Corporate Citizens

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What is the proper level of corporate taxation? According to those on the left, a lot higher than they currently are, while those on the right can’t imagine they could ever be low enough. They can’t both be right, can they? Of course not, but it is possible they could both be wrong.

In order to understand the debate, one first has to consider what a corporation is and why it exists. In the early 19th century, the industrial revolution almost came to a shuddering halt because most rich people were not entrepreneurs (they still aren’t but that’s another issue). The idea of capitalism is that you risk your money in hopes of a large return in the future. Rich people liked the idea of large returns; risk, not so much. Especially when that risk meant not just potential loss of money, but, if things went badly wrong (say, if a bridge collapsed or a well got poisoned) with a business venture, the risk of personal responsibility and, even, jail time. Why chance it when you can buy a nice country estate?

The idea of the corporation was an old one, arising out of the model of business partnerships. But, still, a dozen backers might lower the financial risk to any one of them but not necessarily the criminal risk. Limited liability only could take you so far. But suppose we were to treat the corporation as “an artificial person,” that is as an entity separate from the people who own it, the criminal and civil risk now falls on it rather than its owners (as long as they acted in good faith and didn’t actually direct the company managers to break the law). Whew—the capitalist class collectively sighed and the rest is history.

In fact, it is so embedded in history, corporations are allowed to mess in elections as if they were people (at least in the USA) and boards are able to claim no knowledge of the wrong doing (say, illegal bribes in Libya) of their employees. But, of course, corporations can’t go to jail or be executed—though they can be fined or forced into bankruptcy. And, the managers who broke the law can be imprisoned and, of course, fired and excoriated by the board and stockholders.

Even the left have completely bought into this pleasant fiction of the personhood of corporations, forgetting that every single corporation in the world is owned by somebody. Now, I’m not saying we should throw rich people in jail every time a corporation goes astray (though I’m not averse to the idea) but I do think, for the purposes of taxation, we shouldn’t let them hide behind the protective walls of corporate tax laws.

Because here’s the thing: in almost every jurisdiction, corporate and business taxes are effectively lower than personal income taxes (even if they are similar on paper). I’m not just talking about the tax rates of the rich—most middle-class people pay taxes at or above that charged to corporations.

So instead of racing to the bottom to try to attract corporations to move from one province or one country to another, maybe we should reduce the corporate tax rate to zero—and assign their profits (and losses) to the people that own them. This would require much simpler tax laws and closer auditing to ensure creative accounting didn’t make profits magically disappear and maybe stricter penalties for tax evasion (both for the evaders and the accountants who help them).

And here’s the thing, it should also make markets more efficient as risk and reward became more transparent and people make choices in their own best interests, instead of going along for the corporate ride.

And that’s ten minutes

The Man Who Would Be King

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During the years between the end of the American Revolution and the drafting and adoption of the constitution, there were lots of ideas of how the new country should govern itself. Some even suggested a monarchy and, while that idea didn’t gain much traction, it must have made the drafters a little nervous because they made sure that no President could ever assume the powers imbued in a King.

The constitution was deliberately designed to limit the power of the president by checking and balancing his powers and responsibilities with those of Congress and the Supreme Court. The President of the USA is not called the most powerful person in the world because of his unlimited authority but rather for the size of the American economy and the power of its armed forces and nuclear arsenal. In terms of getting his own way, a Prime Minister with a majority in Parliament can exercise more raw authority.

The drafters must have gotten it right since the American Republic (a better description than democracy) has survived presidents who were drunks, thieves, liars, and buffoons. Although the union (more perfect but not actually perfect) teetered at times – especially during the years leading up to and following the Civil War, it never collapsed.

There are those who worry that things have changed in America and that the current President might – by intent or by accident – break the system once and for all. There are reasons to fear. Congress has become increasingly partisan and, due to gerrymandering, the advantage of incumbency and the role of big money, less sensitive to bad polls or even bad election results. The Republicans have gained a tremendous edge in winning more seats that their popular votes warrant and seem unlikely to turn against the president, even as his approval ratings fall.

The recent sacking of the head of the FBI, while certainly neither unconstitutional nor unprecedented, is a worrying sign. The absolute insouciance of the Republican leadership regarding the matter is even more worrying. Worst of all are the rumours that Trump is demanding oaths of loyalty – not to the Constitution but to him personally. That begins to sound more kinglike all the time – or at least, more like a tin pot dictator of a banana republic, since kings are largely passé.

But there is hope on the horizon. Some Republicans have rediscovered their principals while others have begun to grow worried about their jobs. The courts have been consistently rolling back the efforts of state governments to gerrymander congressional districts in favour of their own party, which, if it continues, will severely limit the ability of the Republicans – who have natural advantages in the Senate and Oval Office – to dominate the House of Representatives, which was always meant to be a close reflection of the popular vote.

The renewed activism of American citizens is also a good sign but whether it can be maintained for two or four years is always open to doubt. Democracy is hard and fighting for your rights is a tiring business. The Democratic Party needs to change, too – finding ways to make allies in the Republican Party rather than vilifying them at every turn. I remain, as ever, optimistic.

And that’s ten minutes.

Right to Die

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Yesterday, an 81 year old man suffering from terminal cancer and in terrible pain that could not be relieved or mitigated was assisted in dying by his physician. This came one day after a judge ruled that the procedure could go ahead. This was the first individual, outside of Quebec, to use the Supreme Court ruling of last year to end his life.

Quebec and the Supreme Court have long been critical to changing the law to reflect the changing social mores of Canada. It was Quebec courts – or more specifically Quebec juries – that initially struck down the provisions of the Criminal Code prohibiting abortion. The Supreme Court ratified those decisions and when the Canadian Senate refused to pass new laws proposed by the Mulroney Conservative government, Canada became the first country in the world to have abortion a matter of public policy rather than of the law.

Once again it was case law from Quebec that led to the Supreme Court to strike down the criminal code provisions against physician assisted death and establishing the court-approval process in advance of a new law being passed by Parliament to regulate the process. This law is expected to pass (as required by the Court) by the end of June.

What is most striking about this decision is that it is a reversal of the decision the Court made twenty years ago in the Sue Rodriguez case. Then, in a split ruling, the Court ruled that assisted suicide would remain a crime and that those suffering an inevitable and painful demise had no recourse.

There are those who argue that this is a slippery slope and that it is immoral. There is no evidence for the former and the latter is a matter of debate – a debate that will undoubtedly occur in the House of Commons and the Senate. The government is likely to create a system of approval rife with safeguards and oversights. It is critical that the right to die remain an individual right – with decisions made solely by competent individuals free from family or institutional coercion.

The right to die decision – like the abortion one before it – was based in a legal argument that the law, including constitutional law, must evolve and may change as society changes. The Courts in Canada have not always been so liberal in their interpretation – we had to send a case to the Law Lords in London to recognize that women were persons back in the 1930s – but have grown more flexible when Canada adopted its new Constitution along with the Charter of Rights and Freedoms.

This is quite different from the debates that rage in the United States where some believe the Constitution should be interpreted as the founding fathers intended (though the same jurists made an exception for Second Amendment rights in the greatest example of judicial activism ever). They accept – barely – those amendments that outlawed slavery and gave women the vote, but otherwise want to lock America into a past that has long ceased to be relevant to most modern Americans.

Yet another reason I’m thankful for being born Canadian.

And that’s ten minutes, eh?