The Legal Fiction of Corporate Income and the Coming U.S. Reorganization in 2012

Markets and pundits are celebrating the great tax deal “compromise” between the Obama Administration and the Republicans. A tax deal pitched as a compromise between the two-party duopoly that has been selling the United States into debt slavery for decades is not likely in the best interest of the country, or your bank account. The deal strikes me as a bit like a two-year-old eating homemade ice cream for the first time, believing it is the greatest possible pleasure on earth, with no earthly idea of how it stacks up against a honeymoon.

What the politicians don’t realize is that the global crisis is forcing American’s to grow up fast regarding matters of high finance and the truth about taxes. They are beginning to understand the exploitation of the current tax system. Word is spreading concerning real tax reform that could light a fire under the U.S. and global economy, and simultaneously reduce the deficit.

There are high hopes that this latest tax extension band-aid will provide some juice to the U.S. economy. However, it has only extended the old two-party regime and game of kicking the debt can down the road. The clear goal of the deal is to bring back the delusional debt binge years. Good luck with that great idea. It is a travesty that matching spending cuts were not required to match the tax cuts, as any responsible adult would have required. Unfortunately, this compromise is likely only rearranging the deck chairs of the U.S. economy, just before it slips beneath the icy surface of the long wave winter season.

The problem with the tax deal is that it represents such pathetically small thinking. It sells America short and will prove to be too little too late. It is tragic that there is such vast untapped U.S. and global potential waiting to be unleashed, and this embarrassing tax compromise is all the creativity our leaders could muster. The politicians have put us in such a big hole we have to start thinking bigger. The global economic boom that could be unleashed with real tax reform will have to wait for another day, but that day may come sooner rather than later, likely in 2012.

The next stage of the U.S. and global crisis directly ahead will change everything. What is coming is not an aftershock of the 2007-2009 crisis. That was the warm up, or you could call it the pre-shock. The real crisis is going to come with a political storm that will make the 2008 mid-terms look like civil discourse. What is coming politically is fundamentally different from anything in America’s past, save maybe the Revolution. But we had the Revolution already, what America needs now is a reorganization.

Believe it or not, I’m actually optimistic. The U.S reorganization is going to happen, in ways that will astound most Americans, and the world. The U.S. reorganization will lead the world into a global boom and new golden age.

Typically, reorganizations come as part of a bankruptcy. America will not likely go bankrupt, but it will be a narrow escape. Anyone with the pulse of the American people knows they are ready for radical fundamental change like never before. Fiscally responsible American’s from all walks of life and all social views are going to rise to the occasion and demand a U.S. reorganization. Fiscal conservatives from across this great country are going to join forces, from the libertarian left to the religious right and everyone in between, fiscal conservatives will be marching arm in arm and demanding real fiscal change before the U.S. reorganization of 2012 is over.  

So what should be at the top of the list for this reorganization? Real tax reform must be at the top of the list as the U.S. goes into the reorganization period of 2012. It is almost more that a rational mind can handle, watching the relentless destruction of the U.S. economy and the abuse of the poor and middle class by the current regressive corporate tax code. Yes, I wrote regressive. The supposedly progressive politicians love to talk about taxing corporations so that the proceeds can be redistributed to the poor. It is a bold-faced lie.

The fact of the matter is that any corporate tax is regressive. It is a tax on poor, working poor and middle class that can least afford it. Politicians using talk of corporate taxes to win their votes are engaging in classical Orwellian doublespeak. The U.S. has the second highest corporate taxes in the world, and they are destroying the U.S. economy and shipping millions of jobs to countries with lower corporate tax rates.

Corporate Income Tax Rates

Fortunately, the general ignorance of these most basic facts of taxes in the U.S. is ending. There is a great awakening occurring from online education and angry citizens looking for answers. Objective reasoning and the clear thinking it brings is beginning to win the war of ideas. The American people are getting wise to the fact that corporate taxes are one of the biggest political frauds in history. They are recognizing corporate taxes for what they are, a government sponsored swindle that is increasing the costs of all products and services, reducing wages, increasing unemployment and poverty across the land and crippling the U.S. and global economy.

The FairTax.orgmovement is catching fire. It is going to be a fire that sweeps across the country and burns the unfair and regressive tax system to the ground. Consider the following well reasoned statement from regarding corporate taxes:

Corporations are legal fictions that have not, do not, and never will bear the burden of taxation. Only people pay taxes. Corporations pass on their tax burden in the form of higher prices to consumers, lower wages to workers, and/or lower returns to investors. The idea that taxing a corporation reduces taxes on, say the working poor, is a cruel hoax. A corporate tax only makes what the working poor buy more expensive, costs them jobs, lowers their lifestyle, or delays their retirement. Under the FairTax Plan, money retained in the business and reinvested to create jobs, build factories, or develop new technologies, pays no tax. This is the most honest, fair, productive tax system possible. Free market competition will do the rest.

Once the average American starts to understand the basic principles at work here, they are going to turn up the heat on the politicians and demand real change, or throw them out in 2012. The politicians in Washington and in the state capitals around the country know the swindle of corporate taxes is being brought into the light of day by

Before the current political cycle is over, the class of 2010 will deliver real change in the way of major tax reform by signing onto the proposal, or their days are numbered. There will be a meeting with destiny in 2012. Maybe the class of 2010 will make some real changes, but they are likely already being wined and dined by K Street. It is questionable whether they are up to the challenge, since we are told they are already being instructed and agreeing to raise the debt ceiling as one of their first orders of business.

There is over $50 trillion in public and private debt in the U.S. that threatens to crush the U.S. economy and the American people in decades of debt slavery. A debt collapse depression is unfolding in slow motion. The municipal bond market in the U.S. and various sovereign debt debacles are now queued up to lead in the next wave of the great global debt collapse, which threatens to bring the global financial system down with it. The only way to put a flow under collapsing asset prices, including any debt that is not real AAA debt, real estate, stocks, etc. will be a radical U.S. reorganization in 2012 with real tax reform.

The U.S. and global economy will have to have growth to overcome the deflationary collapse. The only way to get sufficient growth when the politicians have spent decades destroying the underpinnings of the economy is reorganization. I’m not talking about cocktails at the White House and a few percentage points of temporary Social Security tax breaks for a minimal growth kick to the next few quarters. I’m talking about real reform. The U.S. needs a $30 trillion economy to grow out of the mess the politicians have created with decades of mismanagement and bad policies.

The proposal to scrap the corporate income tax and the personal income tax for a single national sales tax is required. It will be the only way out of the debt death spiral into 2012. The proposal is a truly progressive proposal. If President Obama, the GOP or Democrats really want to address U.S. and global economy and financial disaster that is brewing they will get on board with

If the U.S. scraps the corporate and personal income tax for a single national sales tax, the world will have to follow. Otherwise, every company in the world will want to move to the United States and bring millions of jobs with them. Other major economies including Germany, Australia, China, India, Brazil, etc. will be forced to join in and abolish corporate and personal incomes taxes in favor of only a sales tax that is the only truly viable progressive tax system. It is then that The Great Republic will dawn and a new golden age will commence.

It is likely a farfetched dream, but if president Obama continues his turn toward objectivity and reason and away from the dead and destructive ideologies of the past, and embraces the plan, even I would consider voting for him in 2012. If President Obama and the class of 2010 do not come up with real and radical tax reform, not the same old tax games and more debt that are bankrupting the country, they can look forward to pink slips in the U.S. reorganization of 2012.


David Knox Barker is author of Jubilee on Wall Street; An Optimistic Look at the Global Financial Crash, Updated and Expanded Edition (2009). He is the founder of, and the publisher and editor of The Long Wave Dynamics Letter. Permission is granted for this article to be reprinted if credit is given to the author and a link is provided to

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