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.