The EU

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Friday, January 13, 2012

Who Pays Taxes?

In this post from The Atlantic we have the discussion of rich folks vs middle class vs whomever paying taxes, and throw in corporations.

Call me old fashioned, but I don't really see corporations actually paying taxes.  It is like the assertion of "Free Shipping".  Shipping isn't free.  It is rolled into the cost of the item.  Corporate taxes are rolled into the cost of the item, and if the Corporation only makes capital goods, such as metal presses and industrial sized lathes, then the cost of that Corporation's taxes are rolled into the cost of the capital goods they sell to manufacturers, who roll that cost into the cost of the goods they sell to the consumers.

At the end of the day we are the ones who pay all the taxes.  We just allow our lawmakers to hide some of them from us, so we won't feel the burden as much.

Now take your average millionaire, who made his or her millions in the stock market or financial services or running some company.  At some point, for them, their salary is about what they get to take home.  The price of some consumer products go up by a mil, or less, to help pay that salary, which has to be sufficiently high that the net after taxes is good.  We don't see this until enough of these small increases adds up to a penny, or maybe a nickel.  But, at the end of the day, we pay for it.

And taxes drive human actions.  I know Mary Quant claims she invented the mini-skirt, but the fact is British tax policy was a factor, in that the British did not tax children's clothing and children's skirts were defined by length and that length defined the miniskirt of the 1960s.  A good design for skinny young women in London, who really invented the design.

Regards  —  Cliff

3 comments:

Craig H said...

Corporations not being citizens, and often foreign in origin--the failure to tax earnings would in many cases simply simplify the looting of our economy by foreigners who would be only too happy not to have to pay for the privilege of all the great infrastructure and legal protections they enjoy here. The pass-through effect of corporate taxes is an important concept for citizens to understand, however eliminating corporate taxes isn't as simple as you'd like to make it sound here.

C R Krieger said...

I didn't mean to advocate not having taxes done by taxing corporations, but I do mean for citizens to be aware that, in the end, it is the citizens who are paying those taxes.  My wife said to me this AM that Jos A Bank is having a sale.  I don't believe that.  I just think their inflated prices are down for a while.  Time to purchase a couple of shirts.

A long time ago there was a great New Yorker cartoon, showing a father and son outside a store with a "Going Out of Business" sign.  The father, with his hand on his son's shoulder, is saying, "Someday, son, all of this will be yours."

I don't propose cynicism, but I do advocate asking the next question.

Regards  —  Cliff

Craig H said...

I often get stymied in trying to explain the advantages of "value added tax" to conservatives here, who equate the whole thing with liberal European governments and thus refuse to consider that the most regressive business tax is the sales tax, which leaves the retailer holding the entire bag. (The customer paying the total amount either way, as you so importantly point out). A VAT levy correctly distributes the corporate tax burden across the supply chain, instead of unfairly at its very end. We end up paying the full tab for our government either way.