Friday, January 27, 2012

Corporations are people my friend!

I read the above article this morning and its been bothering me since. It's a well-written informed opinion piece with a conclusion I disagree with. God knows it's a pleasant diversion from "Newt Gingrich's adultery is *actually* an indication he should be president" style drivel. I couldn't help but feel something was off about the argument but until just now I couldn't translate my gut feeling into words.

A corporation is more than a group of people (eg shareholders) who have pooled their money. I'm not up on my financial lingo but entities exist to fulfill that role: partnerships, limited partnerships, limited liability corporations and the like. The U.S. tax code has provisions for people who want to pool their money and have the resulting entity basically be "a group of individuals".

(My understanding of) the reason people form corporations is precisely because they want to form an entity separate from the people involved. They want an entity that can go bankrupt, for example, without the shareholders as individuals go bankrupt. They want an entity that the Supreme Court can rule - ಠ_ಠ - as having freedom of speech. Again, my knowledge limits me, but I hope the point is accepted: people form corporations precisely to create an entity apart from the shareholders.

Which is why, once we keep that in mind, it's bizarre to argue that corporations should be independent entities in every way except when it comes to calculating tax burdens. I don't want to blame someone for arguing for something that benefits them (although that sentence alone speaks volume about society) but it's transparent that the argument only holds water if one is a shareholder themselves. I can't see any justification for arguing that corporations are people when it comes to tax burdens but very much aren't people when it comes to everything else.

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