The great corporate tax swindle

Legendary investor Warren Buffett famously criticised a system that permits venture capitalists to pay less tax than their cleaners.

Richard Wolff, The Guardian:

It's astounding how our politicians have bought in to firms' tax blackmail. But there is an alternative: workplace democracy

More and more, we hear that nothing can be done to tax major corporations because of the threat of how they would respond. Likewise, we cannot stop their price-gouging or even the government subsidies and tax loopholes they enjoy.

Such steps by "our" government are said to be impossible or inadvisable. The reason: corporations would then relocate production abroad or reduce their activities in the US or both. And that would deprive the US of taxes and lose more jobs. In plain English, major corporations are threatening us. We are to knuckle under and cut social programmes that benefit millions of people (such as college loan programmes, Medicaid, Medicare, social security, nutrition programmes, etc). We are not to demand higher taxes or reduced subsidies and tax loopholes for corporations. We are not to demand government action to lower their soaring prices. If we do, corporations will punish us.

One concrete example can illustrate the benefits of this alternative to the threat/counter-threat scenario. Corporations have used repeated threats (to cut or move production) as means to prevent tax increases and to secure tax reductions. Likewise, they have made the same threats to secure desired spending from the federal government (military expenditures, federal road and port building projects, subsidies, financial supports and so on). In effect, corporate boards of directors and major shareholders seek to shift tax burdens onto employees. Their success over the last half-century is clear. Tax receipts of the US government have increasingly come, first, from individual rather than corporate income taxes and, second, from middle and lower individual income groups rather than from the rich.

In worker-directed enterprises, the incentive for such shifts would vanish – because the people who would be paying enterprise taxes are the same people who would be paying individual income taxes. Taxation would finally become genuinely democratic. The people would collectively decide how to distribute taxes on what would genuinely be their own businesses and their own individual incomes.

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