We won't tax you. We'll tax corporations
There is a well known saying, "Corporations do not pay taxes." I don't know who made the original quote but it is something to remember. The most important thing to a corporation is the bottom line. It affects how much money the owners of the company make. It affects how much money they have for research or promoting their product, it affects how much they pay their employees, it affects how many employees they hire, and it affects how much their product costs.
So when the government comes along and, "taxes the corporations" they are adding to the companies costs. This usually means that the products they sell will increase in price, thus we all pay for the tax in higher prices for goods and services. Or they may pay for the tax by reducing payroll. This way the companies employees pay for the tax through reduced wages, reduced benefits, or maybe by losing their job. Of course if a lot of people lose their jobs then they reduce their spending which ripples throughout the economy. So once again the people pay for the tax.
So why do politicians use this ploy when they know that eventually we the people will bear the price of the new tax? Easy, by saying that they are going to tax someone else, they get more support for their tax. If the politician was honest and said, "I'm going to raise everyones taxes by 3 percent" then people would get upset. They may start to question whether the program is needed, or maybe they will want to know how the many is going to be spent. But if they put the tax on some nameless, faceless entity, then people don't question the need for it. After all, I'm not paying for it, so why should I care? That is how the government successfully takes away more and more of the nations wealth. And it is also one reason why jobs are leaving the country. The companies can avoid some taxes by hiring offshore companies to do the work for them.
So the next time you hear a politician say, "we won't tax you, we'll tax the corporations.", remember it's a big lie. Eventually it will be you that pays the price of the tax.
- Thomas Paine 2
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8/10/2008 4:41 PM
2Taboos.com wrote:
Barack Obama's plans for change include massive new programs and taxes. Candidate Obama promises that middle and lower income groups will not have to pay for any of his programs. Instead, he will fund his programs by taxing those greedy rich people and businesses. So lets all stand up and cheer for Candidate Obama who promises to rob Peter to pay Paul. But wait, what is the consequences of all of these new taxes? One important thing to consider is our ability to compete with other industrial nations. A report by the Tax Foundation shows that when you combine ...
I never really thought about corporations in this way before. What I worry about when I think about taxing large corporations is how much the big wigs and owners are making. Good for them for making money, thats great, but they should pay taxes just like everyone else.
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Taxing corporations does not mean that the top executives pay more tax. It means that the corporation has another expense added to their balance sheet. An expense that can reduce their competitiveness internationally, or force them to change the way they do business in order to reduce costs to compensate for the new tax.
The way they change their business is to reduce their cost (reduce quality, reduce employees, move overseas) or increase their prices.
When it comes to executive pay I think the stock option bonuses is the most damaging in terms of how executives and corporations do business. Like Newton said for every action there is an equal and opposite reaction. He may have been talking about physics and the law of motion but the same idea can be applied to business and politics...
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