Sunday, May 30, 2010
Large businesses do not pay taxes; they collect them
Large businesses regard taxes as just another cost to be passed on to their customers. The poor by contrast earn what they cab in jobs available at wages offered and pay the taxes embedded in prices. In practice, taxes are always paid by the wage earner.
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I've heard this on numerous occasions. It is not, in fact, true.
Leave aside things like the GST, which are designed so businesses don't pay them.
Other taxes are direct expenses against business profits. The presumption is that the cost of such rtaxes will simply be passed onto consumers in the form of higher prices.
But this would require that we suppose that prices are not currently set at what the market will bear. Because otherwise, an increase in the price would result in a drop in sales, also impacting business income. The business would not be able simply pass increased costs along to the consumer.
And this presupposition is suspect. It seems very unlikely to me that businesses are not charging what the market will bear. That is, after all, what determines price - not value, or cost to produce, but willingness to pay. The business charges the maximum the customer is willing to pay.
The only flexible point in the equation is business profits. Business can manage with lower profits. So businesses can be taxed without the cost being passed on to consumers.
To argue that a business pays taxes, one has to believe that taxes are not part of the cost of doing business. All costs MUST be covered with income, and the only source (under consideration here) is what is charged the consumers. The price may or may not go up, depending on how the additional expense is handled (find cheaper materials, layoff workers,reduce dividends, etc), but, taxes remain on the expense side of the ledger.
People pay taxes. My hammer does not pay taxes because it is a tool; just like the hammer, corporations are tools. They are more intricately designed, but they are tools, nonetheless.
Think of it as a "natural" law... You can fire a bullet into the air, but it will come back down toward you?). Pandering politicians can fire taxes at corporations, but they will come back down at us, the consumers. Don't vote for sleazy politicians who carry on about corporations "paying their fair share."
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