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Citizens United established that corporations, as legal persons, are entitled to free speech, including spending unlimited amounts of money in political "speech".

Under Constitutional law, CU asserts, corporations and individuals are equivalent in their civil rights.

Therefore Federal and state tax treatment of corporations and people must necessarily be equivalent--"equal protection under the law", via the 14th and 5th Amendments.

That means that for tax purposes, individuals are corporations.

In particular, individuals, since they are corporations for tax purposes via the implications of Citizens United and related precedents, may only be taxed on their income after expenses related to the production of income.  As corporations are only taxed on their gross income net of "cost of goods sold"--which includes most major corporate expenses such as employee salaries, training, benefits, rent, materials, supplies, freight, utilities, and insurance.

But virtually all personal expenses are related to the production of income--they are the "cost of services" that an individual sells to their employer. So individuals must be allowed to deduct all their living expenses (food, clothing, rent, mortgage, supplies, furnishings, utilities, insurance, transportation, medical, education, interest, etc.), and will only owe tax on their remaining net income in any given year. (If any!)

Citizens United implies that the personal income tax is unconstitutional if a more liberal tax treatment is provided to corporations. Equal protection under the law!

When courts uphold the above "doctrine of tax equivalence", it will precipitate a dramatic tax revenue crisis overnight.  The IRS will be required to change immediately to the new all-corporate system.  300 million newly corporate-equivalent citizens will suddenly be able to achieve zero or near-zero tax liability.  As corporations do now.

In that case, you can be sure that those in charge will exert furious efforts to eliminate "corporate personhood", by Amendment or by any other means, with the utmost haste.  In fact, it would likely be resolved as a national security emergency, by Executive order, until an Amendment could be ratified.

The "flash" tax rebellion starts... now!  Class action!  Citizens United will be our shield.

(Disclaimer: the above is not legal advice--consult a lawyer before asserting either your corporate personhood or your personal corporate-hood on your tax return!)

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Comment Preferences

  •  Sorry, this is total nonsense (4+ / 0-)

    I appreciate the try, but you need to understand the tax law better before you start making proposals.

    1.  Citizens United had nothing to do with equal protection.

    2.  Citizens United didn't say that corporations and individuals are equivalent in their rights.

    3.  Corporations can be taxed on anything Congress wants them to be taxed on.

    4.  The corporate income tax is not based on gross receipts less cost of good sold.  The items you mention are either itemized deductions or section 162 "ordinary and necessary" business expenses.  If Congress wanted to it could repeal section 162.

    5.  Most personal expenses have nothing to do with the production of income, except to the extent that an individual cannot produce income if he or she is dead.  

    Back to the drawing board.

    "[W]e shall see the reign of witches pass over . . . and the people, recovering their true spirit, restore their government to its true principles." Jefferson

    by RenMin on Sun Nov 11, 2012 at 01:45:59 PM PST

  •  individuals already are taxed on their (1+ / 0-)
    Recommended by:
    VClib

    net business income.  rent, food, etc, paid by individuals are typically personal expenses, not business expenses.

  •  Unjustifiably Offhand Dismissal (0+ / 0-)

    I disagree with this offhand dismissal and weak tax analysis of other commentors.   

    I have been working on a very similar idea for some time.  

    First, it would not have to be legally ironclad to be an effective political and rhetorical approach. Sometimes courts serve purely by airing arguments in a forum where detailed argument takes place under rules of evidence, before arbiters who have to defend their decisions to a community with some standards of acceptable logic.

    I believe that it has enough coherence to be effective rhetorically,  and possibly legally – though Iam NOT an Attorney.  Remember that law gets changed by good arguments, even if the  detail of the legal process never gets executed.

    It makes no difference if the approach involves addressing both/either Citizens and Buckley.  The argument is also effective if the relief requested were to be wholesale changes to tax code applicability rather than overturning Citizen’s and/or Buckley.  In fact, I would suggest that the legal strategy would be to frame it on that basis: that federal (and/or state) tax policy constitutes a violation of equal protection.

    I think taking this case before an appropriate state Supreme Court re state income taxation might be an effective initial venue, but again, this isn’t my field. Attacking via state or federal income tax code would be effective because the remedies of equalizing tax policy would be sufficiently onerous to force an explicit or implicit reversal of the Buckley/Citizens distortion.  Attacking a state income tax might also have the advantage of negating any of the potential argument about whether the 14th amendment’s explicit language about state protection of equal rights applies to the federal government (rather than tempting the Robert’s court to make yet another precedent reversal).

    The fundamental argument goes:
    If corporate expenditure of money is held to be constitutionally protected, as free speech and/or because corporations are persons under the law, then there is a coherent argument under equal protection.

    To the extent that money = speech and corporations = persons, then treating an individual’s money (income) differently from a corporation’s income is denying the individual’s speech the same protection afforded to the corporation.  This denial applies to a fundamental Constitutional right, freedom of speech, through relatively depriving individuals of the means thereof, money, per Buckley/Citizens.

    As to taxation comparability.

    1 - Note that “corporations” does not just include publicly held stock corporations, but a wide variety of closely held forms of corporation, partnership, etc (as I understand it).
    - I leave aside the question about whether there is an even more effective legal                    or rhetorical argument tackling only the lack of equal protection of income between the average citizen and the owner(s) of very closely held corporations.
      - I also leave aside a discussion of how 501 c 3 & c4 etc political expenditure fits into this, because it is not necessary to our central purpose, and because I haven’t focused on it enough to have anything useful to say.

    2 – If I understand correctly, the most basic protection enjoyed by corporations is that their political expenditures are treated as a cost of doing business and therefore a pre-emptive deduction from income.  So a corporation could lobby for a monopoly in shoe manufacture with pre-tax income, where a cobbler must spend post-tax income to argue against it.  

    3- Corporations often spend money on activities (including political expenditures) that have no discernable connection to their apparent means of production of income.  Undoubtedly this is far more an issue for privately held corporations than publicly held ones, but not exclusively so. There is no equivalent “personal expenditure” test for corporations, even though corporations make significant political and non-political expenditures not obviously related to their business.  – And in the case of publicly held ones, there is another tier of expenditures that would not pass audit as being in the interest of the stockholders.

    4 - Contra RenMin and jwurster above, for a wage earner there are significant amounts of work-related expense, starting with wardrobe and transportation that are not generally deductible (some is allowed but only above 2.5%(?) of AGI).  Further, any reasonable cost-allocation basis would attribute a significant share of housing, health and food expenditures to the production of labor for sale.  That’s what cost allocation plans are for, because shared costs in numerous economic settings – and are considered as sound accounting.

    5 -  Not only do corporations enjoy all these avenues of income deductions unavailable to the common taxpayer, but also enjoy much wider deductibility of interest and depreciation.  

    So, to sum up, taxpaying wage earners have their integral means of constitutionally protected free speech severely unequally protected relative to corporate persons.  We  could petition for relief in the form of being allowed to file income tax under the same rules of deductibility as apply to corporations.

    The cleanest, simplest would be to narrowly apply on political speech grounds, attacking only the deductibility of corporate expenditures in their economic interest compared to identical expenditures by individuals.  This one has the merit of not being vulnerable to any argument about pass-through to ultimate taxation at the shareholder level.  We simply file to amend our returns to deduct our political expenses and make a “federal case” of it.

    I am interested in the possible flaws of this idea, but the above does not achieve that end.

  •  being morally correct (1+ / 0-)
    Recommended by:
    VClib

    s not tht same as being legally sound.  But good luck.

  •  There is a simple way of neutralizing all this $$ (0+ / 0-)

    By implementing public financing of elections.

    However, there is one critical mechanism to avoid any constitutional issues...

    Any candidate may OPT OUT of the public financing.  No one is forced to comply or participate, it is 100% voluntary. If you participate you wave any constitutional concerns.

    We remove ALL LIMITS to contributions, you may use any amount of your own money, and anyone, human or corporation, can donate any amount of money to your campaign. But all donations MUST BE PUBLIC. No secret donations allowed.

    Here is the kicker....

    The US Treasury will MATCH 100% for each other candidate in the race who chooses public funding, any amount of private funding donated to a candidate who chooses to OPT OUT.

    This will completely neutralize the effect of any private donations. No rich asshole or corporation is going to donate $millions to a candidate, when that candidates opponents will get 100% matching funds in opposition.

    It utterly silences MONEY, asymmetry of MONEY, as speech.

    Ultimately the real cost to taxpayers will be INFINITELY lower than what the utterly corrupt current financing costs them in lobbying special interests, bribes, pay offs, and corruption of the process.

    No candidates will end up opting out, because no one in their right mind will waste the money funding an idiot into the infinite economic power of the US Treasury.... you know, the PEOPLE OF THE UNITED STATE'S MONEY.

    You will never hear this mentioned in the media, because they are the real losers, they will lose $BILLIONS in the elimination of the insane money wars of politics.

  •  CU not about corporate speech (1+ / 0-)
    Recommended by:
    VClib

    CU defined speech as the right to hear- so it doesn't  much matter who's talking. Buckley said speech equals money, so it doesn't much matter who's paying. Scalia's concurrence drives the last nail in the coffin- individuals don't lose their free speech rights when they are in corps. Crony capitalism doesn't rely on personhood at all.  

  •  The diary author (0+ / 0-)

    has no understanding of either Citizens United or tax law which is why this diary makes no sense whatsoever.

    "let's talk about that"

    by VClib on Mon Nov 12, 2012 at 11:32:02 AM PST

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