| Richard Stallman: Fixing 'too-big-to-fail' Feb 5th 2013, 21:47 http://blogs.reuters.com/great-debat...o-big-to-fail/ An intriguing idea from RMS...what do folks think? RMS is one of the most amazing, intelligent and utterly infuriating people on earth, all at the same time. Reading The Cathedral And The Bazaar should be mandatory for anyone in high-tech. (You don't have to agree with it, just read it). A snippet of his latest idea, read the full thing at the above link. Quote:
It is clear that the larger companies get, the harder it is to enforce antitrust laws against them. Yet, a business-friendly government can vitiate the law simply by launching no antitrust cases – as the Bush administration did.
When the government wins such a suit, the court splits up the company to remedy the specific anti-competitive behavior proved. It can't split the company into 50 parts just to ensure they are all small enough. We can't fix the problem of too-big-to-fail companies this way.
I propose another method *– one that can be applied to all companies. It works through taxes. There will be no need to sue companies and split them up – because they will split themselves up.
The method is simple: a progressive tax on businesses. We tax a company's gross income, with a tax rate that increases as the company gets bigger. Companies would be able to reduce their tax rates by splitting themselves up.
With this incentive, over time many companies will likely get smaller. They could subdivide in ways they consider most efficient – rather than as decided by a court. We can adjust the strength of the incentive by adjusting the tax rates. If too few companies split, we can turn up the heat.
Big companies can afford clever lawyers. They may try, for example, to pretend to split up into several companies that effectively work together as one. So the new tax law must recognize this and treat such entities as one company that pays the rate for its combined size. As for how to recognize and define such combinations, we can probably borrow solutions from antitrust law.
Corporations today are often multinational, and can play accounting games between their divisions in various countries. Yet we should not let this thwart the plan: A multinational company's tax rate for income in the U.S. should be based on the size of its operations worldwide.
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