Situation Wanted: Benevolent Dictator Available....

Headlines shout that some of America’s biggest corporations pay little to no income tax on their profits.  And others hide their profits overseas where the tax rates are low.  This chicanery means no money comes back to Uncle Sam.  All of these businesses are obeying the law, though there is rightfully some concern that the laws were written by their friends for their specific benefit.  When the Supreme Court decided in the Citizens United case that corporations were the same as individual people, by golly they started acting like it.  We the People don’t like to pay the IRS anything.  Neither do the corporations of America, never have.  Suddenly however they seem to be emboldened.  We need their money to keep this big machine we call the US Economy greased and running…. Or do we?

The numbers are complicated, but in simple terms successful corporations pay about 35% tax on profits each year.  If Walmart makes a billion dollars, they are expected to give 350 million to the Federal government who does with it what they choose.  We defend our borders, pay our Congressmen and build dams with this money.  We also pay out welfare and similar benefits to the needy.  Or those who claim to be needy.  But keep in mind that the prevailing thought of the party in power tends to guide some of this spending.  One party claims to be for smaller government, the other for solving all ills with government help.  The Constitution gives the government the right to collect taxes… but like a child being raised by a baker, you’d better show some restraint or you’ll grow up really fat.  Fat kids aren’t healthy.

Now the real corporate tax rate after deductions and write-offs and the like is closer to 12%.  That’s still a lot of money for Uncle Sam to spend on things that not all Americans think are necessary.  I won’t get into all of that right now, but it’s a clue to where I am going.  Before World War I the corporate tax rate in America was 1%.  Yes, a rate that was 1/35th of the current stated rate and 1/12th of the current actual rate.  Well darn…. Who paid for the schools and fed the poor?  I’m not talking social security or Medicare here, those are relatively new ideas and separate taxes.  The corporate tax was supposed to help the government keep our country moving forward, but it was so little compared to today.  How was necessary financial help provided 100 years ago?  Was it provided?

I’m a distant descendent of the men who founded the grandiose sounding, but long defunct Empire State Chemical Company in Athens, GA; 1904.  The actual minutes from the first board meeting still exist.  At that first meeting, ten percent of the company stock was put into a Trust for worthy causes.  Basically, these businessmen tithed from the company treasury.  I used to think this was horribly noble and generous, but think about it.   There basically was no tax required to pay Uncle Sam so civic minded corporations took it upon themselves to serve the needy.  I imagine many, many companies at that time did similar Trust endowments and this was their means of giving back to the community.  Schools were endowed, churches funded and poor houses given alms and more. 

The narrow-minded might think that giving the same money to the Federal Government for their disbursement would have saved the corporations the chore of choosing worthy causes and distributing their largess.  I think of it in just the opposite view.  Back in the day, those receiving the Trust money could be held accountable for how it was spent.  If $10,000 is given to the Baptist Church and they immediately add a hot tub to the parsonage, odds are that church won’t see the money in year two. The old plans allowed industry to target their funds to truly needy causes and be much more nimble in seeing that the money is not wasted.

I think the total benefit from American corporations in 2014 could be huge with no corporate income tax.  Today it’s almost a point of pride amongst business tycoons that they pay as little tax as possible.  Would there be the same pride in being a tightwad when Americans were in need?  Not likely.  I see just the opposite.  If ExxonMobile decided to fund the building of a needed highway bridge in Texas, they’d most likely work hard to see that it came in on time and on budget.  Does Uncle Sam have any motivation to take such a responsibility?  Remember, Andrew Carnegie, a one-man conglomerate, was so rich in 1901 he just started building local libraries and major Universities as places to park his impossibly huge fortune.  Would there be a Carnegie Hall in Manhattan if the government had taken 35% of Mr. Carnegie’s earnings each year?

In 2012, American corporate and private charitable gifts topped $335 Billion.  Wow, that’s a lot.  And this from people who are taxed and taxed and taxed.  How much would be given away if that were not the case.  How much smaller would our Federal Government be if there was no money to fund the Departments of Education, HUD, Agriculture or Interior?  What the heck do they do anyway?

There are news story aplenty about the shift in income inequality and the need for the government to do something about it.  I have another idea….