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Chapter 14
How should the burden of the corporate and business tax be distributed, that is, how should the tax rate be scaled?

The corporate and business tax should be levied against annual gross revenue, not net profit. Since gross revenue is a much larger figure than net profit, the tax rate would be much lower.

Taxing annual gross revenue would simplify and rationalize the tax on corporations and businesses. As things stand today, the government and businesses haggle about what is revenue and what is profit. The result is a labyrinth of complex tax code in which corporations, with the help of their servants in government, foist the cost of every kind of luxury such as expensive meals, travel, executive office appointments, and every kind of employee perk onto the taxpayer. In taxing gross revenue rather than net profit, insofar as taxes are concerned government scrutiny could be removed entirely from the profit area of businesses, and businesses would begin to make decisions concerning operating expenses and capital expenditures based entirely on sound business judgment rather than on how much they can get away with shoving unto other taxpayers.

Businesses and government would, however, continue to haggle over annual gross revenue. Getting less than honest businesses to report all of their revenue would likely be the central problem. While determining net profit in the current tax system is a tricky business, in the new system determining gross revenue would be a much simpler matter. Just as entrapment is used against those who commit drug and sex crimes, it could easily be used against a business that does not honestly present receipts to customers and record and report its revenue.

Government would probably have insufficient resources to adequately monitor all that it would like to monitor. In this matter government would have a friend if it cared to use it: the American people. Anyone could attempt to make an improperly conducted purchase from a business, that is, a purchase lacking the proper receipts, paperwork, etc. which would normally necessitate the business’ entering of the transaction into its own records. If successful, said purchase could be reported to the appropriate government agency. Focusing a bit of its limited resources on the suspect business, the government agency could itself attempt to make such purchases from the company. If successfully entrapped and prosecuted, the person originally reporting the business to the agency could be rewarded handsomely, a certain percentage of the fines paid by the company. Some people might even make a career of it. Companies may attempt to entrap competitors. Disgruntled employees or ex-employees could blow the whistle on their cheating employers. Disgruntled customers could get even with a business if the business could be proved to be conducting illicit transactions. Businesses that keep their sales procedures and revenue records squeaky clean, i.e., honest businesses, would have nothing to fear. Evasion of the reporting of revenue could become rare and could come to be considered socially taboo.

This demos issue would require yet another kind of display on its page and response from the voter. The issue would be presented as a line graph. A vertical line along the left edge of the graph, the vertical axis, would be labeled at intervals from bottom to top with percentage tax rates, i.e., 0%, 1%, 2%, 3%, etc. A horizontal line along the bottom edge of the graph, the horizontal axis, would be labeled from left to right with annual gross revenue amounts, i.e., $0, $1,000, $10,000, $100,000, $1,000,000, etc.

The single line currently displayed on the graph, the percentage tax rate line, would represent the current consensus of the demos electorate on the issue. A demos member would vote on the issue by selecting various parts of the tax rate line and coloring them green, yellow, and red to indicate which portions of the line and, therefore, the tax rate should be increased (green), kept at their current level (yellow), and decreased (red). Methods of voting are discussed in more detail in Appendix 1.

Depending on the consensus of the demos, the tax rate line could tend toward the horizontal, thus tending toward a “flat tax,” the same tax rate for all corporations and businesses. A horizontal line at the 3% level would represent a flat 3% tax rate on all corporations and businesses. A horizontal line at 0% would mean that there would be no tax on businesses at all. Or the tax rate line could curve upward as the line extends toward the right edge of the graph. This would produce a progressive tax rate in which businesses with larger gross revenues would be subject to a higher tax rate than businesses with lesser revenues. The calculation of taxes is discussed in Appendix 2.

This ability of the demos to set a flat tax rate at some level or a progressive tax rate would give it a very important control over corporations and businesses. Not only should “we the people” have control over the size of the government under which we live, but we should have control over the size of corporations and businesses that are allowed to exist.

We need not look to the heavens in fear of hostile aliens. In the form of the modern corporation, we have created an alien form of ‘life,’ a Frankenstein, which, both within and without, consumes humans for profit and growth. Our world has become a “corporate world” in which giant multinational corporations push governments, employees, and consumers around everywhere on the planet, reducing almost everyone to insignificance and servitude. The largest corporations have reached the size where they are larger and more powerful than most governments. Even the American government struggles beneath their power.

Just as, among other reasons, the creation of a strong national government was the plutocratic founders’ countermove against rising democracy at the state level of government, multinational corporations today can be seen as a plutocratic countermove against the democratization of governments around the world. Using multinational corporations to perform end runs around the world’s governments, their principal owners, the elite’s elite, now hold a global hegemony of power and wealth. With resources strategically stashed around the globe, the global elite now reside in a worldwide stratosphere of power and wealth high above the turmoil and inconveniences of lesser mortals and particular nations. In the form of the multinational corporation, the age-old dream of the few of the perfect management and exploitation of the many has become a reality.

No corporate or business entities can be allowed to become more powerful than the federal government, which is (or at least should be) the sacred embodiment of our most fundamental agreements and relationship as a people. No legal entity should be allowed to exist which places so much power into the hands of a single individual that the freedom of all other individuals becomes reduced. Corporations should not be allowed to literally take over the world and enslave us. Corporations are not structured in a manner similar to a democracy but in a manner similar to a feudal system complete with its aristocracy and serfs or in a manner similar to an authoritarian state complete with its dictatorship. In allowing corporations to become mightier than the government, even if the government is rendered more democratic the nation as a whole still moves toward increased authoritarianism.

Corporations should not be allowed to grow to a size and power beyond which we as a people desire. The creation of a demos within the American government (and within all governments in the world) with the power to set the tax rate on the annual gross revenues of corporations and businesses would remove supreme power from the multinational corporations and return control of our world once again to “we the people” where it rightfully and morally belongs.

Also, the demos method of electing the president, senators, and representatives described in this book would place a new breed of people into government, people who would be more responsive to the will of the entire populace rather than to the mighty few. These people would examine and correct the rules under which corporations were allowed to exist, rendering them more serviceable to the needs of all of us.

How does demos control over corporate and business annual gross revenue tax rates give it control over the size of corporations and businesses? If the consensus of the demos results in a significantly progressive, i.e., steep, tax rate on larger gross revenues, then the tax burden would become unbearable were a business to receive revenue beyond certain amounts. It would become a sound business judgment to break the business into two or more independent businesses with lesser tax rates rather than incur the steep tax rate of the single large business. On the other hand, if the electorate wanted to allow businesses to grow to any size without any interference, all that it would have to do is to set a low or even a zero flat tax rate.

It should be the law of the land and of the entire world that one business or corporation may not own another business or corporation. Two or more businesses should be allowed to merge into one business entity, and one business entity should be allowed to split into two or more completely independent business entities. In every case each business entity should be taxed on its annual gross revenue as described in this chapter.

So long as one business is allowed to own another business or a collection or hierarchy of them, either 1) the ultimate parent business should be taxed at the rate of the sum of its own annual gross revenue plus the revenues of all of the businesses it owns, or 2) each of the businesses within the hierarchy should pay its own taxes on its own annual gross revenue, but all of the businesses should be taxed at the rate that the sum of their annual gross revenues would be taxed. However a corporation or business is legally defined and structured—as a single legal entity, as a simple collection of entities, or as a hierarchy of entities—it is still a monolithic power and should be taxed as such.

Also, only individual persons, as individuals, should be able to make campaign or other political contributions, not corporations, businesses, or any other entities or groups. The argument that this would be a violation of free speech is nonsense. The First Amendment protects the free speech of individuals; it does not provide that the legal entities that we create such as corporations shall be our moneyed megaphones.

To make it possible for the electorate to set the size and distribution of the federal tax burden in the demos, the tax code would have to be extremely simple. There could be no tax exemptions of any kind for corporations and businesses. This would be the case for the next two demos issues as well. There could be no personal income tax exemptions of any kind at any time for anyone, and there could be no inheritance tax exemptions of any kind.

Exemptions are in effect subsidies. It takes money to run the government. What it does not get from one person or group, it must take from another. Exemptions for some cause tax increases for others. The elimination of exemptions would produce the simplest, least costly tax system and the lowest possible tax rates for everyone.

There should also be no tax exemptions for so-called nonprofit organizations including religious organizations. Such tax exemptions are only a way of dictating which charitable, religious, and other institutions all of us must support. The net effect of exemptions is that the plutocrats within our government dictate which religions, forms of art, civic projects, etc. we as a nation must support. The few should not be deciding via the tax system what everyone supports. We should be deciding what we wish to support by directly donating our resources and time to those that we wish to support. When we are not given opportunity to dump our ‘support’ unto the next person via tax exemptions and it takes our own real money, then we would learn who and what individuals truly support and just how generous the American people really are.

American religious organizations have taken their eyes from their gods and placed them squarely upon business enterprise and the political arena. In our granting tax exemptions to them, we are subsidizing them. People are forced to support opposing religious views and powers. People whose views do not qualify for tax exemptions must support their own views and the views of others.

Although increasingly abused and muddied in recent years, among the most sacred principles of our system of governance are freedom of religion and the separation of church and state. On superficial glance, one might think that the elimination of tax exemptions for religious organizations and their being taxed in exactly the same manner as any other corporate body that one has introduced the intimate mixing of church and state. But exactly the opposite is true. It is in tax exemptions and, therefore, the subsidizing by the state of the church that church and state become intimately intermingled. It is in the treating the church the same as any other legal entity for the purposes of taxation that the state achieves absolute neutrality toward the church and achieves the complete separation of church and state. From the time of the Roman emperor Constantine, the Christian church has shared a cozy bed with government. It is time and over time and more seemly for the church to sleep in its own bed. It should receive its support directly from its membership.

A wealthy person generously donating to the city orchestra, a pious person donating to the church, and a person handing ten dollars to a needy person on the street should all be treated in the same manner. The tax system should have nothing to do with their donations. Donations should be entirely a personal matter.

Americans are overwhelmingly generous in many ways with their money, time, and effort. Many are not even personally against the federal government being generous with their tax dollars. But the tax system is an inappropriate location and manner in which to provide lump subsidies for anything or to anyone. It adds complexity and paperwork and becomes, as is amply shown, a maze of tax evasion and scam.

All lump subsidies that government wishes to grant to businesses, organizations, and individuals should be moved to those areas of government that handle entitlements and handouts. Further, those areas of government should be consolidated into one entirely transparent entity, so transparent that it could be symbolically named The Glass House. All of its deliberations and actions should be completely visible to anyone in the nation who cares to investigate any of its dealings.

There is one major kind of generosity and wisdom that the demos would be capable of bestowing: By the appropriate scaling of each tax (corporate and business, personal income, and inheritance)—not by adding loopholes, exemptions, and other complexities—smaller annual revenues, incomes, and inheritances could be taxed only lightly or made completely exempt from any tax at all.

One final word on generosity and subsidy: Under our current plutocracy they become crushed and smothered beneath an avalanche of endless need. If the changes to our government and society proposed in this work were put into practice and a more just and equitable society achieved, the need for so much help would not be created in the first place, and our generosity would not become so overwhelmed. Our generosity could easily and would willingly meet all true need without the use of tax write offs.

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