Opinion: It's Time to End the Smallness Tax!

The role of social media in politics has increased ten-fold in light of recent events, including Russian interference in the 2016 election, which included the use of social media "troll bots" to spread fake news and propaganda; the sale of Facebook users' private data to Cambridge Analytica, a political consulting firm that aided Donald Trump's campaign for president; and, more recently, news of social media companies such as Facebook, Twitter, and YouTube using various tactics to censor political speech, from "shadow banning" to demonitizing content to outright banning of accounts.

This has resulted in a larger debate about whether these "Big Tech" companies are to be treated as private companies, free to do whatever they want and dip into politics as they please, or if they qualify as public institutions that have socio-political responsibilities to the public, and, if the latter is the case, what exactly these responsibilities are.

While I'm against censorship in principle and believe the best way to combat "bad speech" is with more speech, I generally believe that these tech companies are private corporations that should be free to do as they please. If Facebook wants to use its resources to aid political campaigns, provided this behavior is mentioned in the terms of service/user agreement all users must agree to when they sign up, that is the company's right. If YouTube wants to delete or demonetize every video that does not support a particular political viewpoint, then more power to the company.

However, there are two caveats to this position. For one, I am concerned that we live in a country where a few giant corporations have such a monopoly on social media that, as we saw with Alex Jones a few weeks ago, a few billionaires can with the "push of a button" almost entirely delete a private individual's presence on the Internet in a matter of days. That is not how the free market is supposed to work. A truly free market would mean that there is immense competition from a variety of businesses, large and small, on a level playing field, and the businesses with the best content would attract the most customers and become the most successful. In a perfect world, private censorship would be permitted, but if a company chose to practice censorship too heavily or too discriminatorily, the invisible hand of the free market would lead that company to lose its customers and companies that provided for more "open" and "free" public discourse would win out.

That brings me to my second caveat, which explains why we don't have this sort of ideal free market and instead have a bit of a "rigged system" if you will, that favors large corporations started by the wealthy and well-connected while small businesses are left in the dust. The answer goes back to the tax code. These corporations, many of which have hired lobbyists to practically write the tax code with our leaders, benefit from a system that favors the wealthy. And this rigged tax code is not limited to the highest level of government; it's ingrained even at the state and local levels. The New York Times and MarketWatch have published excellent pieces shining light on some of the strategies these corporations use to ensure they pay peanuts in taxes, while still consuming a healthy diet of corporate welfare.

The answer, aside from, obviously, ending corporate welfare and excessive tax breaks, is to target what I call the "smallness taxes," or taxes that favor corporations that produce their goods or services "in-house" instead of hiring outside parties to provide parts of their products. Our tax code requires any economic transaction that takes place between two separate entities to be taxed on both sides of the transaction. The purchaser of the service must pay a sales tax, while the provider of the service pays a corporate income tax. Meanwhile, companies like Facebook that are huge corporations and produce all parts of their products within their own companies are exempt from these transaction taxes, giving them a disproportionate economic advantage over smaller companies that must rely on services from other companies for parts of the goods they produce. If we reform this institutional bias in our tax code, I think we will lay the foundation for a fairer society that gives "the little guy" more of a chance to compete with the "major players."


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