The Moral Hazards of Being Rich

The real, tangible hazards of rich people of course are to the rest of us, who have to survive on their tiny leavings.

Tom Sullivan at Hullabaloo:

Not all political deflections are bright and shiny. Hyperventilating over public aid to those at the bottom of the wealth curve is an oldie but goody. Is Wall Street defrauding the planet to the tune of trillions? Well, but LOOK! Over there. A poor person. Eating!

Properly incentivizing the poor is a perennial handwringer for Fox News and other watchdogs of personal morality on the right (who otherwise think the government should mind its own damned business). Nicholas Kristof, however, spares some column inches this morning on the incentives driving our beleaguered corporate persons at the top. He gets downright snarky about it:

A study to be released Thursday says that for each dollar America’s 50 biggest companies paid in federal taxes between 2008 and 2014, they received $27 back in federal loans, loan guarantees and bailouts.

Goodness! What will that do to their character? Won’t that sap their initiative?

The study in question comes from Oxfam. The group finds:

• From 2008 – 2014 the 50 largest US companies collectively received $27 in federal loans, loan guarantees and bailouts for every $1 they paid in federal taxes.
• From 2008 – 2014 these 50 companies spent approximately$2.6 billion on lobbying while receiving nearly $11.2 trillion in federal loans, loan guarantees and bailouts.
• Even as these 50 companies earned nearly $4 trillion in profits globally from 2008 – 2014, they used offshore tax havens to lower their effective global tax rate to just 26.5%, well below the statutory rate of 35% and even below average levels paid in other developed countries. Only 5 of 50 companies paid the full 35% corporate tax rate.
• These companies relied on an opaque and secretive network of more than 1600 disclosed subsidiaries in tax havens to stash about $1.4 trillion offshore. In addition to the 1600 known subsidiaries, the companies may have failed to disclose thousands of additional subsidiaries to the Securities and Exchange Commission because of weak reporting requirements.
• Their lobbying appears to have offered an incredible return on investment. For every $1 spent on lobbying, these 50 companies collectively received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.

Such behavior deprives countries of needed funds for everything from education to infrastructure, and feeds the rampant economic inequality that has become palpable. But what's worse, of course, is what these perverse incentives must be doing to corporate persons' souls. Kristof continues:

The Panama Papers should be a wake-up call, shining a light on dysfunctional tax codes around the world — but much of the problem has been staring us in the face. Among the 500 corporations in the S.&P. 500-stock index, 27 were both profitable in 2015 and paid no net income tax globally, according to an analysis by USA Today.

Those poor companies! Think how the character of those C.E.O.s must be corroding! And imagine the plunging morale as board members realize that they are “takers” not “makers.”

But that's the thing about economic inequality. It also means different rules for those on top and those at the bottom. Sharper sticks must be brought to bear to ensure the "takers" are kept off the public dole. To save their souls, of course. Those at the top get sweeter carrots. Much, much sweeter.