Saturday, September 17, 2005

Corporate Tax Haven

Now that the rebuilding of New Orleans is inevitable, how will we pay for this monumental undertaking? If history is any indication, then we can expect an increase in the national debt, passing off the costs to future generations. The Bush Administration is currently planning on cutting spending, but their track record leads me to believe it will be insignificant. This current fiscal conservative rhetoric voiced by the President is also centered on a denial of any future tax increases. However, I seem to recall a similar promise made by the elder Bush approximately 15 years ago.

A combination of funding policies could be very effective for both short and long term projects relating to the aftermath of Katrina. Closing the tax loophole for corporations, especially offshore accounts in the Caymen Islands and elsewhere would be a start. If corporations want to be treated like individuals, having been effectively granted personhood by the Supreme Court, then paying taxes becomes a patriotic and legal responsibility. An American citizen is required to pay taxes on their income to the government, and since corporations are granted many of the same protections that a person receives, these entities should also be required to pay American taxes if they make their money here.

The macroeconomic argument is that these taxes would negatively affect the bottom line, therefore placing an unfair burden on employees, reducing stockholder's earnings, and as a result the economy suffers. This would cease to be a viable argument if corporate CEOs and board members were willing to cut back on political contributions, "gifts" to shareholders, their own exorbitant salaries, and other "business expenditures" that qualify for further tax write-offs, while maintaining labor and overhead costs. Of course this would adversely affect politicians' campaign funding, effectively minimizing both corporate and wealthy stockholder's influence over the policy making process. This is obviously a very undesirable option in the politically corrupt climate of Washington and therefore unlikely to produce a responsible long term fiscal policy for funding of current and future disasters, either natural or man-made.

The media is also in dire need of policy reforms. Unfortunately, the status quo of media ownership rights has manifested itself by shutting out public discourse on this topic altogether. The "dumbing down" of the public continues. Welcome to the American corporatocracy.

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