Friday, April 15, 2011

The power to tax is the power to destroy

Happy Tax Day.

ASM826 says something that people keep having to say, because most folks keep ignoring:
There is an important difference between individuals being taxed and corporations being taxed. If the government raises a tax, people effectively have less money. They take some, you have less to spend.

Corporations don't work that way. When you tax a corporation, they add the tax to their expenses. They have to, that's what a tax is to a corporation, it's an expense. It raises the cost of the product. They pass it on to the consumer. Every time, all the time.
Corporations don't pay taxes, they collect taxes.  From us.

But there is one other possible outcome.  What if a corporation can't raise prices?  Say, if there's fierce competition?  What does the corporation do?

They lay people off, is what they do.  Meaning they have to cut operating costs by the amount of the tax, and by far the biggest part of "operating costs" are labor costs.

So when the Progressives start talking about corporations paying their "fair share", just remember that they're coming for us.  Either all of us - in the form of higher prices - or some of us - who will join the unemployment line.

But remember, higher costs for the middle class and the poor, and higher unemployment is called "social justice".  And remember that somewhere in Texas, a village is missing its idiot, or something.

10 comments:

genedunn said...

An excellent post BP, I would just point out that when they come for us, it is ALWAYS for all of us. Even if I am not the guy specifically in the unemployment line... I will end up there eventually because the first guy is not able to buy the goods and/or services I produce.

I heartily echo your fact that corporations never pay tax, and I urge folks to support the FairTax (www.fairtax.org). Thanks.

Guffaw in AZ said...

You said it!
I always remind myself if I don't pay, eventually, someone with a gun will darken my door and make me pay, or take me to jail.
(or try to)

Tango Juliet said...

The retail consumer eventually pays ALL taxes.

Borepatch said...

Tango Juliet, this may not be the case in situations where there is lower demand/high competition - the company may not be able to pass the taxes on to their consumers.

My point was that in these situations, the companies will have to cut operating costs, which always always means layoffs.

Anonymous said...

Okay so lets make corporations pay no tax will you also get rid of the corporate welfare that a number of large companies receive. Will a company pay for it's own road and traffic lights allowing access to the main thoroughfares from Greenfield sites. Corporations get a lot back from the government in so many ways that corporations like GE pay little or no tax and even get a big refund check.
Enough rambling basically zero tax means zero from the government. You can not do one without the other.

elmo iscariot said...

If only we had some historical precedent for this being a bad idea...

[wv: "fiatic". n. One obsessed with unbacked currencies.]

ASM826 said...

Here's where those extra hits came from!

aczarnowski said...

@crownarmourer: *sigh* Roads and general welfare always get trotted out when corporate taxes are discussed. And it's always a red herring.

That there are roads and corporations use them does not change the fact that corporations only collect tax, they do not pay it, and therefore corporate "tax" is just another hidden tax on consumers.

I have no problem eliminating subsidies to corporations, but that's a different conversation. Your collusion of topics is not helping the conversation. Probably by design.

SiGraybeard said...

@aczarnowski - probably not by design - probably just the fulfillment of "Never ascribe to malice that which can be explained by stupidity".

Way, way too many people believe companies pay all their taxes and don't pass on the costs to consumers (or lay off workers/go out of business...). Probably never ran even the smallest business. It's why people who should know better were all irate that GE hired a bunch of accountants to reduce their tax burden. Well, to be fair, Immelt probably exchanged sleptons with a few too many people in DC.

Ken said...

What Borepatch said above. They can't always pass along the cost; sometimes they incur margin collapse instead. Result!