Corporatism and taxes
Corporatism and taxes
Corporatism is the term used to describe a economic and governmental approach that favors large entities over people, including adopting rules and regulations to suit the regulated entities, tilting legislation to protect corporate entities that might otherwise be considered to be causing harm to the public good, and allowing access to public fora and public representatives in ways that ensures that corporate voices are heard, whether or not those opposing them are heard.
Corporatism in tax policy has resulted in highly favorable readings of the reorganization provisions–for example, current IRS regulatory approaches proclaim that even losses can be recognized in corporate reorgs, going against well-settled understandings of the operation of the corporate reorganization provisions, and the Code and regulations permit a vastly expanded range of flexible transactions, especially of spins under section 355 and of A reorgs (a mere 40% equity consideration now ‘counts’ as sufficient to provide tax-free reorganization status).
Corporatism has been around in one form or another for a long time, but it was immensely aided by the activism of organizations like the US Chamber of Commerce and the National association of Manufacturers and the ideological ‘think-tanks’ supported by them and by corporate and wealthy backers.
For a revealing slice of the history of corporatism, every reader should be familiar with Lewis Powell’s 1971 memo on the means by which business could take over government. It is given a thorough airing (and there’s a link to the memo itself) by William Black on the blog New Economic Perspectives, My Class Right or Wrong: the Power memorandum’s 40th Anniversary (April 25, 2011).
Corporatism is the inevitable result of the government trying to run the economy. The more control over businesses that you give to government, the more those businesses will try to influence the government. Producing quality products and services at competitive prices is secondary to appeasing politicians.
It is foolish to give the government power to control the economy and then expect that power to be used for the benefit of the “little guy.” One of the perks of being powerful is that you can influence other powerful actors. The big corporations really fear market competition and use government regulation to stack the deck in their favor and protect them from smaller companies. The solution to corporatism is to reduce the government’s control of the economy.
Try this word to describe the scenario: corpocracy or a society dominated politically and economically by large corporations.
Gov never took over corporations, Wall Street and Corporations took over government.
The relationship is mutual. Gov. has a huge influence on the success of businesses. Businesses don’t lobby the government for fun, they do so because gov. policy has a huge impact on their bottom line. It is unrealistic to expect the government to have enormous power over corporations without the corporations influencing government. The gov. should step back and let competition work instead of trying to dictate results. Don’t be surprised when the most powerful interests have the most influence on government.
After the July Revolution [of 1830], when the liberal banker Laffitte led his Compère, the Duke of Orleans, in triumph to the Hotel de Ville, he let fall the words: “From now on the bankers will rule”. Laffitte had betrayed the secret of the revolution.
It was not the French bourgeoisie that ruled under Louis Philippe, but one faction of it: bankers, stock-exchange kings, railway kings, owners of coal and iron mines and forests, a part of the landed proprietors associated with them – the so-called financial aristocracy. It sat on the throne, it dictated laws in the Chambers, it distributed public offices, from cabinet portfolios to tobacco bureau posts…
“Gov never took over corporations, Wall Street and Corporations took over government.”
Is that what happend with Freddie, Fannie and GM?