In the United States, it seems, corporations are people too—except when it suits them not to be. In this week’s Congressional brouhaha over Apple’s overseas tax-avoidance schemes, the chief solutions proffered have been either to give firms like Apple a one-time tax holiday so they can bring some of their cash back home, or else stop taxing them on their overseas earnings altogether. Nobody seems to have suggested a surely more rational choice: Treat Apple as if it were a US citizen or permanent resident, and tax it on all its worldwide earnings.
I use “rational” advisedly, of course. To most non-Americans, the US’s leech-like hold on its people’s wealth, wherever they may have won it, is ludicrous: What right does a government have to tax economic activity that it did nothing to foster? But that’s a debate for another time. The point is that there is a precedent. When they live abroad, Americans pay not only local taxes, but also American taxes on everything they earn above a certain threshold (currently about $95,000 a year). When they live in America, they pay American taxes on any income they make abroad (rent on property they own, for instance.) Double-taxation agreements keep them from paying too much, at least in theory. Why not do the same for corporations?
Of course, that idea won’t fly in the current political climate. Technically, American corporations do pay tax right now on worldwide earnings—just not until they decide to bring those earnings home. (To add to the absurdity of it all, much of the money US companies hold “abroad” is actually in banks in the US.) The Republican position is that even this is too burdensome, and “places U.S. corporations at a disadvantage compared to their foreign competitors.” Those same Republicans tend to be behind complaints that US corporate tax is the highest in the world—which would be true only if all that tax were actually paid.
A compromise would be to lower the overall corporate tax rate, but make companies pay it regardless of where they keep their money, so that their overall tax burden wouldn’t change. The shift would have to be spread over years so as not to disrupt the business models of large swathes of American industry, but it could be done. That the only solutions under discussion in Washington instead involve making companies pay less tax is extraordinary, given the popular anger at big corporations after the 2008 financial crisis. One wonders how different the conversation might be were it not for the Supreme Court’s 2010 “Citizens United” ruling, which allowed businesses and organizations to buy unlimited political propaganda on the grounds that they are entitled to the same rights to free speech as people.
“No taxation without representation” was the cry of the American revolutionaries whose self-proclaimed ideological descendants, in the form of the Tea Party, are now the corporations’ biggest grassroots allies. (As a US green-card holder who enjoys all American taxation with none of the representation, I find the phrase particularly poignant.) “No representation without taxation” might be a slogan for their opponents. If companies are to have the same rights as people, should they not have the same obligations?
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