The capitalist case for taxing business

A true winner would have shorted the stock beforehand. This week, with the moral authority that comes from abs you can cut sushi on, Cristiano Ronaldo cleared two bottles of full-fat Coke from a news conference desk and hailed agua instead.

Censure from the most followed human on Instagram would sting any company. So would the subsequent $4bn hit in market value. But few are quite as self-doubting as Coca-Cola. Its “2020 Business & Environmental, Social and Governance Report” (yes, two “ands”) is an 82-page apology for its core product, if not commerce itself.

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At this point, it is natural to contrast the piety of the modern corporation with its rococo tax schemes. (Sure enough, Coke has had fiscal issues with the feds.) But I no longer see the first as incompatible with the second. It is better understood as an outgrowth of it. The rise of “CSR” and “ESG” — how cant loves an acronym — mirrors the gradual decline of the effective corporate tax rate.

The rationale of the C-suite is transparent: what we deny the common purse, we redress, or at least muddy, in other ways. It is not just guilt that makes a multinational speak the argot of the cultural left. It is not just naïveté that induces a bank to hire phalanxes of grifting sustainability consultants. It is calculation. A sly fox is throwing hounds off the scent.

If I am right, then it follows that higher, better-enforced taxes spell the end of the simpering corporation. In essence, business will buy the right to live the uncommitted life again. We can revert to a time when the production of things that people want, and the sharing of the proceeds with government, was a social good. In that sense, a tougher tax regime is a reinforcement of capitalism. Few things commend the recent G7 accord on the subject more. Few things make the opposition of supposed conservatives weirder.

1984, the least prescient thing Orwell ever wrote, misread the trajectory of the left. The coming force was not the state, which even in Russia peaked around the time of publication. It was the Gramscian march through the institutions. And the result would not be totalitarian, just cloying and priggish.

A harmless manifestation of this is the workplace-as-group-therapy. Call me British, but my expectations of an employer are that they send the monthly wire transfer and meet the statutory minimum on paid leave and the like. If they help me through a tough moment, they can expect reciprocal loyalty. What I don’t want is to enter a pastoral communion with them or together remake the world.

Far creepier is the truly messianic enterprise. Coca-Cola wants its US workforce to “align with” ethnic census data, like a Singaporean housing block. Microsoft’s CSR mission seeks immigration reform, better humanitarian crisis response and “alternatives to incarceration”. It resembles the program of a political party (one, to be clear, I would vote for) and at times the bill of rights of a nation state. Even if you can live with the tax-starvation of government, who believes this Napoleonic range of activities is good qua business? Who thinks it is, in the old sense, sustainable?

Christopher Hitchens had a response when the well-meaning but vapid stuck up for believers who don’t proselytise or act on the meanest bits of scripture. “All you’re saying is that these people are so nice they’re hardly religious at all.”

This is CSR all over. The gist of it is that a business is good precisely to the extent that it does not act like a business. Job creation, innovation, consumer choice: these become givens. In its own please-like-us report, Nike assures the grown adults who buy its silly shoes that at least 1.5 per cent of gross revenue goes on “community impact”. The implication is that employing people does not impact a community.

As an intellectual concession, this is vast, and corporates have gone along with it as cover for stiffing the taxman. The injury to the state is aired well enough. It is the disservice to capitalism itself that builds insidiously over time. The immediate cash saving is not worth the long-term fouling of the atmosphere in which business must operate. The obvious way out of this trap seems expensive. It is, in fact, a bargain. Render unto Caesar what is Caesar’s.

© Financial Times

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