Pondering the piece I wrote on the death tax I wanted to touch on this subject too but it seemed too much to chew on at one time. So I am writing it now as an accompanying piece to the death tax piece.
Apple has $120 billion in net assets. That is a lot. As I’ve discussed before and as the supreme court has ruled in the USA, a person’s $1.00 is equal to Apple’s $120,000,000,000.00 as far as political influence goes. You, me, and anyone with half a brain can see that is not true. While the Justices were interpreting the constitutional merit-a document that originally stated that only white, male land owners could vote-I think they missed the reality of today’s world.
If the death tax is supposed to be an intentional dilution of financial power and influence, what then should we do about corporations with massive financial power and influence but also never die? Logic would tell us to tax every corporation’s net assets once every 100 years. This idea would be laughed out of any legislature but that doesn’t reduce its validity. The corporation in its current form has not been around long enough for us to see the long term societal implications.
When Augustus took control of Egypt after the battle of Actium he did not need the senate-though he did placate their egos-because he had the wealth of Egypt at his disposal and the entire Roman army at his command.
When King George III was insolvent after losing to US revolution forces he made a deal with parliament to give up control of his lands for an annual allowance. This fundamentally changed the power structure in the UK. The King’s lack of money allowed the people (Lords… but still!) to take more power for themselves.
So what will happen if the corporate trends of wealth hoarding, political influence, and tax evasion continue? Governments that can’t pay their bills and corporations that can. I predict that in the future corporations, or the corporate class, which already surpass the political class by wealth will be in full control of the planet with military forces of their own. It seems far fetched but I’m not talking about Starbucks tanks or Walmart fighter jets. Corporations like Exxon, Monsantos or Dupont who currently pay governments to do their fighting for them might need to take up their own weapons when governments can no longer afford military forces.
I don’t think it’s that far fetched. Politicians used to command armies from Cyrus to Napoleon. The richest citizens in circles of power organized and slowly siphoned power from individuals and placed it in the hands of the political class. Through revolution the political classes were forced to listen to the citizenry. Now our democracies are threatened by a new power. Corporations who can sue governments in international courts. I think this is only the beginning.
My solution is to tax corporations heavily. I think it would be wise to have different tax rates for foreign corporations as well. We have to tax them heavily enough to mitigate their current financial power but also enough to keep them subdued indefinitely. Perhaps a cap on net assets; i.e. setting a limit to how big a corporation can get and how much money a corporation can have.