Time for “corporate loyalty oaths”?

posted at 7:21 pm on August 4, 2014 by Ed Morrissey

Pardon my vertigo, but didn’t the Left just get done arguing in the Hobby Lobby decision that corporations shouldn’t be treated like people? Corporations exist to protect the people within the partnerships that incorporation creates, which is why corporations get treated by the law like individuals in certain ways. No one suggests that they actually are people, outside of progressive hysterics who believe the sky is falling because of a century-old legal doctrine and its application.

Now, though, the personhood of corporations is so strong that Jonathan Alter proposes we force them to take a loyalty oath to keep their headquarters within the US. The move of multinationals overseas, including one run by the daughter of Senator Joe Manchin, prompts Alter to demand that government do something, even if it does evoke shades of McCarthyism and worse:

My answer is to make every corporation sign something.

Sign what? If Republicans cared about this issue, which most don’t, they would revive McCarthy-era loyalty oaths, where people were forced to swear that they weren’t communists.

Remembering those dark days, Democrats don’t like oaths, or even pledges, which have proven enormously effective. Grover Norquist’s ability to get nearly every Republican in Congress to sign a no-new-taxes pledge is one of the most successful political gambits of recent decades—and a big reason for today’s gridlock.

Because oaths and pledges are a little creepy, this effort needs something else—something that comes out of the legal and business worlds: a contract. More specifically, an NDA.

Non-disclosure agreements are common in corporate America, where tens of thousands of senior managers and employees sign contracts promising to keep all sorts of information confidential. It’s often a condition of employment.

Now it’s time to change the “D” and expect the same from boards of directors—a “non-desertion agreement” with the John Hancock of every board member and CEO in the United States.

The issue here is the insanity of our current corporate tax structure, which is both more burdensome and more Byzantine than most other Western nations. Some of that can be chalked up to cronyism, as large corporations lobby for special carve-outs and benefits to the disadvantage of others, especially smaller and more entrepreneurial competitors. The rest of it comes from the political impulses of both parties to treat the tax code for both corporations and individuals as a platform for social innovation rather than a rational way to fund government.

Alter’s proposal doesn’t change those facts, nor does it solve the problem that faces him now. The allusion to Grover Norquist’s tax pledge is specious; politicians sign those to attract voters, but there is no other compulsion on them to do so, nor to keep that pledge once elected, as constituents have occasionally learned the hard way. Nor does Alter really explain what would force corporations to sign these loyalty oaths, let alone enforce them, other than public pressure from investors and customers. But investors and customers for the most part shrug at these moves because they understand better than Alter the root cause, which is the dysfunctional American tax system, rather than a lack of patriotism. Public outrage can be ginned up with our without loyalty oaths, as Alter proves today.

Alter then makes this argument:

Many of the same conservatives who believe, along with the Supreme Court, that corporations are people, apparently don’t think that companies have any of the obligations of citizenship.

Again, corporations aren’t people in the way that Alter assumes they are, and makes the strange leap that corporations are people for the purpose of emotional attachment. Corporations have one common purpose — to provide a return on investment to shareholders. The owners may have loyalties (as well as religious beliefs that inform how they want to do business), but they also have the right to move wherever they want to conduct business, too.

Corporations certainly have obligations based on their country of residence. So do individuals. If an individual decided to apply for citizenship in another country based on a dissatisfaction or disaffection with US policies on taxes or any other issue — remember when celebrities threatened to leave the US if George W. Bush got elected? — then they would have an obligation to comply with the laws of their new country. If they stay here, they have to honor their obligations here. That’s painfully obvious, unless Alter suggests that we should start restricting emigration, which has echoes of the old Soviet empire.

(Can you imagine the outcry that would have erupted had someone on the Right demanded loyalty oaths from those celebrities before they could publish their movies, music, and so on? I’m old enough to recall that just criticizing the Dixie Chicks for their political remarks during an overseas concert was considered the height of fascism … when Bush was President. Last I looked, the Dixie Chicks were people, too, as well as a corporation of some sort.)

Alter is just venting here rather than offering an intelligent solution to the problem. I’ll offer one instead, or even two: Change the tax codes for both individuals and corporations to a flat-rate system that has no deductions or loopholes. Better yet, change the individual tax system to flat-rate and eliminate the corporate tax system altogether. That would encourage corporations to return to the US and base their hiring here, and provide the stability and transparency that will encourage entrepreneurs to innovate and challenge the corporations that progressives dread. Set the tax rate on incomes to the needed level to raise enough money to fund the federal government and apply it evenly to all earners and investors. That might also have the salutary effect of reinforcing just how much the federal government takes out of the economy, and encourage a little more thrift and efficiency.

That may not be the easiest solution to achieve, but it’s better than demanding loyalty oaths that solve nothing at all.

Update: Reason’s J. D. Tucille is on the same page:

And you though the whole Benito-tastic flag-draping thing already jumped the shark when President Obama demanded “an economic patriotism that says we rise or fall together, as one nation, and as one people.”

Must… resist… the… urge… to… include… Italian… and… German… quotes. …

As I’ve noted before, the United States is not especially competitive in terms of corporate tax rates, scope of business taxation, or ease of negotiating tax bureaucracy. On PriceWaterhouseCooper’s study of “189 economies worldwide, ranking them according to the relative ease of paying taxes,” Ireland ranked six, Canada ranked eight, the U.S. came in at 64.

So…Maybe fewer loyalty oaths and more making the tax system less sucky? Just a thought.

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If Obama hadn’t spent the past six years preening for the cameras like the affirmative-action, demagogic hack that he is, and, instead, had led on major income tax reform, none of this would be happening. Instead, he had to leave in place a system that favors his corporate cronies all the while bellyaching about mean old grubby corporations.

BuckeyeSam on August 4, 2014 at 7:27 PM

Ed… It’s Johnathan Alter…

Don’t cast pearls before swine… It’s like you just wrote a lengthy philosophical response to Pelosi’s “we have to sign the bill to find out what’s in it” statement.

Alters a troll arguing rhetorically because he got his butt hurt and wants to twist the meaning of words to somehow vindicate himself and call it “logic”.

Don’t give him the time of day.

Skywise on August 4, 2014 at 7:28 PM

make a union sign similar stuff.
imagine the outcry then.

dmacleo on August 4, 2014 at 7:28 PM

Sure, because other oaths — like those taken by POTUS, SCOTUS justices, and Congress critters — have worked out so well!

Let.It.Burn.

ShainS on August 4, 2014 at 7:28 PM

Oh populism, what can’t you ruin?

thebrokenrattle on August 4, 2014 at 7:30 PM

The issue here is the insanity of our current corporate tax structure, which is both more burdensome and more Byzantine than most other Western nations.

Hey Obama already addressed that. He told all of these Companies to shut up and quit complaining about it.

So that problem is solved. See how easy that is?

Johnnyreb on August 4, 2014 at 7:30 PM

Well if you want to treat them as actual individuals, that is to say people, then the corporate tax code goes out the window and the corporations pay personal income tax.

Hey! Would that be a lower or higher tax burden?

It would simplify a lot of things…

Oh, and can we give them the franchise, too? One corporation, one vote? Stockholders get to cast their votes for which way the corporation votes and then majority rules and it casts its one vote from what the majority wants it to be. Sole proprietorships would be excepted, of course, as they are just one person to start with. Privately held companies, ditto. Mind you that one vote is cast by the CEO separately from his/her own, and the record of the stockholders is kept secret until after the votes are tallied and the election certified.

And on the other end of the spectrum, can we impose a liquidation date so that corporations don’t survive their founders because they are like people and need to go the way of all mortals?

This does need to extend to ALL incorporated bodies.

Political parties INCLUDED.

Makes that fundraising a very interesting proposition. And in a lifetime the existing parties vanish. Yes, that would be a very interesting change, indeed.

ajacksonian on August 4, 2014 at 7:31 PM

Flat or Fair tax, I don’t care which. Close shop on the IRS. No favors. No deductions. KISS.

vnvet on August 4, 2014 at 7:31 PM

Link to Jonathan Alter’s Op-Ed.

HEY … Jonathan ! (and all the rest of you “Marxists) . . . . . . . . . . . .

Businesses of any type, kind, or SIZE (includes corporations) do NOT exist to be a “social service”.

They owe NOTHING to the country.

listens2glenn on August 4, 2014 at 7:46 PM

Yes, today’s democrat party is FULL ON totalitarian fascist.

Not a dime’s worth of difference between the NAZI party doctrine of the 1930s and the current democrat party democrat platform.

Wait, the NAZIs didn’t explicitly condone the killing of Jews like the democrat 2012 platform did by not naming hamas a terrorist organization. Hitler was far smarter than Obama on that but I give King Barky the Liar the edge on the NPD scale.

jukin3 on August 4, 2014 at 7:52 PM

They should have to swear allegiance to union friendly States, too.

Sincerely,
NLRB

wolly4321 on August 4, 2014 at 7:52 PM

It’s not just that the US has the highest corporate tax rate in the world. It is also the ONLY country that taxes profits made overseas.

Is it ANY wonder businesses would flee to a more hospitable environment?

‘Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.’

– Judge Learned Hand, Gregory v Helvering, 69 F.2d 809, 810 (2d Cir. 1934), aff’d, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)

Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.

– Judge Learned Hand, Commissioner v Newman, 159 F2d 848 (1947)

Resist We Much on August 4, 2014 at 7:55 PM

HEY … Jonathan ! … (and all the rest of you “Marxists) . . . . . . . . . . . .

Businesses of any type, kind, or SIZE (includes corporations) do NOT exist to be a “social service”.

They owe NOTHING to the country.

listens2glenn on August 4, 2014 at 7:46 PM

He went just short of saying every private business should be Nationalized in that article. The stupid is strong with that one and the majority of commenters about his article.

Johnnyreb on August 4, 2014 at 7:56 PM

Many of the same conservatives who believe, along with the Supreme Court, that corporations are people, apparently don’t think that companies have any of the obligations of citizenship.

Last time I checked, it was not illegal for an American citizen to emigrate to another country and give up his/her citizenship. In fact, with the Democrats dictating tax policy in this country, the rates at which Americans are giving up being Americans is higher than it’s ever been.

When a company signs a NDA it gets something in return. What are the Democrats promising corporations in return? And why would anybody believe them?

Socratease on August 4, 2014 at 7:59 PM

A simple tax code would put too many workers (especially at the IRS) out of business, so it’ll never happen. Accountants/tax attornies work to find/exploit loopholes, and the IRS audits the returns. It’s the equivalent of digging a hole with a steamshovel then filling it back in.

Good Solid B-Plus on August 4, 2014 at 8:01 PM

As an investor, publicly held corporations have a fiduciary responsibility to maximize their profits within every legal means at their disposal. My investing gains have put my kids through college.
To purposefully decide to lessen profits is to purposely hurt every investor who owns shares.
But that’s the left, lead with a stick, instead of a carrot. How about we counter the supposed lost revenue, by attracting more corporations here by lowering taxes instead? Never an option…

redshirt on August 4, 2014 at 8:01 PM

Obama: “Hey Apple, outsourcing all those manufacturing jobs is fine. Hiring as many H1B visa holders as you can to replace American workers because you can get them at at fraction of the price is fine. You, too, Google. Just don’t take those tax dollars out of the country and shelter those billions in Bermuda. “

thatsafactjack on August 4, 2014 at 8:02 PM

Considering that the book of US Tax Code for both individuals AND businesses is so damn big it makes the White AND Yellow Pages feel…inadequate.

Cripes, I bet I could line up the code up on its end, fire a .50 BMG through the first page and not EVEN hit the Index, let alone the antiquated crap near the middle.

BlaxPac on August 4, 2014 at 8:03 PM

I had a Facebook friend criticize corporations for leaving because there are so many people out of work. I reminded her that unemployment has fallen to the low 6% level and that the economy is booming at 4%. At least according to official government statistics. I say live by the sword, die by the sword. Libs can’t have it both ways.

COgirl on August 4, 2014 at 8:04 PM

So many problems would be solved if we just eliminated the corporate income tax altogether.

Count to 10 on August 4, 2014 at 8:23 PM

Tell me again how silly and crazy Atlas Shrugged was…

emz35 on August 4, 2014 at 8:24 PM

So many problems would be solved if we just eliminated the corporate income tax altogether.

Count to 10 on August 4, 2014 at 8:23 PM

Many more would be solved if we simply got rid of all sliding scale taxes and just simply made people pay for the government they vote for.
No pay, no vote.
No taxation, no representation.
Taxation, representation.
highly taxed, highly represented.
Lowly taxed, lowly represented.

No one voted without paying taxes when this nation was first created. You had to either own land which was taxed or owned a business which was taxed.

Time to go back the the tried and true form of Constitutional Republicanism. Time to strike all the leeches from the voter roles.

astonerii on August 4, 2014 at 8:28 PM

Tell me again how silly and crazy Atlas Shrugged was…

emz35 on August 4, 2014 at 8:24 PM

It only thought that entrepreneurs and inventors had value in society. The laborers, no matter how honest and hard working were worthless. It was plenty silly and crazy.

astonerii on August 4, 2014 at 8:29 PM

astonerii on August 4, 2014 at 8:29 PM

Um, no. Completely incorrect but thanks for playing.

emz35 on August 4, 2014 at 8:32 PM

Um, no. Completely incorrect but thanks for playing.

emz35 on August 4, 2014 at 8:32 PM

Point to the laborers that John Galt invited into the Gulch then.

astonerii on August 4, 2014 at 8:37 PM

astonerii on August 4, 2014 at 8:37 PM

Eddie Willers (and his father and grandfather) represented valued workers.

emz35 on August 4, 2014 at 8:43 PM

But to answer your specific question (because Eddie never went to the gulch), the Fishwife.

emz35 on August 4, 2014 at 8:49 PM

Makes that fundraising a very interesting proposition. And in a lifetime the existing parties vanish. Yes, that would be a very interesting change, indeed.
ajacksonian on August 4, 2014 at 7:31 PM

Ditto. And throw in an expiration date for copyrights.

Imagine how many series of Mickey Mouse spun out by OTD (Other Than Disney), not to mention streams of tax revenue by fresh creators telling their version of the Mouse. Heh.

AH_C on August 4, 2014 at 8:51 PM

If Alter wants to make corporations into citizens that means that corporations can vote.

Corporate personhood has nothing to do with citizenship. “Person” and “citizen” are legal terms with different meanings. All persons are not citizens. Courts have given personhood to corporations, but have never said that a corporation is a citizen.

Mark1971 on August 4, 2014 at 8:58 PM

FishWife: Galt says she “wouldn’t be published outside. She believes that when one deals with words, one deals with the mind.”
Not exactly just a fisher, eh? You see, they did not take in simple workers to Galt’s Gulch. You had to have more than just the simple philosophy of value for value. You had to be exceptional and beyond the normal person. Otherwise, you were worthless and deserved to suffer as the world collapsed.
Do not mistake my position. I am solidly conservative, and that is why I took notice of the lack of actual laborers at Galt’s Gulch. I understand that you need two things to create real wealth. Ideas and the action required to turn those ideas into wealth. Atlas Shrugged got rid of the lower and middle class and replaced them with machines.

astonerii on August 4, 2014 at 9:08 PM

Except she was just a fisher, who also wrote – it’s how she made her living.

Anyway, this is all completely aside from the point I was making in the comparison. My point was that just like in AS, they’re proposing a ridiculous law as a fix for the results of other burdensome laws and regulations that corporations are trying their best to deal with.

emz35 on August 4, 2014 at 9:14 PM

Wow, so my question from the other thread seems to apply here too…

When will the DimocRat party go ahead and hold the official vote to change the party name to the New Nazi party?

PLUS, any leftist that starts to use something like “many Conservatives say”, in their argument, I basically stop reading/listening right there. Because everything from that point on is either a bald faced lie, or a bassackwards distortion, guaranteed.

Meople on August 4, 2014 at 9:16 PM

emz35 on August 4, 2014 at 9:14 PM

Ok…
I liked the books. I think there is quite a bit in them to use as examples of why regressivism is bad for the country.
I just know they are not complete or real. And there are a few things that are just plain out there in them.

astonerii on August 4, 2014 at 9:20 PM

astonerii on August 4, 2014 at 9:20 PM

Agreed 100%, I’m certainly no objectivist. But I do think the book had a lot of insight to offer and it’s a bit creepy how so many current affairs mirror the picture she painted.

emz35 on August 4, 2014 at 9:24 PM

Now it’s time to change the “D” and expect the same from boards of directors—a “non-desertion agreement” with the John Hancock of every board member and CEO in the United States.

Can’t allow the slaves to flee from the Plantation.

What prevents mergers with overseas corporations such where the corporate headquarters is somewhere other than the united States?

Corporations also have something called investors who can decide to pull their money from a losing American enterprise and put it in foreign competitor – except what has happened in the past few years is the incredible evil of FATCA which pretty much destroys the ability of Americans to invest or even engage in banking outside of this country.

We mock this fool now, but they have already put in place a Berlin Wall on American investment money.

Reuben Hick on August 4, 2014 at 9:36 PM

Agreed 100%, I’m certainly no objectivist. But I do think the book had a lot of insight to offer and it’s a bit creepy how so many current affairs mirror the picture she painted.

emz35 on August 4, 2014 at 9:24 PM

Why? Has human nature changed over the millennia of human existence?

The history of mankind is nothing more than a grim spectacle of Groundhog Day, where evil keeps repeating what works, and discards or refines what failed – until the day the Beast finally “beds the girl” and it is Game Over.

Reuben Hick on August 4, 2014 at 9:39 PM

Reuben Hick on August 4, 2014 at 9:39 PM

I suppose you’re right. Maybe it is just denial, watching the “shining city upon a hill” finally go dim on our watch.

emz35 on August 4, 2014 at 9:49 PM

Agreed 100%, I’m certainly no objectivist. But I do think the book had a lot of insight to offer and it’s a bit creepy how so many current affairs mirror the picture she painted.

emz35 on August 4, 2014 at 9:24 PM

.
Why? Has human nature changed over the millennia of human existence?

The history of mankind is nothing more than a grim spectacle of Groundhog Day, where evil keeps repeating what works, and discards or refines what failed – until the day the Beast finally “beds the girl” and it is Game Over.

Reuben Hick on August 4, 2014 at 9:39 PM

.
The Anti-Christ, False Prophet, and the “Beast” aren’t going to do SQUAT … until we’re outta’ here.

I mean … unless you allow them to “steam-roller” over you.

listens2glenn on August 5, 2014 at 9:12 AM

Alter is just venting here rather than offering an intelligent solution to the problem. I’ll offer one instead, or even two: Change the tax codes for both individuals and corporations to a flat-rate system that has no deductions or loopholes. Better yet, change the individual tax system to flat-rate and eliminate the corporate tax system altogether.

Egad, no. The only way to make this work again is to repeal the 16th Amendment and return funding of the national government to the states (and duties and fees). Ironically, if you were to do so, companies would probably stay in the US – because they could move from state to state to obtain the best tax situation, rather than having to move overseas.

The national (nominally ‘federal’) government should not be taxing the citizens of the sovereign states. They should get their money from the states. It would stop this sort of thing in its tracks.

GWB on August 5, 2014 at 9:39 AM

So, corporations don’t like our high taxes.

But we can’t lower corporate tax rates because…why, because that would actually make sense?

Archangel Nation on August 5, 2014 at 11:44 AM

A typical Altered state of mind.

Olo_Burrows on August 5, 2014 at 10:03 PM