THE BLOG

Whiny Tiny-Minded Titans & Loophole Logic

12/06/2012 06:15 pm ET | Updated Feb 05, 2013

Here's what President Obama should have told CEOs, after the press left his recent Business Roundtable meeting: Too many of you are whiny, tiny-minded, titans. You might all be great job-creators and "makers" but too many of you are also "takers." It's time you quit whining about how difficult life is for you. And it's time the American people threw your companies off welfare." Sadly Obama, despite being called anti-business, is unlikely to have said anything nearly as useful.

Make no mistake, I'm not anti-business or against corporations: Many are decent responsibly run providers of products and services we depend on every day. But the shameful behavior of some corporations costs taxpayers at least $160 billion (or about $1,900 per federal income taxpayer). That's what the Congressional Research Service says total corporate entitlement programs cost in "tax expenditures" in 2011.

Milton Friedman famously used the logic of "there's no such thing as a free lunch" to point out that every dollar of public spending has to come from a private business or individual. True enough, but that works the other way also. There's no such thing as a free infrastructure. And every dollar a private business makes depends on publicly funded infrastructure, which has to be paid for.

Freidman knew it was wrong to free-ride and was always careful to say that corporations should pay their way by paying taxes. Sadly, too many business titans now shamelessly seek a free-lunch infrastructure. A recent analysis showed that 30 large and profitable corporations paid no federal taxes on tens of billions in profits. Profits they increased by not paying their share of the costs of creating and maintaining what their businesses depend on -- and let's not forget every dollar they don't pay is another dollar others have to provide. Or that has to be borrowed.

But it gets worse: Some of the largest corporations in the country not only didn't pay federal taxes, they received payments from the taxes others pay. ExxonMobil, despite being one of the most profitable companies in the history of capitalism, is one of these titan "takers." As is Boeing, whose CEO introduced Obama at the Business Roundtable meeting.

These corporations justify their actions by saying they pay what's legally required. What that really means is that they have lobbied to create favorable tax laws that grant them special treatment. This may be technically legal, but it's far from ethical. And it's far from sustainable. It fails the logic of the Golden Rule, and of Kant's first test of any workable ethical system. Both boil down to the question: What would happen if everybody did the same -- if everybody found a way to create a legal fig leaf loophole that allowed them to evade contributing to the costs of running the country, or rationalized why they should get payments from the public purse? It takes no special smarts to figure out that that can only work if not everyone can get away with doing the same. Such special treatment weakens the country. And it makes no sense to encourage companies or individuals to succeed by damaging their nation.

Let me repeat, many corporations do their best to be productive, and essentially good, but even they must see the errors of their nastier non-burden-sharing brethren. We've long paid too much attention to the fruits of success and now must focus also on its roots. Keeping the soil that nourishes those roots in good shape isn't free. As the old saying goes, there's a time to sow and a time to reap. It's time we told every titan, no sow, no reap.