Having visited with hundreds, perhaps thousands, regarding taxation as well as being a preacher and speaker internationally, I have observed literally thousands of individual’s responses to taxation. Very few like paying taxes, most of us would like to lower our own taxes, and the majority tend to view favorably—whether consciously or subconsciously—plans that tax others while overlooking us or even lowering our taxes.
Because the percentage of the general public who own corporations is quite small it is easy to sell the public on taxing the rich corporations, thus allowing individuals to enjoy the benefits of bloated government without paying for it. Politicians have learned that the fastest way to raise tax revenues without infuriating the populace is to increase “Corporate Taxes.” Unfortunately, few people comprehend the Corporate Tax shell game.
Corporations do not pay taxes.
Regardless of legislation or what the IRS code specifies, or who writes the check to the IRS, corporations do not pay taxes. Corporations may serve as a government proxy to collect taxes from the public, but the corporations themselves are not going to pay income, sales or use taxes… they won’t even pay FICA or other withholding taxes. This is economic reality. Let’s break it down to the simplest business perspective:
When the government imposes corporate taxes, they have simply increased the price of every product and service we consume, thus indirectly raising our taxes but requiring corporations, instead of the IRS, to collect them from us.
The irony is the effectiveness of this subterfuge; the majority of our populace has never comprehended how we, as individuals, pay every penny of the taxes collected from every corporation. But then, few realize a shell game is being run on them when they are its target. When a politician tells us he is going to lower our taxes by increasing corporate taxes, he not only affirms his intention to raise the taxes we are paying but he affirms how stupid he believes we, the patsy of this shell game, are as he can lie to us and we will be pleased with him.
If we then pat him on the back, thank him for looking out for us, and cast another vote for him, we are confirming his estimation of us.
Corporations do not pay taxes; they pass them on to all of us who buy their goods or services.
Politicians understand this economic principal but have a vital vested interest in keeping a gullible American public thinking only selfishly so we will continue to support those who are stealing from us. As long as politicians incite the avarice in our hearts, so we choose to take another’s earnings to provide benefits for ourselves, we will not acknowledge the deception in the politician’s rhetoric. We accept corporate taxes to provide personal benefits for ourselves at an expense to someone else. Shame on us! We deserve then to pay higher prices for every product purchased and every service used.
But that’s NOT the end of the story.
The economic fallacy of funding government through corporate taxes is larger though than just collecting taxes through a different avenue instead of politicians being honest with us about raising our taxes. The reality is, if we opt for collecting revenues for the government through Corporate Taxes we are opting for an inherently inefficient process resulting in much higher total taxes than if we simply paid the taxes directly.
First, when a corporation is required to file a tax return and pay taxes it becomes necessary to lease more office space and equipment, hire more accountants and clerical staff, and pay the corresponding salaries and benefits. Thus the very process of paying corporate income taxes increases the price of the goods or services provided well beyond the actual amount of the tax collected.
Next, profit is calculated as a percentage of total costs. As costs are pushed up through the addition of taxes and the related business costs, that same percentage of total costs for profits is a higher figure. Ironically, when we require those evil rich corporations to pay more taxes, we inadvertently increase their total profits.
Finally, this total rise in all costs, thus in prices, is inflation and inflation is the most subtle tax of all. With the higher total costs, including the taxes and the corresponding higher profit figure, the consumer pays more. And what figure is used to calculate sales tax? The total price, of course. So with the inflation of increasing prices, sales tax revenues increase even when they remain the same percentage. And if we are fortunate enough to receive a “cost of living increase” in our wage to accommodate this inflation, this has very subtly moved us into a higher tax bracket without increasing our purchasing ability at all.
Until enough Americans realize that when corporations are taxed and those taxes are included in the price of the goods and services we purchase, we not only pay more for the goods and services, and more sales tax on the inflated price, but that we are now paying tax on the taxes we pay within those inflated prices, our politicians will continue demonizing corporations to manipulate us. And until then, this all combines to increase the percentage of our total income we pay in taxes even as we thank the politicians for reducing our taxes.
Politicians win—we lose. When we buy the lie, we pay the price.
This article was first published on World Net Daily, 4/22/2010: http://www.wnd.com/2010/04/143789/
Jack was raised in a Christian home where he spent his youth preparing to preach God’s word. First published at thirteen, writing and speaking became Jack’s passions. Whether through newspaper columns, magazine articles, radio broadcasts or public speaking engagements, Jack continues to share his heart with his readers. His life’s motto: To Know God, and To Show Him To Others.