“Economic Patriotism”: The Last Refuge of a Tax Scoundrel

In mid-July, US Treasury Secretary Jack Lew proposed that Congress prohibit US-based companies from moving offshore in search of more favorable tax climates, citing an ostensible need for a “new sense of economic patriotism.”

The resort to “patriotism” theater stands out as the most egregious aspect of legislation whose retroactive status would blatantly violate the Constitution’s prohibition on ex post facto laws.

Underneath the veneer of common interest between the government, big business, and the general public provided by the legitimizing ideology of “patriotism,” there is and always has been a symbiotic corporate-state alliance parasitic on the latter. The state provides corporations such favors as liability shields, regulations keeping out new competitors, and labor laws preventing workers from holding out for higher wages. In return, the corporations — as Martin Short’s satirical lobbyist Nathan Thurm put it when pressed to defend the vast amounts of corporate welfare received by his clients from the government — “give a lot of that money back.”

Crucially, corporations collect such revenue for the state by passing their tax burdens on to the consumer via stealth de facto “taxes” hidden in the above-free-market-level shelf prices of their products. Thus, any tax on corporations initially favoring Washington eventually comes out of your pockets and mine.

The corporate-state symbiosis is so close that it’s difficult to keep track even of which members of the elite are part of which entity and when. Charles “what was good for our country was good for General Motors and vice versa” Wilson went from heading GM to spearheading the interstate highway system as Secretary of Defense. Supposed muckraker Lew is himself a perfect example of that revolving-door phenomenon, his career alternating between various departments of the federal government and Citigroup — including (ahem) its subsidiaries in Bermuda, the Cayman Islands and Hong Kong.

It is true that the corporate-state alliance has been strained by the panoply of neoliberal economic policies. But “globalization” requires doing away with borders only very selectively, when it suits corporate purposes. The American superstate and its international “trade partners” are more than willing to ignore borders when corporations benefit by moving goods from low-cost labor centers to high-profit sales centers. But that same state and those same partners consider borders of paramount importance when it comes to capturing the tax revenue that pays for all the perks their corporate symbiotes depend on for their continued existence.

Thus, corporate attempts to avoid paying taxes deserve little sympathy, since they amount to offloading the bill for the perks they still receive from the state, instead footed by the public directly. But the appropriate response is not to redouble efforts of the decaying nation-state to tax them, but for the public to refuse to be bamboozled into being the “patriotic” third leg propping up the corporate-state stool.

As the example of Wilson proves, corporate influence skews the implementation of even public services as seemingly neutral as roads in a direction that benefits corporations first and the public second. Thus, the means to fund essential public services is not “economic patriotism,” but consistent free markets and free trade.

Note: This article was written in collaboration with Thomas L. Knapp.