Geoffrey, how is taxing an oil company protecting the well-being of the whole commonwealth?
First, I dealt, in general, with the legitimacy of the taxation power of the state in an earlier comment on this same post.
From a Constitutional standpoint, Congress has the freedom to regulate interstate commerce (it even has a name, the commerce clause). Second, from a theoretical standpoint, it is important to remember that businesses exist because of government; markets exist because of government. Without the monopoly on police power enjoyed by the state, there would not be enough order to control forces that would destroy any economic regime. Furthermore, since corporations are entirely a product of the state, I see no reason in the world why the state should not regulate them in some manner.
Furthermore, in order for the state to continue to exist to provide a safe area in which economic activity can thrive, taxation is necessary to fund the continued police power of the state. This is an elementary bit of political theory. It is also common sense. If corporations want to operate without rules, they need to understand that not only will there be no regulation or taxation, there will also be no protection from criminal activity directed against them, or unethical, immoral or other actions detrimental to their continued survival in such a non-state as well.
I think this answers Cameron's question in general, should he care to read it again. If not, I shall elaborate.
States have been exercising taxation power from time immemorial. From a practical standpoint, the power to tax needs no theoretical justification; it has always been a part of our common life. To pretend otherwise is to ignore history and reality. No one enjoys paying taxes in any form, whether it is income taxes, sales taxes, property taxes, what have you. Virginia has what is colloquially known as a "personal property tax", but is just a "car tax"; it is so loathed that one governor, Jim Gilmore, road to victory in 1997 by promising to rebate all of the previous year's personal property tax payments. This kind of feaux-populist garbage may win votes and influence various pin-headed "thinkers", but it hardly constitutes good government or good policy making.
Corporations have been deemed, by Supreme Court ruling, persons under the law. As such, they are not just subject to (somewhat limited) freedoms and rights (including limited free speech rights and protection from illegal takings under certain conditions), but are also subject to certain obligations with which persons must comply, under the law. One of those obligations is to contribute monies to the state for its continued existence.
Unlike ideologues of all kinds, whether they be socialists, free-marketeers, libertarians, or dyed-in-the-wool syndicalists, the fact is that, in the United States, our laws define what is and is not "proper". Congress, the people's representatives, enacts laws, which are in turn signed by the President. Provided these laws do not abrogate the Constitution that sets the limits on state action, these laws define what is in the best interest of the entire country. If Congress decides that a windfall profits tax should be levied on Big Oil, by definition that makes it in the interest of the entire commonwealth.
I believe we are a non-ideological society. We are a constitutional republic; as such, we are defined not by some theory of government, whether based in economics, race, culture, or what have you. Unlike Britain, whose constitution is unwritten, who we are is set down in a piece of paper hammered out in compromise, first, by a bunch of gentlemen farmers, lawyers, publicists, and businessmen back in 1787, and then amended on occasion in the ensuing 220-plus years to reflect changing attitudes (mostly a growing democratic and egalitarian spirit). This document is all the theory we Americans need to really understand what the state is and how and why it acts.
I think it only fair to repeat - the state has always enjoyed the right to tax those who enjoy its protection. Requiring those who live under the umbrella of its protection to contribute to that protection is a fundamental duty of the state. We can quibble over what constitutes a proper level of taxation, or whether a particular group or another is contributing its fair share; that is the work of legislatures. At its most basic level, however, the fact remains that taxation of any kind is part and parcel of living as a social animal.
6 comments:
Thanks for the reply and clarification Geoffrey.
There are two quotes that pique my interest. First, is the apparent reason given for taxation:
"provide a safe area in which economic activity can thrive, taxation is necessary to fund the continued police power of the state."
Is policing what taxes are for? Funding a police force, military etc?
I could extend 'policing' to include creating a safe economic environment that encourages participation and prevents monopolistic actions.
But that's still a pretty narrow scope of governmental power. In terms of the windfall profits tax, I'm not sure how it can be argued that those revenues would go for policing duties. Unless, I suppose, those monies are earmarked for something specific like a war funding bill or something similar.
Second, you argue that if Congress passes something, then by definition it is in the best interest of the Commonwealth:
"If Congress decides that a windfall profits tax should be levied on Big Oil, by definition that makes it in the interest of the entire commonwealth."
But it can be argued, and has been argued on these pages, that just because Congress passes something doesn't make it right or correct. Nor does it mean citizens must simply accept it.
Third (I know I said two, so sue me), you argue that corporations have been granted personhood by the state and therefore should be taxed just as people are. And they are. But a windfall profit tax is something I'm fairly certain no private citizen has ever faced. If a person's income increases, then so does the corresponding tax burden according to existing tax tables. What is the rationale for changing this method by way of a windfall profit tax?
Certainly Congress from time to time passes legislation that most Americans dislike, but we have recourse to remove those representatives who voted against our interests - or at least, that's the theory.
The problem our government faces is that corporations are not really persons - they are super persons. The courts have insisted that they have all the rights and protections of actual citizens (humans) and none of the responsibilities. When a corporation commits a crime, we don't put it in prison or administer the death penalty. In most cases, the corporations have bought legislative immunity anyway.
When oil companies wreak havoc on the economy by raising prices while they are raking in record profits, that is simply irresponsible and unpatriotic. A windfall profits tax is one way to rein them in, but I would prefer we revoke their corporate charter and sell their assets, or just nationalize them. Of course, that's just the kind of commie talk that gets people all upset.
When corporations commit crimes, they are fined and their management is put in jail. Not to mention that their stock price plummets. And then Congress overreacts and passes legislation everyone regrets a year or two down the road.
And in terms of taxes, they are treated as people. They earn income and are taxed on this income. So why an additional windfall tax on corporations that an individual taxpayer doesn't face?
"When oil companies wreak havoc on the economy by raising prices"
Did the oil companies raise the prices?
First, Cameron, thank you for your reply-reply.
Police power is an all-encompassing term that refers to the order the state imposes upon anarchic disorder. Part of the police power is the regulation of markets through law.
You make the general statement that just because Congress passes a law doesn't make it right or correct. That is a category confusion. Again, by definition a law passed by the people's representatives is "correct", even if a large plurality disagrees with it. This is what makes democracy so messy and confusing. Even a law, such as segregation or micegination, that many people find "immoral", can be argued to reflect the will of the majority at the time it passed. Of course, as society changes, and these laws continue on the books, they become increasingly irrelevant, or grate against the sense of what should be proper in our society.
This is a good argument against using the courts to overturn antiquated legislation, such as segregation. Of course, the problem with this argument is that, for the most part, there is still a vocal, active minority or plurality, willing to act to prevent the repeal of a law that is the cornerstone of a social order. Again, this is what makes democracy so messy.
Specifically to the point in question, requiring a corporation to provide its share to the common funds available for it to thrive is hardly wrong or bad. And, to repeat myself, should Congress determine that a certain profit level or income level be outside the bounds, even if it cannot be traced directly to illegal activity, it may show the intent of Congress to ensure that inordinate profit-making - at a time of stagnant growth in other corporate sectors as well as in the economy in general - be controlled. Again, there is no absolute standard against which this can or even could be measured; these are determinations based on each case, and the circumstances in which they occur. Reasonable people can disagree, even vehemently and violently, over these things. This is what makes democracy so messy.
Figuring out the rules beforehand, figuring out what is right or correct beforehand, determining beforehand that certain social, cultural, or economic activities are a priori outside any legitimate legislative purview is a fool's game, precisely because, under the rules of the road, if Congress determines such to be so, then they are. Reasonable people can disagree, even vehemently and sometimes violently, about these things, but using an absolute standard only confuses the subject, rather than providing clarity. Whether the subject is taxation, abortion, race relations, war and peace, or what have you, each issue exists within its own set of rules, and the politics proceeds according to the relative influence and power of the various groups at odds over the particular question. Politics, in the end, is about power and influence, not rational argument, or prior rights. The assertion of a right is the assertion of a limit to government action. They are pretty clearly stated in the Constitution (I am one of those liberals who doesn't believe in Justice Douglas' creation of a "right to privacy", by the way). Economic rights are not among those enumerated, nor should they be. Reasonable people can disagree over these things, and disagree vehemently and sometimes violently. This is what makes democracy so messy.
I am SO glad you cleared up that overly narrow notion of "police power."
I think everyone should be honest about a windfall profits tax: It's a special tax, it's a "taking" in the general sense, and sometimes such special taxes are justified. You won't find this Okie ragging on energy companies; nobody gave a damnn when oil was $9 a barrel and towns in Oklahoma and Texas were drying up and blowing away. You won't see me complaining about belated energy profits. But you will also not hear me saying it's wrong for the country to skim some of the current profit off the top.
"Police power is an all-encompassing term that refers to the order the state imposes upon anarchic disorder. Part of the police power is the regulation of markets through law."
I understand this principle, but how does an "extra" profit tax fit in?
In other words, to go back to the original question, how does this "windfall profits tax" protect the well being of the commonwealth?
What I've gathered from the comments so far is that some taxes are necessary and Congress can tax what it wants. But in a representative democracy, how do I decide what I want my representative to do?
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