Friday, September 01, 2006

Ford supporters grasping at straws

This guy is really grasping at straws.

In a shocking move, the Ford campaign revealed to today that it has obtained documents from the Tennessee Secretary of State showing that in both 1984 and 2003, Bob Corker's companies did not pay taxes. Because of this failure to pay, the Tennessee Secretary of State revoked the business charters for Corker's companies in those years.

The first business was Amnicola Associates, Inc. In 1984 Corker was its registered agent and the company did not pay its state business taxes. The second company was the Corker-James Limited Partnership, of which the chief partner was Corker Properties. This company also did not pay its state business taxes, this time in 2003. Both of these egregious transgressions did not go unnoticed, and as mentioned the Tennessee Secretary of State in both years revoked the corporate charters of these businesses.
There are several problems with these allegations. First, serving as a registered agent of a business does not impose any obligation on the registered agent to see that a business pays taxes or file its annual report. The primary purpose of the registered agent is to accept service of process if the company is sued. The secondary purpose is to be a back-up contact person in the event that the company fails to pay its taxes or file its annual report in a timely fashion. Many attorneys serve as registered agents for their clients. CT Corporation Services serves as registered agents for thousands of corporations across the country. Are they somehow culpable if one of the corporations for which they serve gets administratively dissolved? Absolutely not.

Secondly, even if we assume that Corker was the owner of the businesses (which he likely was for at least one of them), the fact that a business entity that a person owns fails to pay state franchise and excise taxes does not make the business owner culpable or liable in any way and to suggest otherwise is either an act of deliberate misrepresentation or a show of pure ignorance. If I own shares in a business and the business fails, that is part of the business world. The fact that the business owns money does not mean that I personally owe the money. The primary purpose of the business entity is to protect the owners from the liabilities of the business. For example, suppose I owned shares in Delta Airlines at the time of its bankruptcy. In fact, suppose I own all of the shares. The fact that Delta filed bankruptcy, owed tons of creditors, taxes, etc. does not mean that I personally owe those creditors, taxes, etc.

As a society, we want people to invest in businesses because they create jobs, invigorate the economy and create tax revenues. In order to encourage such investment, our society has decided that allowing the formation of business entities to protect investors is a wise thing to do because it allows investors to limit the amount of their personal wealth that will be at risk in any particular business venture. Sometimes these businesses fail and sometimes they owe money when they do, including taxes. That's just part of a capitalistic society and I am glad that our society allows investors to take risks in such a calculated way. We are all better off for it.

As for the referenced post, I find nothing shocking about these allegations and there is certainly nothing egregious about them. It is extremely common for this to happen. Acting like this is a big deal is, well, lame. What I find shocking is the fact that Bob Corker made a voluntary tax payment to the U.S. Treasury for the purpose of reducing the national debt. While I laud the efforts of anyone who wants to reduce the national debt, I cannot understand why anyone would make a direct donation to the government. If you can't find a charity that you like well enough to give to instead of the federal government, you suffer from a lack of imagination. Of course, this could provide some valuable insight into the individual, as it suggests that he believes that government can solve more problems with that money than a private charity. I disagree with that notion completely. As Ronald Reagan once said, government is not the solution to our problems. Government is the problem.

Update: One of the Corker bloggers has more on this.


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