For some time now I have been concerned about the consolidation of our industries and in what may be the result. An obvious one is competition will decrease with prices rising as perhaps quality deteriorates. This potential decrease in quality can be partially offset by competition coming from overseas. This seems logical.
The recent reduction in corporate tax rates brings to light a bigger, riskier problem for the country. BLACKMAIL BY CORPORATIONS.
As Industries consolidate we become more dependent on fewer entities for job creation and economic growth. With more dependence, comes more power to these large entities. Power to control wages. Power to control their taxes. Power to control our politicians. With control over our politicians they control our laws. They could become so powerful they could end up controlling their own tax rates.
Someone will argue that before this happens government will step in to assure corporate tax rates remain high enough so the average citizen will retain their high standard of living that we have grown accustomed to. I am not convinced.
The world has changed. All nations have recovered from the devastation of World War II. Modern transportation, computers and the internet effectively has made the world smaller. Buick produces more cars in China than in the United States. Europe is presently the largest consumer market in the world. In a relatively short time Europe will be replaced by Asia as the largest marketplace. No doubt there are new innovations on the horizon that will make the world even smaller.
Another result of lowering corporate tax rates is wealthier individuals will use corporations as a tax planning tool. If you own a corporation you can effectively lower your tax rate to 20% and build wealth that much faster. When you need personal income you can declare a dividend and transfer funds to your personal account.
As corporations consolidate they gain more power and influence. With nations competing for jobs, corporations will pit one nation against another reducing the nation's wealth at the expense of the consumer. Political power further transfers from nations’ capitals to corporate board rooms.
I foresee a day when a large, multinational company threatens to move jobs overseas if their taxes are not eliminated. This will be possible because of technology including the advances in transportation.