Thursday, September 10, 2009

Corporations are People, Too?

In a sad development for the roots of democratic republics - and a backdoor victory for oligarchy - the The Supreme Court's conservative bloc sounded poised Wednesday to decide, on free-speech grounds, to end the ban on corporations spending large amounts of money to elect or defeat candidates for Congress and the presidency. The "ironic" issue of money as "free" speech has always troubled me, though I understand the reasoning behind it. Of course, it wasn't nearly the problem thirty and eighty years ago before the rise of television, especially cable. Now we have trillions behind spent to promote agendas, and the concept of truth in politics and ideology becomes even more bent.

This development - corporations being freed to use their resources to specifically influence individual political races - is a nail in the coffin to any hope of campaign finance reform. Perhaps the most disturbing concept is the idea that "Corporations are persons entitled to protection under the First Amendment," said Olson, who represented Citizens United. This is an absolute affront to the rights of the individual and democratic republics. A corporation is NOT a person, and that was not the intention of the First Amendment. If individual members of a corporation want to exercise free speech, I support it. If the corporation wants the same right to use its massive funds to override representative voices of individuals, that's a move toward oligarchy.

Thom Hartmann - and I know he's very liberal - first brought this to my attention in his critical book What Would Jefferson Do. Issues like these really do bring Supreme Court appointments into prominence. While I was bothered by the Courts ruling on private property last year, I am equally, if not more, bothered by this one.


Dennis Fermoyle said...

Michael, I'm with you on this one, but individuals are limited to $2,000 per election. If corporations are "persons," wouldn't the same limitations apply? If that's the case, it seems to me that $2,000 in a congressional election is small potatoes. Granted, if a number of corporations all give to the same candidate, it adds up, but it's not like they'd be able to give millions in a particular election. I would also think that, since full disclosure is necessary, the other candidate might be able to make political hay out of someone who took too many corporate contributions. But, then again, I'm not sure the American public is smart enough to react to that. The health care debate that is now taking place has not exactly increased my confidence in the intelligence of the American citizenry.

RJP said...

I agree with you both as well, if corporations are "persons" then they should also pay taxes like "persons"? Afterall, I do not get to deduct expnses on my private jet from my personal income when filing my taxes. Then again, if the new equation is that "person=corporation" perhaps I should be allowed to deduct expenses like a corporation? (Diapers may be able to be considered office supplies?)

steven said...

Just for the record, RJP, corporations do pay taxes just like persons - either at the corporate level or at the shareholder level (subchapter S corporations, which are limited to 100 shareholders, pass their net income to their shareholders and the shareholders pay taxes on their share of the net income). They pay taxes on their net income from the business, just like sole proprietors, who file a Schedule C with their Form 1040, pay taxes on their net income from the business. Both the corporation and the sole proprietor are allowed to deduct ordinary and necessary business expenses in arriving at net income - neither are allowed to deduct personal expenses. So if you are an individual person involved in a legitimate business activity which is not incorporated you may deduct business expenses just like a corporation.

mmazenko said...

And to add to the record, Steven, in the last decade, according to the GAO, the average US corporation paid nothing in income taxes. Of the corporations that do pay taxes, the average pays 5%, though the tax rate is 25%.

So, in theory, they are just like citizens. But then there's the reality.

RJP said...

Corporate and shareholder level are not the same as "person" level. ( I think shareholders only pay capital gains taxes?) You can muddy the code all you want, corporations pay taxes differently than citizens/persons. Always have and always will!

However, this does not change the fact that you should not be able to cherry pick the constitution by being considered a person w.r.t. the 1st amendment and a corporation w.r.t. the tax code. What would stop any "real" person from doing the same? Couldn't I consider my "person" to be a corporation when I file my taxes, even if I am not a solep or SCorp? (I think the argument for 1st amendment rights is that corporation = person.)

steven said...

5% of what, Michael? The rate starts at 15% for the first $50,000 in net income and goes up from there, unless they are a personal service corporation, in which case the rate starts right at 35% on the first dollar of net income.

RJP, shareholders of regular corporations (not Subchapter S corporations) pay taxes on dividends received from the corporation. Since the corporation has already paid taxes on their net income this amounts to double taxation. Shareholder pay taxes on the capital gains they earn when they sell their shares (or they deduct the loss as a capital loss).