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Corporations Should Pay More Taxes

Cara Palmer |
August 14, 2011 | 3:25 p.m. PDT

Staff Columnist

(janinsanfran, Creative Commons)
(janinsanfran, Creative Commons)
Presidential candidate Mitt Romney sparked controversy with his statement earlier this week suggesting "corporations are people."

Legally, that statement is true. The Supreme Court ruled in the 1886 case Santa Clara County v. Southern Pacific Railroad Company that corporations share with people the same protections under the Fourteenth Amendment. However, his defense of his statement involves the logic that a corporation is considered a person because a corporation is comprised of individual people – a defense that does not follow the ruling, in which a corporation as an entity is presented as a person in and of itself. His inaccurate defense aside, Romney’s initial statement gives rise to a question.

If Mitt Romney believes that corporations are equivalent to people, why does he not support forcing corporations to pay their fair share of taxes?

Last year, Forbes reported that some of the "world's biggest, most profitable corporations enjoy a far lower tax rate than you do – that is, if they pay taxes at all."

In fact, General Electric paid no federal taxes in 2010.

Think Progress reports:

"From Bank of America to ExxonMobil to General Electric, these big businesses have gone quarters or entire years without paying their income taxes – at a time when the effective tax rate on a median family is 13.6 percent."

The United States has the second lowest tax rate for corporations in the world, with about two-thirds of corporations neglecting to pay any federal income tax. Loopholes in the tax code allow for corporations to avoid paying their share of taxes. As if that was not enough, according to a report analyzed by Think Progress, “…major corporations earned $173 billion in profits put together. Yet these major corporations paid an average federal corporate income tax rate…of -1.5 percent, meaning they actually got money back from the Treasury in the form of tax benefits.”

This escaping of paying a fair share of taxes is not a new phenomenon – Ronald Reagan, during his presidency, found that corporations during the eighties were not paying their income taxes. Think Progress states:

"So Reagan undertook a comprehensive tax reform effort that actually raised the corporate taxes and closed numerous loopholes that allowed big firms to dodge their tax responsibilities. As part of these reforms, Reagan passed the 1986 Tax Reform Act…

"During the signing ceremony for the speech, Reagan explained that his goal in pursuing these reforms was to make sure ‘that everybody and every corporation pay their fair share.'"

He closed tax loopholes for corporations that were worth $300 billion over five years.

If one believes a "corporation" is a "person," why should a corporation be able to avoid the responsibility each person bears, of paying a fair share of taxes? It is not fair that the average person must pay more than a corporation in taxes, when a corporation is considered a person.

If raising taxes on corporations is not on the table, why not consider following in Reagan’s footsteps and closing loopholes that allow corporations to escape their duty of paying taxes? Reagan is the Republican hero, after all.

 

Reach Staff Columnist Cara Palmer here or follow her on Twitter.



 

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