investors, corporations and inheritors pay a disproportionately small amount.
For me the answer to this is clear: while voting, best as I can, to counter these trends, I also have to make my family part of the problem. We have to become investors, corporations (by buying into them) and become prodigious accumulators of wealth (as first pointed out in The Millionaire Next Door).
A wise or forward-thinking government would encourage people to enter manufacturing jobs, or managerial positions or even public service positions. A country can’t continue rewarding investment at the expense of labor and creation indefinitely (although the US is struggling to disprove that). I often wonder why I work for a living rather than investing, given the tax code. I also wonder why more people don’t see that the relationship between work and wealth is tenuous – wealth is only generated through investment in this country.
But the point of this post is simply to ask the question: should a country or society be happy to create wealth by investment, or should it create wealth by work? Is it right that investment income is taxed lower than earned income? Should the burden of governmental spending be borne by the citizens who receive those benefits – or should it be borne by the pseudo-people, the corporations, who profit by the labor of those citizens? What is the true role of government?
I wish our elected leaders would address these questions, because all I hear is Britney/tire gauge/drill here, drill now/blather. People who are trying to organize their financial lives in difficult times deserve better.