Introduction
The proposal below is a suggestion as to what business tax rates ought to be, based on the notion that a business should be taxed in accordance with how much assistance it receives from the public, the commons, and/or from taxpayers.
The idea behind this is one of free enterprise; that a business cannot call itself truly “private” unless it provides most or all of its needs by itself, without the assistance of the government or the state. The goal of the tax proposal below, is to impose punitive taxes, in order to discourage the use of public resources.
Such resources include taxpayer-funded privileges, monopoly rights, and other unfair advantages which businesses would not have in the absence of the state. Since the state is a mechanism which uses coercion, threats, and violence to extract taxes, it is unfair for businesses to enlist the state to extort from taxpayers in a manner which would be illegal if the businesses did it directly. The state hands taxpayer funds, and lucrative contract deals, over to selected cronies; in a process which is sometimes called either “picking winners and losers”, “economic interventionism” or “Keynesianism”, “crony capitalism”, or “redistribution from the poor to the rich”.
If and when subsidies and bailouts and other privileges are being offered to businesses, it will be necessary and proper to tax such businesses, in order to provide fairness; whether through a social safety net, or through administrative reforms which could increase the opportunity to compete.
The rationale for choosing the tax rates, is that: 1) all tax rates combined add up to 100%; 2) the most egregious offenses against principles of responsible enterprise are taxed the most heavily; and 3) the second-least egregious offense is taxed at twice the rate of the least egregious offense, and the third-least is taxed at three times the rate of the least, and so on.
This means that if a business takes every possible opportunity to use public resources which are afforded to it, then it must pay 100% of its profits going forward (or of its earnings going forward; or of its accumulated wealth, in the event of a revolution, or the repeal of the ban on ex-post-facto laws).
The time frame in question could be annual – meaning that the proposals apply if a business has committed an “offense against free enterprise” in a given calendar year - or the time frame could be all-time, or cumulative, or any other temporal variable.
I am leaving the matter of what to tax, and when to tax it, unresolved, in order to make this an open-ended proposal, which is not intended as a particular law, but instead as an open-ended framework. I am doing this in hopes that my proposal will inspire others to build upon it, to make it as specific as will be necessary to develop it into a complete plan for reforming the way we tax business (and tailor-made to the particular legislative and logistical needs of the jurisdiction in question).
Proposals
#1. If a business discriminates against customers, while maintaining public accommodations open to the market-going public and substantially affecting interstate commerce, and while receiving taxpayer funds, then the business's total amount of taxable wealth, should be subject to a tax of 8.74545%.
#2. If a business receives bailout funds from the Department of the Treasury, then that business should be subject to a tax of 8.345454%.
#3. If a business receives lucrative contracting deals from the government, then that business should be subject to a tax of 7.945454%.
#4. If a business wields a collusive or unnatural monopoly, according to the Federal Trade Commission's Bureau of Competition, then that business should be subject to a tax of 7.545454%.
#5. If a business is a for-profit entity which was created by government or an agency thereof, then that business should be subject to a tax of 7.145454%.
#6. If a business receives assistance in declaring bankruptcy, from the Department of Justice and its bankruptcy courts, then that business should be subject to a tax of 6.745454%.
#7. If a business receives corporate subsidies from the Department of Commerce, and/or any state chamber of commerce, then that business should be subject to a tax of 6.345454%.
#8. If a business offers publicly traded stock, which is being traded by any public official(s) capable of regulating an industry which is relevant to that stock, then that business should be subject to a tax of 5.945454%.
#9. If a business receives finance or insurance from the Export-Import Bank, of goods it produces which are purchased in foreign countries, then that business should be subject to a tax of 5.545454%.
#10. If a business receives trade promotions and trade protections from the Office of the United States Trade Representative, then that business should be subject to a tax of 5.145454%.
#11. If a business receives a corporate charter, or a limited liability corporation (L.L.C.) designation and protection, from a Secretary of State's office, then that business should be subject to a tax of 4.745454%.
#12. If a business benefits from favorable government regulations regarding professional licensing standards, in a way that “grandfathers-in” old established companies and “job creators”, then that business should be subject to a tax of 4.345454%.
#13. If a business receives intellectual property protections (such as patents, copyrights, and trademarks) from the U.S. Office of Trademarks and Patents, then that business should be subject to a tax of 3.945454%.
#14. If a business benefits from the easy credit and low interest rates which are offered by the Federal Reserve System, then that business should be subject to a tax of 3.545454%.
#15. If a business receives discounts on public utilities (such as roads, sewage and waste disposal, and electricity and other forms of energy) for buying in large amounts, then that business should be subject to a tax of 3.145454%.
#16. If a business receives small business loans from the Small Business Administration, then that business should be subject to a tax of 2.745454%.
#17. If a business benefits from favorable zoning laws which allow wealth to be created, earned, and stored far from where people are trying to take it home to, then that business should be subject to a tax of 2.345454%.
#18. If a business receives physical property protection from the police, then that business should be subject to a tax of 1.945454%.
#19. If a business receives bank deposit insurance from the F.D.I.C. (Federal Deposit Insurance Corporation), then that business should be subject to a tax of 1.545454%.
#20. If a business receives public utilities instead of providing its own utilities, then that business should be subject to a tax of 1.145454%.
#21. If a business receives physical property protection from the U.S. Armed Forces, then that business should be subject to a tax of 0.745454%.
#22. If a business occupies land in a manner which makes the ground beneath the surface unusable or inaccessible to the public or to others, then that business should be subject to a tax of 0.345454%.
Additional Proposal: File criminal charges against businesses which commit offenses #1-#8, in addition to taxing them at the rate mentioned. Their privilege to receive the same sort of privileges in the future, could additionally be curtailed, to help reduce the chance that the businesses will continue to exploit the opportunities offered to them.
Post-Script
This proposal was inspired and influenced by my April 2016 infographic “Government is the Source of Corporate Privilege”, and by Andy Craig's idea to abolish Secretary of States' offices in order to prevent the creation of new corporations by the state, which inspired that infographic.
That infographic, which lists ten types of artificial business privilege and their sources in government, is available at the following link:
To learn more about why I believe that monopolies and recipients of taxpayer funds should be taxed whenever such funds are being offered, please read my May 2019 article “Rent, Profit, Interest, Usury, and Taxing Monopolies”:
Written on September 22nd, 26th, and 29th
Published on September 29th, 2020
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