Back in December, 2008, Massey Energy, which was responsible for the recent mine disaster in West Virginia, pleaded guilty to criminal charges in the deaths of two miners two years prior.
Now that the Supreme Court has ruled that corporations are the same as people, shouldn’t Massey get the same penalty as a person who commits the same crime? Of course, you can’t incarcerate a corporation, nor can you give it a lethal injection. So what penalty would be appropriate to punish the “personhood” of Massey Energy? Should the CEO get jail time? Should the Board of Directors? Or, is a corporation not really the same as a person?
Massey was fined $4.2 million for the 2008 crime. Their income was almost $3 billion in 2008. This would be the same as a $98 fine for a person who was found guilty of causing two deaths and whose income was $70,000 per year. Hardly seems just.
Will Massey ever be punished as severely as a flesh-and-blood person? File this under “When pigs can fly.”
7 Comments
Without wishing to defend Massey in any way, your analogy of their fine with an individual is flawed. For a company gross income before operating expenses is in no way equivalent to a private individual’s salary
Massey’s gross income before operating expenses was $2.98 billion. Their net income after operating expenses was $133 million. After taxes their ‘take home’ income was $56 million. The $4.2 million fine represents 7.5% of their take home income.
A person earning $70,000 has a take home of $52,500. 7.5% of that is $3,900.
$3,900 is a bit more significant, but is it enough? No.
Massey were not just negligent. I’ve worked in the coal mining industry on two continents and Massey are criminally negligent. Fining a company punishes the share holders not the management – who still get paid. Jail time for the officers is entirely appropriate.
I agree with Quidam on the point of criminally charging the individuals responsible. It is common in other businesses for instance, in a bar or rest the server/bartender who serves an underage patron can be charged, along with the company getting fined or having their license suspended.
Going after those responsible for the negligence creates a greater incentive to not cover for the company when your butt will be on hanging in the breeze. The company can still be fined or sued to get just compensation for the victim(s).
Quidam, I knew someone would make this comment about corporate gross income not being equivalent to a private individual’s salary. The same argument was made on the original site. But your new formulation is equally flawed since it does not include expenses related to earning an income.
Do I need to own and operate an automobile in order to get to work? Do I need to buy suits? Pay for childcare for my children? Did I need to spend years and lots of money earning a degree to get my job? Did I move to a different city because there were no jobs where I live? A company like Massey would get to deduct all of these in determining their net income. Heck, companies even get to deduct the money they spend to buy politicians!
Deciminyan used gross income for both Massey and an individual and came up with $98 as an equivalent fine. You compare Massey’s net income after all operating expenses to an individual’s income after deducting only taxes and come up with $3,900. The truth lies somewhere in the middle (and being someone with quite a bit of experience with corporate accounting, I believe it is closer to the low end, where Deciminyan put it).
But this argument doesn’t matter (which is why I didn’t mention it). Even you acknowledge that $3,900 doesn’t seem like sufficient punishment for negligently killing two people, not to mention that it punishes the shareholders and not the people who actually committed the crime.
The problem is that corporations are not individuals. Individuals have one set of deductions, tax credits and tax rates, corporations another. Individuals can deduct things corporations can’t and vice versa. Corporations have more things they can deduct and (in the USA) pay higher tax rates. Trying to compare them is a fallacy (false analogy)
BTW ‘Buying politicians’ is not deductible in the US. Bribes and kickbacks, contributions to political parties or candidates, dues and membership fees for social clubs, lobbying expenses and penalties and fines are all non deductible
http://www.irs.gov/publications/p535/ch11.html#en_US_publink1000209189
Individuals in the Massey company (and BP) were individually culpable, the corporation profited by their venal acts and collectively acquiesced to them. There is an individual liability that should be punished (jail or if engineers by losing their license to practise) and a corporate liability that can only be punished by fines.
I support the concept of corporate person hood, their rights under the 13th amendment are severely violated and I demand that be fixed.
Corporate Death Penalty
http://www.corpwatch.org/article.php?id=1810
Now more than ever…
How about BP for negligent homicide of the 11 people who died on the Deepwater Horizon?