Mitt Romney’s explanation of why he’s against raising taxes on corporations — indeed, America already has some of the highest corporate tax rates in the developed world — at the Iowa State Fair was a bit awkward but not wholly incorrect. Reason’s Katherine Mangu-Ward has a good post with video and transcript, but here’s the salient bit:
ROMNEY: We have to make sure that the promises we make — and Social Security, Medicaid, and Medicare — are promises we can keep. And there are various ways of doing that. One is, we could raise taxes on people.
AUDIENCE MEMBER: Corporations!
ROMNEY: Corporations are people, my friend. We can raise taxes on—
AUDIENCE MEMBER: No, they’re not!
ROMNEY: Of course they are. Everything corporations earn also goes to people.
AUDIENCE: [LAUGHTER]
ROMNEY: Where do you think it goes?
AUDIENCE MEMBER: It goes into their pockets!
ROMNEY: Whose pockets? Whose pockets? People’s pockets! Human beings, my friend. So number one, you can raise taxes. That’s not the approach that I would take.
Now, obviously, Romney is not saying that corporations are living, breathing beings with rights to abortion (or not, or depending on the stage of development of the fetal/baby corporations) and marriage, who are subject to Obamacare’s individual mandate (or even Romneycare’s for Massachusetts corporations), can be put to death if they murder someone, and so forth. He means that corporate money always comes from, flows through, and ends up in human hands. It cannot be otherwise: we are the only beings/entities/“things” on the planet that deal in money. Not even the honey badger does that.
I probably would’ve phrased it differently — Democrats and left-wing activists are already having a field day (for example, mixing Romney’s speech with Barbra Streisand’s singing “People”) — but there’s really nothing wrong with Romney’s point. Indeed, it’s the tax-policy corollary to the legal point I’ve been making ever since Citizens United came down: corporations don’t have constitutional rights because they’re corporations, but because they’re made up of individuals, who don’t lose their rights when they associate (in corporate form or otherwise).
As I said in a previous blogpost, “it really doesn’t matter that ‘corporations aren’t people.’ Of course they’re not living, breathing human beings, and their ‘personhood’ for legal purposes is just that: a convenient legal fiction.” I even wrote a law review article (co-authored with Caitlyn Walsh McCarthy) to explain this fairly simple argument. From the abstract:
When individuals pool their resources and speak under the legal fiction of a corporation, they do not lose their rights. It cannot be any other way; in a world where corporations are not entitled to constitutional protections, the police would be free to storm office buildings and seize computers or documents. The mayor of New York City could exercise eminent domain over Rockefeller Center by fiat and without compensation if he decides he’d like to move his office there. Moreover, the government would be able to censor all corporate speech, including that of so-called media corporations. In short, rights-bearing individuals do not forfeit those rights when they associate in groups.
Similarly, when you tax corporations, you’re taxing the people who ultimately profit from corporate activity: officers, directors, and, most directly, shareholders. Of course, all these people also pay individual income taxes so, in effect, that income is being taxed twice. I’ll leave it to my colleague Dan Mitchell to explain why that might be bad and how otherwise to reform our tax code, but the fact of the matter is that raising corporate taxes does in fact constitute raising taxes on people — which you have to be against if you want to become the Republican presidential nominee. That’s why Romney said what he said.
Anyhow, the title of my article is “So What If Corporations Aren’t People?” but perhaps I should retitle it “So What If Corporations Are People?” and offer it as a press release to the Romney campaign.
