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Corporate Personhood

Do you believe in corporate personhood?

  • Yes

    Votes: 2 6.5%

  • No

    Votes: 24 77.4%

  • Other (Please explain)

    Votes: 5 16.1%
  • Total voters
    31
Guy Incognito said:
If you purchased 100 shares of an unincorporated business, on same facts as your describe, you would be legally liable. Your distinction between "investors" and "passive investors" does not exist under the law, nor should it. If you engage in an activity you ought to be personally accountable for the consequences of the activity, just as the law is applied to everyone else.
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From irs.gov:
There Are Two Kinds of Passive Activities:

Rentals, including both equipment and rental real estate, regardless of the level of participation
Businesses in which the taxpayer does not materially participate on a regular, continuous, and substantial basis
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Passive Activity Losses - Real Estate Tax Tips
 
Guy Incognito said:
Why not? Every partner in a partnership is jointly and severally liable. Why do shareholders in a corporation get special treatment? This only simply wordplay, not a meaningful distinction.
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The distinction is that when 2 or 3 people jointly own a small business, it is a reasonable assumption that they're all involved. (And if they aren't, there are limited liability partnership agreements available, where some of the partners can be shielded if they're playing a passive role.) When 100,000 people jointly own a large corporation, it is NOT a reasonable assumption that each of them carefully researched their decision and endorses all of the corporation's actions.
 
Kandahar said:
The distinction is that when 2 or 3 people jointly own a small business, it is a reasonable assumption that they're all involved.
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It's also a reasonable assumption that a shareholder is involved. The act of purchasing a share involves one in the business.
 
MaggieD said:
From irs.gov: Passive Activity Losses - Real Estate Tax Tips
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This is entirely irrelevant to what we are discussing, which is not taxes but liability. The fact that the IRS considers a type of income "passive" does not in any way impact the liability to which the income earner is exposed.

This citation actually goes to prove my point. A "passive" investor in an unincoporated business is going to be liable while a "passive" investor in a corporation is not.
 
Guy Incognito said:
It's also a reasonable assumption that a shareholder is involved. The act of purchasing a share involves one in the business.
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That is certainly not a reasonable assumption. Some people don't even know that they HAVE shares in specific stocks. A 65-year-old who saved for her retirement by investing in an index fund probably doesn't even know what the component stocks of that fund are. Nor should she be expected to. Even among people who actively invest in certain stocks, there is a certain information asymmetry. A small-time investor is not going to have access to corporate secrets or the decisions that go on in the boardroom or the day-to-day happenings of the company.

It makes no sense to hold people like this personally liable for the actions of the corporation. They have nothing to do with those decisions, and have no easy way of even KNOWING about those decisions. If people face the prospect of losing everything they own because they bought a share of stock, then people simply will stop buying shares of stock. And then business funding will dry up and the economy will grind to a halt.
 
Kandahar said:
Very few people would be willing to invest in stocks if they were risking their entire life savings every time they plunked down $100 to buy a few shares of some corporate stock.
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Very few people would be willing to invest in stocks if they were personally responsible for the liabilities of the companies they own. Maybe that just means very few people should be investing in stocks :shrug:

It is absurd to suggest that proper course of action is to protect businesspeople from the consequences of their own actions. Yet, nonetheless, that is what you are advocating.
 
I like Kandahar's idea that liability should only be worth the investment amount. That makes sense since if it consumed the investment amount for all investors, the business would likely declare bankruptsy anyway.
 
Kandahar said:
A 65-year-old who saved for her retirement by investing in an index fund probably doesn't even know what the component stocks of that fund are.
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Yet, if that same 65 year old bought an unincorporated company and knew nothing about it, the law would hold him personally accountable. Should the government protect him?
 
megaprogman said:
I like Kandahar's idea that liability should only be worth the investment amount. That makes sense since if it consumed the investment amount for all investors, the business would likely declare bankruptsy anyway.
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That is the same system we have at the moment. If a corporation declares bankruptcy, its creditors are out of luck. If an unincoporated business goes bankrupt, its creditors can go after the businesspeople who made up the bankrupt business. That is the very definition of personal accountability. The extent of their investment is irrelevant, as, absent any coercive corporate regime, partners are jointly and severally liable for debts of the business.
 
I just want to observe the irony that we have three left-wingers here arguing in favor of corporate welfare.
 
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Guy Incognito said:
Very few people would be willing to invest in stocks if they were personally responsible for the liabilities of the companies they own. Maybe that just means very few people should be investing in stocks :shrug:
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Businesses typically have only three sources of funding available to them: 1) Equity from selling stock, 2) Debt to banks, 3) Retained earnings from sales to customers. If you cut off Stream #1 by making it unattractive for people to buy stocks, then Stream #2 will dry up as well. As corporations scrambled to make up the loss of equity by increasing their debt, it would push interest rates sky-high and price most of them out of the market. And if Streams #1 and #2 have both run dry, then there is no way of increasing sales to customers in most cases, so Stream #3 would dry up as well.

In other words, what you are suggesting is an effective way to bankrupt the majority of businesses, but it's not a very effective way to run an economy.

Guy Incognito said:
It is absurd to suggest that proper course of action is to protect businesspeople from the consequences of their own actions. Yet, nonetheless, that is what you are advocating.
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You're using "businesspeople" here as a populist attempt to conjure up an image of an unsympathetic guy in a suit smoking a cigar. But in reality, you're also talking about teachers, secretaries, soldiers, construction workers, truck drivers, nurses, and waiters who may be trying to save for their retirement by investing in index funds. Or you're talking about 15-year-old kids who are personally interested in finance and maybe have a few hundred dollars invested in specific companies, just for fun.
 
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Haven't finished reading the thread, but it seems we're diverting from the concept of "personhood" (incorporation means "into a body") to the issue of limits on personal liability.

Liability limits are a reasonable concern in our lawyer infested society.

Corporate personhood confers the rights of a person onto entities that ARE NOT PEOPLE, and therefore CANNOT suffer the consequences for their actions that a person can. No prison, no death penalty, etc.

But they obtain first amendment rights etc as if they are persons.

This is the pertinent question.

The other issues could be addressed by other mechanisms, ie limiting personal liability.
 
Guy Incognito said:
Yet, if that same 65 year old bought an unincorporated company and knew nothing about it, the law would hold him personally accountable. Should the government protect him?
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No. There's more of an expectation of due diligence and commitment if some guy approaches you and asks you for some money to finance his business, than if you buy a share of Apple stock just because you like the company.
 
Kandahar said:
You're using "businesspeople" here as a populist attempt to conjure up an image of an unsympathetic guy in a suit smoking a cigar.
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You're making a straw man out of me and I do not appreciate it. My argument is not based on populism, nor am I indulging in a caricature of businesspeople, rather it is a principled libertarian stand in favor of free markets.

I am well aware that a kid selling lemonade is as much a businessperson as anybody. You are the one who seems unable to follow that to its logical conclusion that liability should be equally applied to all businesspeople, regardless of their ability to purchase government influence.
 
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Guy Incognito said:
Yet, if that same 65 year old bought an unincorporated company and knew nothing about it, the law would hold him personally accountable. Should the government protect him?
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My goal in this was the idea wasn't so much financial but if someone was enough of an owner in a company to have some impact on decisions, than if one of their employees does something illegal and it was determined that part of the problem was a failure in adequate businesses processes to prevent such activity, those higher up the chain should be held personally liable. For example if the business was a bank and a loan officer commits fraud in the course of doing business than the business owners should have some liability due to a lack of oversight to prevent the fraud in the first place. Or if some company dumps a chemical, than a majority owner should possibly be liable for jail time or massive fines. But again, it depends on whether this particular stock owner has some input in the decision making process and isn't simply an investor who owns a few shares.

Obviously it would have to have been preventable in the first place, but thats what courts are for, figuring that sort of stuff out.
 
Mr. Invisible said:
I just want to know, how many of you think corporations are people and if so, please, tell me exactly what makes up a corporation and why it is deserving of personhood.

Personally, I think that coporations should not be considered people. A corporation is nothing but a thing. It has no soul, cannot breath, and in general portrays little to no qualities that a person has.
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For somethings such as contracts etc, it's a useful legal fiction to call corporations persons. Thats said, I think it's a remarkably horrible idea and the seed of the downfall of representative governments to consider corporations to have the rights to lobby our govt.
 
Mr. Invisible said:
I just want to know, how many of you think corporations are people and if so, please, tell me exactly what makes up a corporation and why it is deserving of personhood.

Personally, I think that coporations should not be considered people. A corporation is nothing but a thing. It has no soul, cannot breath, and in general portrays little to no qualities that a person has.
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Is your neighborhood get-together a person? Is a union a person? Is an association a person? In the literal sense, of course not. However, these GROUPS of people are entitled to the exact same rights enumerated in the constitution, including the right to speak.
 
Simon W. Moon said:
For somethings such as contracts etc, it's a useful legal fiction to call corporations persons. Thats said, I think it's a remarkably horrible idea and the seed of the downfall of representative governments to consider corporations to have the rights to lobby our govt.
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You have it precisely backwards. The problem is the liability shield that corporations hide their assets behind. Corporate free speech, on the other hand just makes sense. It is only in the context of our corporatist system that group political lobbying is corrupted. If limited liability were done away with (and corporate welfare generally), then there would be no danger in Citizens United.

ElijahGalt said:
Is your neighborhood get-together a person? Is a union a person? Is an association a person? In the literal sense, of course not. However, these GROUPS of people are entitled to the exact same rights enumerated in the constitution, including the right to speak.
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But a neighborhood get together is not entitled to limited liability. That's the point.
 
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MaggieD said:
Then you favor dissolving every contract any corporation has entered into. Nope. It is not just a way to avoid consequences. It is a way for a corporation to own property, enter into union contracts, purchase machinery, hire/fire, etc., etc., etc., etc..

What you are objecting to is the corporate veil. That should be tested-tested-tested because I suspect more of us than ever find it wrong that individuals can limit their peresonal liability by hiding behind it.
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Being able to enter into a contract does not equate into "personhood". There are trust, corporation, government etc, all distinct entities that are not "person" but with ability to enter into contract.
 
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nonpareil said:
Being able to enter into a contract does not equate into "personhood". There are trust, corporation, government etc, all distinct entities that are not "person" but with ability to enter into contract.
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Legal personality - Wikipedia, the free encyclopedia

Legal personality (also artificial personality, juridical personalty, and juristic personality) is the characteristic of a non-human entity regarded by law to have the status of a person.

A legal person (Latin: persona ficta), (also artificial person, juridical person, juristic person, and body corporate, also commonly called a vehicle) has a legal name and has rights, protections, privileges, responsibilities, and liabilities under law, just as natural persons (humans) do. The concept of a legal person is a fundamental legal fiction.​
 
Simon W. Moon said:
Legal personality - Wikipedia, the free encyclopedia

Legal personality (also artificial personality, juridical personalty, and juristic personality) is the characteristic of a non-human entity regarded by law to have the status of a person.

A legal person (Latin: persona ficta), (also artificial person, juridical person, juristic person, and body corporate, also commonly called a vehicle) has a legal name and has rights, protections, privileges, responsibilities, and liabilities under law, just as natural persons (humans) do. The concept of a legal person is a fundamental legal fiction.​
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Yep, I am wrong. It's fascinating to read the "corporate personhood" actually has a history all the way from the Roman time.
 
Guy Incognito said:
But a neighborhood get together is not entitled to limited liability. That's the point.
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You have suggested that individual stockholders be held liable for the actions of the corporation, so let's explore that analogy more deeply: If I attend a neighborhood get-together and chip in $10 for food, and someone at the party breaks a window, should *I* be held personally liable for it? Of course not. You go after the individuals who caused the damage, or possibly the "CEOs" of the party who organized it. You don't go after everyone who had the most remote connection to the event.
 
Kandahar said:
You have suggested that individual stockholders be held liable for the actions of the corporation, so let's explore that analogy more deeply: If I attend a neighborhood get-together and chip in $10 for food, and someone at the party breaks a window, should *I* be held personally liable for it? Of course not. You go after the individuals who caused the damage, or possibly the "CEOs" of the party who organized it. You don't go after everyone who had the most remote connection to the event.
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That's not what is being suggested though.

In the discovery process of tort, the guilty/negligent (however you want to word it) are identified and those individuals are sued for their shares of ownerships, down to personal holdings.

If the business, as a group, decides to market an unsafe product then all those who knew and still went a long with it, are wholly liable.
The main and most significant problem with limited liability is that those that commit the tort can shield their assets.
 
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ElijahGalt said:
Is your neighborhood get-together a person? Is a union a person? Is an association a person? In the literal sense, of course not. However, these GROUPS of people are entitled to the exact same rights enumerated in the constitution, including the right to speak.
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But why do these groups have those rights separate to their rights as individuals? If a corporation exercises it's right to free speech, you're gonna get an individual who belongs to the corporation making the actual speech, if a corporation enters into a contract, it's gonna be an individuals signature on the paper, I admit this isn't my forte of knowledge, but isn't corporate personhood redundant considering it's a collection of individuals with rights?
 
Guy Incognito said:
I just want to observe the irony that we have three left-wingers here arguing in favor of corporate welfare.
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Count this left winger in with the libertarians on this. It is so intuitive to me that those that invest in an endeavor should be aware of and support the actions of the company and accept the consequences for their actions just like everyone else. This special protection is an invitation to unethical behavior. Enron and the recent wall street fiasco come to mind on a large scale.
 
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