When it comes to inversions, (Blog 8/28/14) — corporate shell games to avoid U. S. taxes — some defenders of the practice tie themselves in knots to excuse unpatriotic behavior. Diana Furchtgott-Roth of Market Watch.com, for example, insists the fault behind this behavior lies not with unscrupulous corporations but with government regulations that make these companies less competitive on the world stage. (“Making the case for tax inversions” Diana Furchtgott-Roth, The Week, August 23, 2014, pg. 34) In other words, corporations are victims of an unsympathetic Congress and deserve our understanding. The argument is absurd and reminds me of the joke about the murderer who, having strangled his mother, begs the court for leniency because he is an orphan. Corporations have remedies beyond cheating the government and living off the largess of the taxpayer.
Dean Starkman, writing for The New Republic, agrees. According to him, if there’s a flaw in our government, it lies in coddling corporations and in particular, their white collar crimes. (“Wrecking An Economy Means Never Having to Say You’re Sorry,” The New Republic, 8/25/14, pgs. 32-33.) True, the Justice Department just levied the largest corporate fine in its history, 13 billion dollars against Citibank for its role in the mortgage debacle of 2008, but Starkman complains the amount is miniscule compared to the $13 trillion taxpayers lost in the crash. What’s more, the fine will be paid by the shareholders, — people with retirement or 401k funds invested in the company — not by the executives who rigged the system. Worse, the money will become a tax write-off for Citibank. (Ibid, pg. 23.)
Less well known to the public are the other benefits corporations reap when they avoid trials and arrive at settlements. The terms of the agreement become private, so they avoid public scrutiny. With no public scrutiny or judicial review, Congress is kept in the dark and has no information upon which to take corrective measures.
To state the obvious, the Department of Justice treats blue collar and white collar miscreants differently. That difference is the thickness of a prison wall.