Corporations, democracy, and the U.S. Supreme Court
Mason Gaffney, February 24, 2010
On Jan 21 2010 our High Court shocked Americans by ruling in
Citizens United v.
Federal Elections Commission
that a corporation may contribute unlimited funds advertising its
views for and against political candidates of its choice - in practice, the choice of its CEO or
The ideas behind this are that a corporation is a “legal person”, with all the rights (if
not all the duties) of a human being;
that as such it has a right of free speech;
and that donating
money is a form of speech.
Already K&L Gates, a top Washington lobbying firm, is advising its
clients how to funnel money through lobbying groups or “trade associations”.
This culminates a
long series of actions and reactions (decisions, legislative acts, and electoral results) that bit by
bit have raised the power of corporations
in American economic and public life.
Herein I will
take the fall of the corporate income tax as a simple metric of the power of corporations.
Nothing about corporations is that simple, however, so I must also touch on other aspects of
Some critics react apocalyptically, calling
a death blow to democracy;
some cynically, calling this merely making
what is already
saying the Court ruled more broadly than justified by the case brought before it.
naturally, take this contentedly as righting an injustice of long standing.
would applaud this as a step toward sunsetting the corporate income tax, by electing more
candidates beholden to corporate money.
Many of them – not all -
have been seeking this end
for years in their learned journals and op-eds.
Even the late Wm Vickrey, otherwise an
egalitarian, gave high priority to this change.
This writer does not applaud either sunsetting the tax, or this step.
I agree with Joseph
Stiglitz that the corporate income tax is mainly a tax on economic rent.
That means that a high
tax rate does not destroy the tax base.
Martin Feldstein, an economist who is as conservative as
Stiglitz is liberal, also sees the corporate income tax as a tax on economic rent (1977, p.357).
is not the ideal form of such a tax, but it beats any tax on work, or sales of the necessities of the
poor, or value-added, or gross sales.
Both Vickrey and Stiglitz rate high in the profession and
so we cannot simply appeal to “authorities”.
To prepare our minds, let us
review some milestones in the history of corporations, especially in America.
This is not a paper on the theory of tax incidence.
Such a paper is needed, but would take
a heavy tome, most of it devoted to fine-spun and pretentious theories that appear in academic
journals, and which fail to convince because the authors are weak on distinguishing land from
capital. My own postulates here, in brief, are 1) that corporations own a large fraction of the
wealth in the country; 2) much of that wealth is land; 3) taxes that do fall on capital are in part