What’s Wrong with the World

The men signed of the cross of Christ go gaily in the dark.


What’s Wrong with the World is dedicated to the defense of what remains of Christendom, the civilization made by the men of the Cross of Christ. Athwart two hostile Powers we stand: the Jihad and Liberalism...read more

A New Sovereign Immunity

Quinn Hillyer, writing over at the American Spectator, has a brilliant idea, one which will, all at once, revive a flagging American economy, increase the profitability of American corporations, reward pensioners and investors, lower consumer prices, and eliminate the distorting effects of tax policy from decision-making. Interest rates will fall (how could they be lower, given the loose monetary policy of the Fed?) and outsourcing will end, meaning that this ultimate in supply-side cosseting is also the ultimate pro-labour policy. Everything will operate more efficiently, and we will all ostensibly be better off. Perhaps even cancer will be cured.

What is this miracle cure for what ails the American economy?

Eliminate the federal corporate income tax.

Yes, kill it entirely.

I am afraid, however, that this utterly utilitarian framework of analysis, important though it may be in its rightful place, distorts an understanding of precisely what such a policy 'reform' would signify and accomplish. The elimination of corporate income taxation would not signify a desire to improve the economic climate, by improving the business climate, so much as the overt capture of political institutions by economic interests. The implicit idea of Hillyer's argument - the provision of a technical fix to a technical economic problem - veils the substantive ethical issues implicated in the discussion.

Such a policy is a nonstarter, first, because corporations, since the Santa Clara decision of 1886, are deemed legal persons; which is to say that, for the purposes of the law, fictional persons - fake or non-persons - are deemed equivalent to real persons, and some of the protections which the Fourteenth Amendment was intended to secure to liberated slaves also apply to such fictive persons. In the wake of that decision, there occurred a decades-long debate over the political role of corporations, a debate which was finally settled in the mid-seventies, when a series of Supreme Court rulings definitively accorded these imaginary persons the rights of free speech to which real persons were entitled, allowing them to shovel contributions toward political campaigns. Lobbying exploded as a variation on the world's oldest profession.

Second, all manner of ethical and policy distortions result from the ontologically incoherent attempt to treat persons and nonpersons as identical. This cuts both ways, of course; abortion treats a person as a nonperson for the purposes of the law and the myths of autonomy; corporate personhood, however, treats nonpersons as persons, with the result that these faux-persons, possessed as they are of wealth beyond the imagining of the average real person, acquire inordinate degrees of influence. All persons are possessed of equal rights; but some persons are more equal than others. Which is why the wealth of those interests invested in our present immigration policy, for example, despite their status as a minority of the population, prevails over the relative poverty of the rest of us. To paraphrase Anatole France, the law in its eternal majesty protects with equal solicitude the speech of the common man and the speech of the plutocrat, and permits both to hire the illegal immigrant and receive subsidies for growing masses of corn for an ethanol boondoggle.

Hillyer has a response of sorts to these observations, to the extent that he acknowledges them, which is very indirect, indeed:

Finally, corporate income tax elimination would have a huge added benefit in the realm not of economics but of ethics. (Snip) This is decidedly not to say that the lobbying itself is usually corrupt. It's not. But where money and interests and votes intersect, the whole system of incentives is naturally changed even without overt corruption.

There is, of course, a metaphysic implicit in this conception, that of man as a passional creature, his desires expressible socially as interests. On such a conception, this is simply the natural state, the way we are, simply; consequently, it is not the man haggling with the state for favours - this, he simply must do - who is ultimately responsible for said activities, but those whose silly policies 'compel' him to haggle so overtly. Those who get in the way of interests are therefore responsible for the resultant externalities and so forth.

If, on the other hand, one rejects this notion, and embraces the idea that men and their institutions each possess natural purposes, which ought to be defined and discriminated between, then this entire spectacle becomes unworthy: certain things, particularly the entire process of lobbying and the granting of favours, ought not occur because they are irreconcilable with the form of government that our Constitution specifies. Crucial to a Republic is the distinction between private interests and the public things; this unseemly spectacle of horsetrading and back-scratching, conflating as it does the two, is more consistent with a system of private government, or, better, a political system in which political and economic power formally overlap. So much for modernity.

Moreover, there is a certain sleight of hand in Hillyer's proposal, the idea that the elimination of the corporate income tax would remove the perverse incentives of the tax code, allowing our Solons to pursue the common good. But this is to elide the difference between tax-code-related favours and all of the other favours that government dispenses to the connected. Eliminating the corporate income tax would mere remove the former occasion of corruption, not the latter. It is easy to envision an America under such a tax regime, in which corporations not only paid no taxes, but sought and received other dispensations, such as overt subsidies, easier access to public properties, regulatory easing, and so forth. As such, the picture that emerges is one of a more express interpenetration of corporate and political interests, in which the former, being regarded as so essential to the American Way, effectively exempt themselves from the burdens of sustaining the institutions that privilege them, and even help themselves to their largess. In that sense, tribute would flow in one direction; the Sovereign would immunize himself, for no Sovereign taxes himself, but rather receives the taxes - and other payments - that are his due.

One could imagine tax policies that would privilege, say, the family. However, that might exude an odor of natalism. No, tax policy should favour the corporation, rendering this fictive person more equal than other nominally equal persons, thus demonstrating what truly lies at the heart of the American system. This is not merely - as demonstrated by the very fact that the attachment of such 'rights' to corporations was a developmental process - a reversal of American history and ideals, but an inexorable outworking of the logic of treating persons and nonpersons as legally equivalent, of violating justice by treating like and unlike identically. To do this is to veil vast inequalities behind a drapery of formal, contentless equality.

Now, I should state that there are ways out of this thicket, but they are unpopular: a restoration of strict, Constitutional, limited government, eliminating the very opportunity for such favours to be dispensed, with everything that entails. Moreover, I'm not averse to tax reform, though any putative reform should not privilege, as certain proposals do, capital over labour: no tax regime should impose upon labour, though the combination of payroll and sales and income taxes, a burden higher than that imposed upon those who take their income from returns to capital. And if the taxes upon the latter must be low, so much the better: lower them across the board and pare back the government. And let us have done with the notion that faux individuals called 'corporations' are so much more important than real individuals that they ought not have the obligations of real individuals. Better yet, let's jettison the fiction that the fakes are even real to begin with.

Comments (1)

Who are we kidding - corporations do not pay taxes anyway - it's just another cost passed on to the ultimate consumer.

Post a comment

Bold Italic Underline Quote

Note: In order to limit duplicate comments, please submit a comment only once. A comment may take a few minutes to appear beneath the article.

Although this site does not actively hold comments for moderation, some comments are automatically held by the blog system. For best results, limit the number of links (including links in your signature line to your own website) to under 3 per comment as all comments with a large number of links will be automatically held. If your comment is held for any reason, please be patient and an author or administrator will approve it. Do not resubmit the same comment as subsequent submissions of the same comment will be held as well.