Corporations are People, Except at Tax Time

If we need anymore proof that a corporation is really not a person, we can turn to an item in the news which so far the Milwaukee Journal Sentinel has not covered beyond printing a brief Bloomberg report in its Business section. The news is that, according to a U.S. Senate investigation, Caterpillar, Inc. (which four years ago purchased local mining equipment manufacturer Bucyrus International) has avoided paying $2.4 billion in income taxes over the last 13 years by making use of a Swiss subsidiary and a sweet Swiss tax deal.

The U.S. Senate investigation concluded that Caterpillar took advantage of some good (if expensive–$55 million) accounting advice, and a Caterpillar executive said at a Senate hearing  on the matter that “Americans pay the taxes they owe, but not more. And as an American company, we pay the taxes we owe, not more.” Not a penny of difference, is there? Certainly our Supreme Court doesn’t think so, having previously ruled that wealth is speech and, yesterday, that limits to aggregate campaign donations  are an injustice to the very wealthy.

Individual, real American persons cannot, of course, claim that because we have a distant relative in Switzerland that our American income tax should be calculated at the Swiss rate.  Nor can we ordinary Americans usually negotiate a special discount tax rate with the Swiss as Caterpillar reportedly did– 4 to 6 percent.

That Caterpillar and other major American corporations can take advantage of such unpatriotic and perhaps illegal tax evasion schemes while individuals cannot means that corporations’ claims of constitutional rights do not extend to the paying of taxes. We have the right to spend as much as we want in order to “speak”, say our corporations, but we also have the right to avoid paying the taxes we owe if we can “speak” loud enough to a sympathetic and greedy Congress that will look the other way.

Though it’s hard to believe that any member of Congress would publicly defend the tax evasion tactics of corporations, some of the senators in attendance at the hearing did so. One of those senators was our own Sen. Ron Johnson. What follows is courtesy of the Wall Street Journal:


“Caterpillar’s executives defended their tax practices as legitimate and said the company’s effective global income tax rate is about 29%, or three percentage points above the average for U.S. corporations.

That prompted Sen. Ron Johnson, a Wisconsin Republican, to suggest Caterpillar might be missing other opportunities to reduce its tax burden. “I’d be talking to my tax managers and saying, ‘What are you potentially doing wrong here,’” Sen. Johnson said.”


Got that? Not wrong as in ethically or legally wrong in evading taxes, but wrong as in wrong to pay what the tax rate says you owe. As a wealthy business owner himself, our Sen. Johnson seems eager to alleviate the burden of corporate taxes.

Why does it matter that many huge corporations in Wisconsin and elsewhere fail to pay their fair share in taxes? Because, dear hardworking taxpayer, there is less money in the pot to invest in the public good. The nation as a whole is cheated, but so are states that give tax breaks and subsidies to the same corporations. As Roger Bybee writes, Wisconsin spends 10% of its annual budget (about $1.5 billion a year) on giving goodies to big corporations with little to show for it. That’s some real money that could do some real public good.

Caterpillar, by the way, has since 2007 received $196 million in state grants from 17 states, as the NY Times reports. Wisconsin is not listed as one of those states, but it should be noted that Wisconsin did give Bucyrus (which Caterpillar bought in 2010) $21. 7 million in income tax relief from 2007 to 2011. Where can an ordinary American get a deal like that? Maybe Switzerland.

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Could you elaborate on the notion of “corporate personhood”, Mr. Chomsky?



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