Isn’t Profit a Tax on Workers?

The people of a country generate its Gross Domestic Product with the support of the nation’s infrastructure, judicial protection and public services, and a part of the overall revenue is channelled to fund the maintenance and development of the state’s capability to discharge its duties to the people. That is taxation.

The people in a company generate its turnover with the support of those in charge of the company putting in place effective systems and investment, and a part of the returns is diverted to cover what those who own/run the corporation believe are necessary to keep them doing what they do. It is their profit from the enterprise – it is in essence also a form of taxation.

Taxing people to pay for important support that would not otherwise be forthcoming – be it a deduction for the work of the government, or one for the input of corporate chiefs – makes sense, so long as the deductions are set at an optimal level.

Obviously if the people in charge are taking too much from those with whom they are meant to be working as a team, misspending the money on ill-conceived projects, or keeping large amounts for their own gratification with scant regard for those they have taken the money from, then the arrangements need to be challenged.

In the case of a country’s government, the closer we get to a democratic system of accountability, the more likely citizens can scrutinise how much is being taxed and choose through electoral contests the tax/spend options that make the most sense to them.

In the case of companies and those who control them, despite parallel arguments having been made about democratising corporate governance, most workers have no say at all how much of the revenue they generate together is taken away as profit. And if the amount taken away satisfies those with power, but leaves the company in question less viable or the workers more insecure, not much can be done under an autocratic regime.

It is ironic (though hardly surprising) then that the plutocratic elite complain incessantly about being taxed by a democratic government that citizens can freely play a part in electing, scrutinising, and removing; while at the same time they tax the workers of organisations they preside over without any form of democratic input from those workers to ensure that the proportion taken out as profit is fair and good for the business’s own future.

Of course, there’s the familiar retort that workers can move to another firm if they’re not happy with too much money taken away from them as profit for those in charge, whereas citizens cannot escape from their country and its taxes. In reality, economic conditions make all the difference. Workers, with unions’ negotiation powers curtailed and social security slashed, have little choice but stick with companies that treat them with scant regard. Wealthy citizens, by contrast, can set up a few homes abroad or hide their money off-shore, and avoid paying taxes.

But the plutocrats will no doubt point out, it’s their company, they can take out what they want as their profit, and they can’t see why anyone else should have a say about it. Just as the autocratic rulers of old used to say, it’s their country, they can take whatever they want, and they laugh at the thought that anyone else should have a say about it.

Let’s see how long the reign of corporate dictatorship lasts.