4. Level Playing Field Act
Summary: Require 1099’s to be issued for all corporate revenue and reported to the IRS.
Background: “Oligarchy” is a word that excites insiders but baffles most regular voters. Our problem isn’t that we have rich people in the United States, it’s that we have allowed a second set of rules that mostly benefit the already rich at the expense of the rest of us. Many of those rules are designed to advantage corporations over actual people. Our treatment of reporting requirements for revenue are a perfect example – we treat corporations better than people. The Level Playing Field Act is a clear example of how government can re-level the playing field; it gives Red State Democratic candidates an actual answer to voters’ concerns about corporations.
Background: “Oligarchy” is a word that excites insiders but baffles most regular voters. Our problem isn’t that we have rich people in the United States, it’s that we have allowed a second set of rules that mostly benefit the already rich at the expense of the rest of us. Many of those rules are designed to advantage corporations over actual people. Our treatment of reporting requirements for revenue are a perfect example – we treat corporations better than people. The Level Playing Field Act is a clear example of how government can re-level the playing field; it gives Red State Democratic candidates an actual answer to voters’ concerns about corporations.
In the eyes of the law there are two kinds of persons in the United States: natural persons and legal persons. Natural persons are living, breathing human beings. Legal persons are the various forms of corporations, essentially a sheet of paper with the same rights to participate in our economy as a natural person. The invention of corporations was a significant step in the development of our economy, making possible the financial collaboration necessary for massive projects like building a factory. However one of the most fundamental ways that our government has allowed our economic playing field to become unlevel is the difference in treatment of living breathing persons and legal persons. In many different ways and without a lot of attention, our government now treats legal persons better than it treats living breathing persons.
A fundamental example is the difference in tax reporting. By law, any money paid to a living breathing person has to be documented in a W2 or 1099 sent to the person, and also be reported to the IRS. Why? Because if the IRS knows how much every living breathing person is paid, it’s much harder for living breathing persons to cheat on their taxes.
We don’t have that same requirement for legal persons. Corporations aren’t required to issue 1099’s to other corporations for the money they paid them, or report those payments to the IRS. Instead, legal persons are largely on the honor system – it's up to them to make sure they accurately report all of their income to the IRS.
Does this lack of transparency into corporate revenue allow some corporations to under-report their revenue? We don’t actually know - the IRS has no easy way of knowing if the legal person is telling the truth when it reports its income. But it doesn’t matter - there is no reason that reporting obligations for legal persons should be any different than the reporting obligations for living breathing persons. There is no reason for anything other than a level playing field – the federal government should have the same visibility into the finances of corporations that it has into the finances of actual people. The IRS needs to require 1099’s to be issued for all corporate revenue and that information to be reported to the IRS. And who knows, once corporations also have to start reporting their revenue, maybe we will see an increase in tax collections without actually increasing our tax rate.