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Corporations Pay no Taxes; All Taxes are Paid by Individuals

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We often hear the liberals today claiming that we must raise taxes in order to pay down the national debt. They generally are quick to say that they don’t want to raise taxes on poor or on the middle class. They say that they plan to raise taxes on the rich and on corporations. After all, shouldn’t they pay their fair share? Or even more? The purpose of this article is to prove that corporations pay no taxes.

Taxation

Now that I have your attention, let me explain how this is so.  Corporations are economic entities and they do collect and remit many types of taxes, such as income, sales and use, employment, capital gains, property, and personal property.  Many people stop right here and erroneously believe that corporations do indeed pay taxes.  On the surface it seems that they are correct, but they are, in fact, wrong. 

The basis on which corporations are taxed is profit.  If a corporation earns a profit in any given tax year then it will owe taxes on the profit only.  Corporations do not pay tax on gross revenues.  As individuals, we pay taxes based on our adjusted gross income less personal exemptions and standard or itemized deductions.  Don’t miss the difference here.  If corporations don’t earn a profit then they won’t owe any taxes. Now let me explain how I can say that corporations don’t pay taxes, they only remit taxes. 

Corporations need to make a profit to survive and if they don’t make a profit they will go out of business.  We can all understand this point.  Profit is basically calculated as revenue less expenses.  Corporations view taxes as a cost, or expense, of doing business, just the same as they view other expenses such as office supplies, rent, and payroll.  As such, when a corporation determines what it is going to charge for its goods or services it includes all the various taxes in its calculation.  This means that corporations pass along to their customers the cost of the taxes they remit . The corporation actually functions as a collection agent for the governmental agencies to which it reports. 

What does this mean to us?  When our elected governmental leaders talk about raising taxes on the rich and on the evil and greedy corporations, they are actually talking about raising taxes on every individual citizen under their authority.  Individuals pay the full amount of taxes charged by the government.  They pay them directly through their own personal income tax returns, through their property taxes, through the sales tax on the items they purchase, and through the embedded taxes that increase the  cost of the items they purchase.  No corporation or business pays taxes.  Those that claim they do are misinformed or are lying intentionally. 

So when you hear politicians talking about raising taxes or closing loopholes you now know that you will pay for this.  I suggest you vote accordingly in the next election and in every election to remove those who don’t understand this basic economic principle.

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About Tom Shelton

  • tro ll

    …a couple of notions –

    first your argument oversimplifies the pricing mechanism and overstates its flexibility – taxes can impact the bottom line

    second you say When our elected governmental leaders talk about raising taxes on the rich and on the evil and greedy corporations, they are actually talking about raising taxes on every individual citizen under their authority.

    but even were your argument concerning corporations correct you offer no description of how ‘the rich’ pass their taxes on to everyone else…you appear to conflate the issues presenting no argument against raising income taxes on the wealthy

    …pretty foxnewsish

  • http://www.sanctification.wordpress.com Tom Shelton

    Troll,

    You said “first your argument oversimplifies the pricing mechanism and overstates its flexibility – taxes can impact the bottom line”

    I can agree with the thought that my article overstates the flexibility of the pricing mechanism. It is true that in a capitalistic system prices can’t always be raised to cover the costs associated with production. Because of competition prices are not always flexible.

    In that environment, the corporations pass their costs to employees instead of customers in the form of lower wages or benefits or in the worst case scenario by laying off employees. I did not include this point in my article but I probably should have touched on it. I may edit the article to include this.

  • http://tmackorg.com/ Tommy Mack

    The problem with this article is that it starts with a false premise in order to prove a fallacy. What it proves instead is that its author has no business interests or knowledge about corporate taxation, either federal or state. The assertion, “No corporation or business pays taxes” demonstrates such ignorance.

    Tommy

  • http://www.sanctification.wordpress.com Tom Shelton

    Tommy,

    You said: “What it proves instead is that its author has no business interests or knowledge about corporate taxation, either federal or state.

    Please enlighten me then.

    For the record, I am an accountant and have been for about 15 years. I have done everything from monthly bookkeeping, consulting, tax preparation (federal and state corporate, individual, sales, personal property, payroll tax, etc) payroll, and year end tax planning. When I worked in public accounting I sat through hours of continuing education each year discussing the tax code and how to properly interpret it. I earned a Bachelors of Business Administration in college.

    I don’t claim to be an expert on every aspect of business or taxation but I have a better than average understanding of how business and taxation works in the real world. When I come across something I don’t know I know where to find the answers. What are your qualifications to make the claim that I have no knowledge in this area? Again, please enlighten me……..

  • Leroy

    Tom is wrong when he says ¨Corporations need to make a profit to survive¨. As long as you grow the ownership increases in value, whether that value is expressed in explicit publicly traded shares, or in the implicit values of shared ownership, and the corp will thrive. The smartest businessman I´ve ever known told me ¨the trick is not to make profit but to break even at ever higher levels¨.

    Have you ever founded and owned a corporation? If you had you would know darn well that corps pay taxes.

  • http://www.sanctification.wordpress.com Tom Shelton

    Corporations collect and remit taxes….they pass the cost of taxes along to either their customers or their employees.

  • http://www.sanctification.wordpress.com Tom Shelton

    here is an article by economist Walter E Williams that basically makes the same points that I do only he does it better.

    Politicians Exploit Economic Ignorance

  • http://handyfilm.blogspot.com/ handyguy

    Tom’s articles are about cliched truisms of social conservatism and far-right libertarianism.

    Marriage equality for same sex couples is an attack on ‘the family.’ Well, no, it’s not, and Tom breaks no new ground in ‘proving’ this unprovable falsehood.

    Corporations always pass along tax costs, penny for penny, to either customers or employees. Well, no, they don’t. In particular, large, complex, successful corporations may have multiple ways of dealing with profit and loss.

    If a company made a billion in profits and pays $200 million in taxes, do you think no company, ever, would just accept that as an $800 million profit? Or find some other cost savings besides prices or wages?

    Corporations have thousands of profit items and expense items. They don’t all end up in higher prices or lower payroll. This is absurd oversimplification.

    As is often the case, especially in dunderheaded internet ‘articles,’ Tom starts with a conclusion that he ‘knows’ to be true because of ideology [or religious faith, which is also a form of ideology].

    The facts can’t possibly be at variance with what he ‘knows,’ so he rejects or bends facts to fit his preordained conclusion.

    It may give him a way to pass an empty afternoon, but it proves absolutely nothing at all.

  • Cannonshop

    #8 and how many of those options come directly from manipulating tax-code and regulatory ‘incentives’, Handy?

    Legions of accountants and Lawyers work long hours (not to mention lobbyists) finding ways to cut that 20% tax down for corporations, and 435 members of Congress are all too eager to help ‘em in exchange for a portion of that gain coming to their campaigns next election.

    Meanwhile, the customer and the wage-earner ends up footing the extra cost. a Corporate entity is not an individual, and it can, and does, pass costs on to someone else by whatever means it finds useful to do so.

  • http://tmackorg.com/ Tommy Mack

    Tommy Mack Organization is a California certified Small Business (SB) that practices business management consulting. As its Director and owner, I am a business expert. Based upon what you state, Tom, you are a bookkeeper, not a Certified Public Accountant. Even if you were a CPA, you would be unqualified to give business advice because that is not a CPA’s job. Taxes are.

    What you are attempting to do is put forth the specious argument for Fair Tax. Let me recommend the article I wrote on the topic earlier this month. You will find it enlightening.

    Tommy

  • Arch Conservative

    Liberals love to grandstand on socking it to those evil corporations by raising their taxes which in turn causes the corporations to raise the price for their goods and services.

    What’s so f-ing hard to understand about that.

  • http://www.sanctification.wordpress.com Tom Shelton

    If a tax is levied on a corporation, and if it is to survive, it will have one of three responses, or some combination thereof. One response is to raise the price of its product, so who bears the burden? Another response is to lower dividends; again, who bears the burden? Yet another response is to lay off workers. In each case, it is people, not some legal fiction called a corporation, who bear the burden of the tax. – Walter E. Williams

  • Clavos

    Lots of attempts to “debunk” Tom’s premise (which is true) but none that actually prove he’s wrong, just a lot of harrumphing and more than a little self promotion.

    I am the sole proprietor of two small businesses. Neither pays direct taxes; we collect them and pass them on to the government (albeit resentfully and reluctantly), but our customers pay them when they avail themselves of our services and pay us for those services.

    We make sure of that.

  • http://tmackorg.com/ Tommy Mack

    The premise is bunk.

    Tommy

  • t roll

    …when after a bit of back peddling the ‘premise’ following Williams turns out to be that the expense of corporate taxes is covered by workers and/or owners as such and/or consumers generally in some unspecified (politically determined) ratio there doesn’t seem to be much to dispute

    however this is not the premise that Tom presented in his article

  • Leroy

    Tom Shelton is blatantly wrong, and I? surprised that Clavos would support him.

    The argument that corps pay no taxes is laughable to this person, who has co-founded a half dozen corps and owns two and is keenly aware of paying corp taxes and the impact on company pricing and operations.

    By Tom Sheltons logic one could argue that no one pays any taxes, that all they do is pass the tax along to the next person in line, like a hot potato.

  • http://www.sanctification.wordpress.com Tom Shelton

    The end consumer ultimately pays all taxes.

    Leroy, who do you pass your taxes on to? Who is the next person in line for you?

  • Clavos

    …is keenly aware of paying corp taxes and the impact on company pricing and operations. (emphasis added)

    Exactly.

  • Clavos

    The premise is bunk.

    WOW! Keen insight and really strong, persuasive argumentation there, Tommy! Sure did git me to a-thinkin’!

    So, obviously it’s bunk that I pass along all taxes to my customers in both my businesses, eh? I’m either lying or don’t know my own businesses, I guess…

  • http://tmackorg.com/ Tommy Mack

    You are right, Clavos. There are two premises that are incorrect, not bunk.

    Premise number one: “. . . they plan to raise taxes on the rich and on corporations” No one except Republicans and libertarians says that. It is a misrepresentation. What Democrats are saying is that it is time to eliminate the Bush-era tax cuts for the wealthy and largest corporations.

    Premise number two: “. . . corporations don’t pay taxes, they only remit taxes.” Therefore, “. . . the corporation actually functions as a collection agent for the governmental agencies to which it reports.” That is a gross misrepresentation. The provocative semantics come from the Libertarian tracts of Professor Williams that support the Fair Tax idea. It is an interesting argument that sounds good to many people and it confuses them.

    You are correct that a business entity absorbs its overhead in determining a break-even point as the first step in its pricing determination. That overhead includes its taxes, payroll, rent, electricity, Internet access, loan interest and the rest of its expenses incurred as its cost of business (COB). Another COB is labor burden, which is wages plus SUTA, FUTA, FICA, and paid vacation time. To make a claim that correct pricing is somehow just remitting taxes as a tax collector “for the governmental agencies to which it reports” is confused and incorrect.

    Tommy

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    Right, Tommy. Taking Mr Shelton’s argument to its logical extreme, one might then argue that corporations also pay no wages, rent, utilities, interest or other expenses.

  • http://handyfilm.blogspot.com/ handyguy

    It’s both amusing and frustrating the way the two sides of this argument talk right past each other.

    Yes, all of the costs of doing business become factors in pricing. But it’s not a penny-for-penny effect in every case. Service companies, retailers and wholesalers all have different sets of considerations.

    Since Clavos’s customers are rich, if he passes tax costs along to them, it’s fine with me. And it’s no reason to propose cutting his business taxes.

    But what about, say, Wal-Mart, whose business model depends on offering the lowest prices? They’re not going to raise prices to pay their corporate taxes, and their labor costs are already minimized. They have a very profitable business, even after taxes. If their taxes were eliminated tomorrow, would they lower prices? Pay their workers more? Or just deposit more into their bank accounts?

    Businesses are taxed on their profits. The taxes don’t cause that profit to turn into a loss.

    And using any of this as a reason to justify ending corporate taxation is just ideologically driven hot air.

    Many sensible politicians and economists favor lowering corporate tax rates and eliminating loopholes, so that all companies pay about the same rate on profits.

  • Cannonshop

    #22 the problem with ending loopholes is that it goes to the most common secondary purpose of the Tax code- to influence/control the actions of persons in the economy, rewarding those that the Party favours, and punishing those it does not.

    (and it doesn’t matter WHICH party-both Dems and Reps use exemptions and increases to punish or reward businesses, it’s one of the most important functions of Lobbyists on K-street.)

    Tax all corporations on the same level, no exceptions, and that strips a LOT of power used to influence behaviours away.

    espl. behaviours involving donations to the party in control of the ways-and-means committee.

  • http://handyfilm.blogspot.com/ handyguy

    Some current loopholes make no sense at all. Subsidizing outlandishly profitable oil companies, for one.

    Yes, all governments use the tax code to encourage/discourage certain behavior. And it is unlikely that all tax breaks will ever be done away with.

    But the Republicans are arguing in favor of keeping all tax breaks whether they make sense or not, because getting rid of any of them constitutes ‘raising taxes,’ their all purpose bugaboo.

  • Cannonshop

    #24 of course they are, Handy. the GOP defends cuts/exemptions, the Democrats defend spending and increases. It’s gotten so ridiculously polarized that they’re both become caricatures of themselves.

    Sometimes it’s kind of fun to play the caricature up to the hilt, but sometimes, in more thoughtful moods, I look upon the both of ‘em with a bit of despair-because even when the two ‘compromise’, the only thing compromised, is the public good and the future of my nieces.

    The objective of both parties (and their highly packaged candidates) has devolved to power for its own sake.

  • http://handyfilm.blogspot.com/ handyguy

    Your description is a caricature.

    The Biden debt-reduction talks had reportedly come up with a package of 87% spending cuts and 13% revenue increases [from closing loopholes]. This is when Cantor walked out, demanding 0% revenue as part of any deal. This is not negotiation…it’s ‘my way or the highway,’ ‘heads I win, tails you lose’ bullshit.

  • Clavos

    To make a claim that correct pricing is somehow just remitting taxes as a tax collector “for the governmental agencies to which it reports” is confused and incorrect.

    Of course it is, but it’s not what Tom said; he alluded to taxes as being one of the COBs and one which is passed on, as are others.

    And Doc is actually right (!); one could say that ALL COBs (certainly all that are passed on as part of the price for the good or service) are not “paid” by the corporation.

  • http://handyfilm.blogspot.com/ handyguy

    Fine. We’re not so far apart after all. But Tom’s larger point is that there shouldn’t be any corporate taxes. That’s an ideological conclusion that does not follow from the premise or evidence.

  • Clavos

    My take on the point is that, as we raise corporate taxes, we should be aware that, in the majority of cases, such raises wind up in the laps of we, the taxpayers (which is really how the constitution should open, instead of “We the people…”

  • Glenn Contrarian

    Tom (and Clavos)

    This means that corporations pass along to their customers the cost of the taxes they remit.

    This evinces a basic misunderstanding of the laws of the marketplace. If corporations have to pay taxes, they do NOT pass on all the cost to the consumer. How do we know this? Because no matter how much tax the corporations are required to pay, they STILL will charge no less and no more than what the market will bear. They will NOT charge more than what the consumer is willing to pay.

    Take five competing corporations – if they pay 40% tax or 25% tax or ZERO tax, they STILL will charge what the market will bear…and if one of those corporations can increase market share by dropping their prices even though they will make less of a profit, that corporation WILL do so…and the other corporations will follow simply in order to survive the price war.

    The ONLY way in which corporations will act as Tom and Clavos think is when there is price-fixing…and such is quite illegal, and rightly so.

  • Clavos

    Take five competing corporations – if they pay 40% tax or 25% tax or ZERO tax, they STILL will charge what the market will bear…and if one of those corporations can increase market share by dropping their prices even though they will make less of a profit, that corporation WILL do so…and the other corporations will follow simply in order to survive the price war.

    Your magnificent, beautifully written and well-crafted theory has a major flaw: it ignores the fact that taxes are not raised on just one corporation at a time.

    And, as Tom pointed out, most corporations will not simply settle for a smaller profit; to make up the difference incurred from a higher tax when they can’t raise prices, they’ll lower employee benefits if they can, or wages, or even reduce the payroll with layoffs.

    What they won’t do is pay the tax.

  • Cannonshop

    #26 Handy, it strikes me as possible that the infants in Congress may be playing a game not related to the subject they’re ostensibly negotiating-the same behaviour (but in reverse) was common during the “Health Care” er…’negotiations’, the Majority party stating things will be thus, and if the direction is not so, walking out, or throwing the other guy out.

    which has apparently also become how Congress does business now-tantrums and “I won” attitudes.

    But beyond that…

    Closing loopholes may not generate revenues to the optimistic levels predicted (or at all), just as raising taxes does not guarantee an increase in revenue. In a weak (and face it, this is one) economy, business failure/outsourcing/movement and outright tax-evasion are far more common than in a strong economy where businessmen might actually apply a little of that obselete value known as “Patriotism” and endure such inconvenience.

    Remember also that business is taxed not on the gross, but on the net-it’s rather a simple matter to,through internal accounting, show a net loss in spite of record reciepts-and we’re not in an economic period that will actually show record reciepts, so it may be that the “Increases” were directed at the wrong sectors, or maybe they were only directed at sectors Joe Biden and the DNC don’t like.

    unless you have a link to the text, we don’t know.

  • Glenn Contrarian

    Clavos –

    Your magnificent, beautifully written and well-crafted theory has a major flaw: it ignores the fact that taxes are not raised on just one corporation at a time.

    And YOUR theory has an even greater flaw – that it does not matter that the taxes are raised on all corporations at the same time. All that matters is the ability of the consumer to pay, because if they raise prices beyond what the customer will pay, the customers will NOT pay.

    NO corporation will charge more – and NO corporation will charge less – than what the market will bear. Such is the nature of business! You KNOW this, Clavos.

    You as a businessman should also understand instinctively that the business that excels will be the one that figures out how to remain profitable despite higher taxes and the inflexible laws of the marketplace. If they have to take a little less profit in order to retain market share, they will STILL choose to retain the market share! If this were not the case, then explain how America’s businesses did so well when we had MUCH higher corporate taxes for thirty years from the 1950’s through the 1970’s!

  • http://handyfilm.blogspot.com/ handyguy

    “The liberals” [Tom’s quaint term] aren’t suggesting any gigantic tax hikes anyhow…just a reversal of unjustifiable tax breaks that help specific industries such as oil. Maybe removing this indefensible loophole will lead to higher gas prices [though it’s certainly not a simple penny for penny formula, and oil companies are always saying prices are beyond their control — can’t have it both ways!]. But how can you justify the tax loophole during a budget crisis? Ludicrous.

  • http://www.sanctification.wordpress.com Tom Shelton

    These “loopholes” everyone keeps referring to are legal tax deductions. They may or may not be well known but they are valid. Calling them loopholes implies they are dishonest or somehow immoral. They are not.

    Having said that, in most cases I do not support corporate welfare and I know that some deductions or credits are given to industries to subsidize them. These are not “loopholes” either but they should be ended. If a company can’t survive in a free market economy then it should fail. This is the reason I opposed the bailouts in the last couple years.

  • Clavos

    If this were not the case, then explain how America’s businesses did so well when we had MUCH higher corporate taxes for thirty years from the 1950’s through the 1970’s!

    For one thing they paid far lower wages than they do now, and gave far fewer benefits (few corps gave (or even offered for sale) their employees health insurance in the 50s, e.g.

    And that’s still true; rather than accept a lower margin, they will cut elsewhere — usually labor expenses — one way or another (i.e. RIFs, automation, offshoring, etc.) but they keep their profits, even when taxes go up — without losing market share.

  • Clavos

    Maybe removing this indefensible loophole will lead to higher gas prices…

    Which, if you libruls are serious about shifting to renewable fuels,should be higher — considerably so, for two reasons: to make it painful enough at the pump to discourage consumption, and pricing the petroleum product up where alternatives are priced, so the alternatives become competitive. The market will them even them out once alternatives are viable price-wise.

    I see $10 a gallon as a good price point to accomplish the shift.

  • Glenn Contrarian

    Clavos –

    Now you’re tap-dancing, flailing to try to find a flaw.

    Regardless of taxes paid or not paid, businesses STILL try to keep wages as low as they can, and STILL try to keep benefits to a minimum, and STILL use RIFs and automation and offshoring whenever they can anyway!

    Again, Clavos, you KNOW this. Such is simply good business management regardless of what taxes are paid or not paid.

    Furthermore, can you show me a significant example of how tax cuts resulted in lower prices? When Reagan slashed tax rates, did prices fall accordingly? No. When Bush 43 slashed corporate tax rates, did prices fall accordingly? No.

    You know I’m right, Clavos. As a businessman, you know it in your gut…but you’re tap-dancing as fast as you can…and it’s not going to work.

    BTW, I strongly agree that we need significantly higher gas prices…and the tax revenue should go directly to pay our deficit. But it must be done gradually, because unlike Europe, our economy is so strongly based on NON-mass-transportation, and to jack up our gas prices too quickly would be injurious to our economy.

    (imagine that – Clavos wants $10/gallon on gas, and I’m saying not-so-fast!)

  • http://www.sanctification.wordpress.com Tom Shelton

    Glenn,

    You said: “Furthermore, can you show me a significant example of how tax cuts resulted in lower prices? When Reagan slashed tax rates, did prices fall accordingly? No. When Bush 43 slashed corporate tax rates, did prices fall accordingly? No.”

    Lower taxes don’t always mean lower prices. Sometimes businesses will use the extra cash to pay higher wages or better benefits to attract better or more workers. Sometimes they will use the extra cash to upgrade equipment or expand facilities. Sometimes they will use the extra cash to pay higher dividends to their stockholders. Sometimes they will use the extra cash to pay off or pay down debt. All of these are positive things for any business to do. Businesses don’t automatically pocket the extra cash like liberals seem to think they do.

  • http://handyfilm.blogspot.com/ handyguy

    Large corporations [both those that pay a lot of tax and those that don’t] are sitting collectively on a ginormous pile of cash right now.

    I will note that Tom and Clavos, among others, describe [with apparently limitless confidence in their own opinions] many things that companies do.

    Companies raise prices, companies cut jobs, companies send jobs overseas. Whatever a company does, destructive or pain-inflicting though it may be, is just fine…never a flicker of disapproval. ‘Cause, you know, this is capitalism in action. And that’s just grand!

    Some of us find capitalism’s more unsavory side less inspiring.

  • http://handyfilm.blogspot.com/ handyguy

    Clavos, you’d actually rather give oil companies big tax breaks than pay 10 cents more a gallon? You don’t actually come out and say that. But isn’t the scenario without the oil depletion allowance more, you know, free-market and all?

    [By the way, according to FactCheck.org, the 2005 bill that included the tax breaks currently being yelled about also contained other provisions that led to a net tax increase for oil companies. Record years of profit have followed, nonetheless.]

    In addition, FactCheck notes that calculating how much an oil company’s income taxes affect gas prices is just about impossible, because there are so many other factors [and products, not just gasoline at the pump] involved.

  • Cannonshop

    #40 There’s teh little factor of “Doing what it’s designed to do” involved that I think you’re missing, Handy. Corporations aren’t people, but they are made by people-to do one thing…

    Generate returns for their investors.

    all of the antisocial, amoral, uncaring behaviour that seems so shocking to you, is the machine doing what it is built to do…what ALL corporations are built to do.

    Of course, the more arcane your regulatory environment, and the higher your “corporate” taxes, the harder it is for sole-proprietorships and limited partnerships to challenge the dominance of big, faceless, essentially amoral corporations-because a corp CAN afford the legions of attorney-drones and Accountants necessary to comply, or it can pass the costs of non-compliance onto the customers, or any of the other strategems Clavos and Tom have outlined several times already.

    Small/medium businesses operate much closer to the margin, and when the taxes go up, they often don’t have the slack to remain profitable-which, naturally, puts them out of business, which puts people out of work, and people out of work are on the dole, so it’s really a win for the Democratic Party since there are then more people dependent on the largesse of government, with fewer opportunities available to them.

  • http://tmackorg.com/ Tommy Mack

    When I read “Businesses don’t automatically pocket the extra cash like liberals seem to think they do,” I know what I am dealing with. I also know that it is pointless to argue. Arguments based on dogma and recitations of mantras are oblivious to facts. Quibbling with semantics and indulging in gross generalizations obfuscate the truth.

    When an argument begins with a false premise, it can be as logical as possible but the conclusion will be false. Insisting that something that is incorrect is correct won’t make it so.

    Tommy

  • Glenn Contrarian

    Tom –

    Lower taxes don’t always mean lower prices.

    Instead of “don’t always”, try “NEVER”…because I don’t think you can show me ANY instance of lower federal taxes resulting in lower prices.

    Sometimes businesses will use the extra cash to pay higher wages or better benefits to attract better or more workers.

    They would do this with lower taxes? Prove it. Show me an instance of them doing so. When Reagan and Bush 43 slashed taxes, did Big Business raise wages or increase benefits? Or did they – with the Reagan administration’s support – go on the attack against unions?

    Sometimes they will use the extra cash to upgrade equipment or expand facilities. Sometimes they will use the extra cash to pay higher dividends to their stockholders. Sometimes they will use the extra cash to pay off or pay down debt. All of these are positive things for any business to do.

    Granted, they might. BUT if you’ll look at ANY chart of wage growth since the beginning of Reaganomics, the wages of the top two percent have skyrocketed, whereas the wages of the middle class has stayed stagnant or fallen. Even worse, the tax burden has shifted significantly away from the wealthy to the middle class. Is this really the way to maintain a first-world nation with a high standard of living?

    In any case, one has to determine what’s most important, not just for businesses, but for the nation AS A WHOLE. More than anything, EDUCATION is the primary key – and we’ve a whole slew of Republican-led states that are slashing teacher benefits or laying off teachers even as they continue to have hundreds of millions of dollars in tax breaks to businesses.

    This is known as shooting oneself in the foot – because there is NO resource, NO segment of infrastructure as valuable as a well-educated population.

    Businesses don’t automatically pocket the extra cash like liberals seem to think they do.

    And taxes aren’t automatically wasted like conservatives seem to think they are. And government isn’t always the problem that conservatives seem to think it is.

    Tom, you’re using a dogmatic argument that is NOT based on fact. The nation’s tax burden is at a fifty-year low…and you get what you pay for. It doesn’t matter how hard we try to have a proper government, if we only pay enough to have a crappy government, then you’re guaranteed to have a crappy government. Any resident of a third-world nation can tell you the same thing.

  • Glenn Contrarian

    Cannonshop –

    Small/medium businesses operate much closer to the margin, and when the taxes go up, they often don’t have the slack to remain profitable-which, naturally, puts them out of business

    Then explain exactly how America’s businesses – large, medium, AND small – did just fine for thirty years from the fifties through the seventies with MUCH higher taxes (that were used to support silly things like good education, roads, communication, and so forth).

    And while you’re at it, explain why it is that America’s industrial base didn’t start moving overseas en masse until AFTER Reaganomics was instituted.

    And don’t stop there – please also explain why it is that American businesses did just fine, thank you very much, when (until Reaganomics) we had tariffs that protected domestic industries…but now that we don’t have protective tariffs, we don’t have much of an industrial base left.

    You got some ‘splainin to do, friend.

  • Clavos

    Clavos, you’d actually rather give oil companies big tax breaks than pay 10 cents more a gallon?

    I never discussed (or mentioned) the oil companies’ tax breaks, handy, so I don’t know where you got that idea. And as for paying more a gallon, did you not see above where I advocate raising the price of gas by $6.50 per gallon over today’s prices?

  • http://www.sanctification.wordpress.com Tom Shelton

    Glenn,

    You said: “And while you’re at it, explain why it is that America’s industrial base didn’t start moving overseas en masse until AFTER Reaganomics was instituted.”

    The giant sucking (as named by Ross Perot) sound we all heard as the industrial base moved overseas didn’t begin with Reaganomics. It began when Clinton signed NAFTA.

    You also said: “It doesn’t matter how hard we try to have a proper government, if we only pay enough to have a crappy government, then you’re guaranteed to have a crappy government. Any resident of a third-world nation can tell you the same thing.”

    Please define what you mean by a “proper government”. Do you mean European socialism? Proper government as defined by our Constitution is that of limited government and state sovereignty. That is NOT what we have today but I hope to get back to it sooner rather than later.

  • Glenn Contrarian

    Tom –

    Two things: first Here’s an interesting take on the exodus of our industrial base from an engineering standpoint:

    Those extended supply chains were an outgrowth of a fundamental change in business thinking that had its roots in the 1980s. Wall Street analysts argued that companies that devoted their resources to a few key sectors succeeded most consistently. Jumping to the snap of Wall Street’s whip, companies began spinning off “non-core” operations.

    Instead of buying components from their own factories, companies as diverse as General Motors, Boeing, and Dow Chemical spun off upstream operations into new, independent companies that now had to compete for their business. They also spun off functions. They outsourced maintenance, legal services, and information technology. They traded proprietary software for commercial systems that vendors upgraded and maintained.

    By giving costly operations and low-return services the heave-ho, companies slashed cost. That forced their competitors to reevaluate their own operations. Slimming down became the order of the day for companies that wanted to survive.

    But that doesn’t really lay the blame on Reagan, does it? Nor should it. Why? Because I was wrong. As YOU pointed out, Reagan did NOT start the exodus of our industrial base, as this essay from the Cato Institute makes clear…and when the highly-respected (even in my eyes) Cato Institute calls out Reagan for being the most protectionist president since Herbert Hoover, well, that gets my attention.

    I will no longer blame Reagan for allowing our industrial base to dissipate like toilet paper in a dishwasher. I will still blame him for convincing America that “government is the problem” – it’s not and never was. By convincing Red America that small government is the cure for all that ails us, he enabled real idiots like Bush 43 to take our economy and flush it down the toilet by taking our surplus and giving it away to Big Pharma, Big Defense, and Big Billionaires.

    I will agree with you that Bill Clinton deserves a great measure of the blame because of NAFTA…but Republicans are STILL every bit as responsible for the exodus of our industrial base. Why? Look again at the essay by the Cato Institute…free trade was the great CONSERVATIVE goal, the way to true economic greatness.

    Clinton deserves an equal share of the blame because instead of leading and keeping us out of NAFTA, he FOLLOWED the congressional conservatives’ lead.

    So will you agree with me, then, that we need tariffs and a measure of protectionism once more?

  • Cannonshop

    Outsourcing supply chains didn’t begin with Reagan, it began with Nixon, and GATT ’72-which is also when we began paying american companies to move production overseas, while simultaneously (under the EPA) punishing them for remaining in the U.S.

  • Cannonshop

    and Glenn? the reason is simply thus: if you ran a business today, the way they were run in the period you’re talking about? they’d be in front of the NLRB in a heartbeat, assuming the EPA or BLM didn’t get there first. Start with minimum wage, add in health care benefits, etc. etc. plus regulations, OSHA, EPA and sundry other alphabet agencies, regulatory compliance, permit processes… The cost of environmental compliance or Osha easily makes up for the lower expense of the taxes you’re so buzzy about.

    in some areas, it EXCEEDS the lost tax costs.

    You have to look at the ENTIRE system, not just the bit you happen to be on a crusade about.

  • Glenn Contrarian

    Cannonshop –

    Your head will probably explode when you read this, but OSHA generally SAVES businesses money.

    Read that again – OSHA generally SAVES businesses money.

    How’s that? Take hardhats, for instance. Or ground fault circuit interrupters. Or safety harnesses. Or handrails. The cost of ONE death due to one of these causes – including litigation and settlement – is generally MORE than what it would cost to implement the applicable safety standard throughout most companies.

    Wanna gripe about the EPA? Have you been to a third-world country where environmental standards aren’t enforced at all? Where people live shorter lives because of the pollution? You don’t think this has a definite effect on the bottom line of businesses in those countries?

    You include the NRLB – but IIRC it’s that same board that’s helping to protect the jobs of Boeing workers here in Washington state (maybe including yours) since they wanted to open up that plant out east to build 737’s. The decision – whether you agree with it or not – was made due to agreements made with one of the Boeing unions…which means that if the union had lost the battle, you might be out of a job…or looking at transferring over to the east coast.

    And speaking of unions – and OSHA and the EPA – here’s ONE case that puts all three in perspective. Remember the Upper Big Branch coal mine explosion that killed twenty-six miners last year? Remember all the safety regulations that were ignored in this NON-union mine? Not long ago the news came out that 24 out of the 26 dead miners showed that they had black lung disease at least to some extent. In UNIONIZED mines, the percentage is less than ten percent.

    But why the hell should the Massey coal mining company worry about unions and OSHA and the EPA…’cause all they do is enforce useless and expensive regulations and waste taxpayer money, right?

    Just something to think about.

  • zingzing

    cannonshop–i went to china once. it was a good time. but i could stare directly into the sun. and even if it was a sunny day, there was no sunny day. next time you have a sunny day, (and i’ve lived in washington as well, so i know they’re rare, but i also know they’re in season,) and it’s brilliant, thank your god you don’t live in china. thank the epa.

  • zingzing

    and cannonshop, get back to me on that patriot act shit, or i’ll fucking hound you, as i am doing now.

  • http://www.sanctification.wordpress.com Tom Shelton

    Glenn,

    You said: “I will no longer blame Reagan for allowing our industrial base to dissipate like toilet paper in a dishwasher. I will still blame him for convincing America that “government is the problem” – it’s not and never was.”

    Constitutional government is not the problem. I will agree with that but what we have today is not Constitutional government. What we have today is what the founding fathers feared would happen and took great pains to warn us about. They implemented checks and balances to insure that what we have today did not develop but here we are anyway. Government is the problem and people know it. That is why Reagan’s message resonated with so many people.

    I will read the Cato Institute report you linked to at some point today but for now it is time for me to do my morning Bible reading.

  • zingzing

    “What we have today is what the founding fathers feared would happen and took great pains to warn us about. They implemented checks and balances to insure that what we have today did not develop but here we are anyway.”

    how wonderfully vague. how utterly meaningless.

  • Glenn Contrarian

    What we have today is what the founding fathers feared would happen and took great pains to warn us about.

    And who gave us Citizens United? The conservatives. Tom, you need to be pointing your anger at those who have essentially turned our government into an oligarchy, who believe in travesties like “corporate personhood”.

  • http://www.sanctification.wordpress.com Tom Shelton

    Glenn,

    I am not familiar with Citizens United but I looked at their website. I don’t know about others but what they say on their about page sounds very good to me. It says

    “Citizens United is an organization dedicated to restoring our government to citizens’ control. Through a combination of education, advocacy, and grass roots organization, Citizens United seeks to reassert the traditional American values of limited government, freedom of enterprise, strong families, and national sovereignty and security. Citizens United’s goal is to restore the founding fathers’ vision of a free nation, guided by the honesty, common sense, and good will of its citizens.”

    What is wrong with any of that? Also, I don’t understand how returning government to its Constitutional role equates to instituting an oligarchy. How does Citizens United or any other conservative organization advocating limited government equate to instituting an oligarchy?

    I think it is the liberals who have been responsible for attempting to turn our government into an oligarchy. They are the ones who are always advocating and attempting to implement policies and laws that seek to consolidate power in Washington. I recognize that many Republicans are also guilty of this and should also be held responsible but remember that Republican does not necessarily equal conservative.

  • http://handyfilm.blogspot.com/ handyguy

    A suggestion, Tom: read a newspaper once in a while. Read several. Keep yourself informed.

    Citizens United refers to a Supreme Court decision which basically removed the few remaining limits on corporate political spending. So if the interests of rich companies conflict with the interests of ordinary citizens, guess who gets the advantage of bigger [gigantically bigger] political donations? Hint: not ordinary citizens.

    You have swallowed someone’s propaganda about ‘the liberals’ whole. Corporate interests are not always your best friends, believe it or not.

  • zingzing

    quick question about that decision… if say, a corporation made a commercial, would they have to say something like “mcdonalds and its corporate offices (but probably not its workers) would like to endorse xx republican, because republicans kinda smell like beef, but aren’t really too,” or would they be able to remain anonymous?

    if they had to identify themselves (even if they just gave political donations), i think any major corporation would think twice about pissing off half their customers. i dunno.

  • http://handyfilm.blogspot.com/ handyguy

    The big growth is in ‘SuperPACs’ like Karl Rove’s CrossRoads groups, and the Koch brothers’ Americans for Prosperity. Lotsa anonymous donors. Any attempt to require that donors identify themselves will not fly before the 2012 election.

    Donations directly to a candidate or party are still all supposed to be transparent and public.

    That’s my understanding anyhow. Perhaps others have additional info.

  • http://www.sanctification.wordpress.com Tom Shelton

    handyguy

    I have looked up a review of the case. It said “The Court struck down a provision of the McCain–Feingold Act that prohibited all corporations, both for-profit and not-for-profit, and unions from broadcasting electioneering communications. An “electioneering communication” was defined in McCain–Feingold as a broadcast, cable, or satellite communication that mentioned a candidate within 60 days of a general election or thirty days of a primary.”

    Personally, I think this was a good decision. Political speech should not be restricted in any way and the struck down provisions did just that.

  • http://handyfilm.blogspot.com/ handyguy

    Political speech [mostly, not entirely, TV ads] costs money. So the people [and companies] with more money get to buy more political speech. The people and companies with the most money do not necessarily have the best interests of the other 300 million Americans [including you] at heart.

    [As you noted earlier, companies are interested in increasing profits — and probably not so interested in whether pollution makes kids sick or whether certain policies exacerbate poverty.]

    This certainly bothers “the liberals.” I don’t understand why it doesn’t bother you.

  • zingzing

    “Political speech should not be restricted in any way and the struck down provisions did just that.”

    so then… should gov’t organizations (like, say, the social security or medicare office,) be able to make political ads against those that would want to privatize it?

    remember, you said “in any way.”

  • http://handyfilm.blogspot.com/ handyguy

    Ha, that won’t happen, zing, but there will be liberal equivalents of CrossRoads and Americans for Prosperity next year. It will be interesting to see how that plays out.

    Mostly it has been public employee unions doing the liberal political ad spending the last several years….surely someone will get some corporate money going.

  • Glenn Contrarian

    Looks like Tom is a classic case of a “low-information voter” since he doesn’t realize that what Citizens United did was to open the floodgates of corporate money, to enable corporations to spend as much money as they want in order to influence elections.

    He doesn’t realize that this decision enabled FOREIGN-owned corporations to use unlimited funds to influence America’s elections. Not that that ever stopped foreign-owned Fox News….

    He doesn’t realize that this flies in the face of a full century of legislation and court decisions.

    He doesn’t realize that Citizens United further enshrined the idea of “corporate personhood” in America’s legal traditions.

  • http://tmackorg.com/ Tommy Mack

    “Low-information voters” recite mantras rich with factoids and falsehoods in the hopes that if their statements sound as if true and are recited enough, they will become true. You cannot engage such people in an argument and keep them on point. Faced with facts they change the topic. The debt ceiling turns into the War Powers Act or Citizens United. Ultimately, Ronald Reagan gets quoted or inaccurately referenced. But it is their self-righteousness and propensity for name-calling that confirm their ignorance of an issue.

    Tommy

  • Cannonshop

    #51 my point, Glenn, was that you can have extensive regulation, OR you can have high business taxes, when you have both, you don’t have a competitive marketplace anymore, you have the few who can afford to pay congress for the exemptions, or who can afford to pay the vig in fines, or the ones whose operations those regulations were custom-written to preserve.

    Big Government LOVES Big Business, and the relationship is mutual-Big Business can afford heavy regulations and the necessary clout to protect itself from taxes, while Big Government hates competition in teh marketplace as a competitive market is difficult to control.

    For government, it’s all about control. the proof is in the Feds allowing the McDonnell-Douglas/Boeing merger, the various oil-distributor mergers of the ’80s and ’90s, the recent Telecom mergers, and the buyout-to-prevent-liquidation of General Motors, the 785b$ Bush bailouts, and the over-800b$ Obama bailouts of the biggest banks in the U.S., and the whole concept of “Too big to fail”-something that antitrust was supposed to prevent. (oh, and the entire lack of antitrust enforcement aside from the Clinton shakedowns of Microsoft, too…)

    It’s all about power, and more specifically, about witholding power from people ‘outside the club’.

  • Glenn Contrarian

    Cannonshop –

    #51 my point, Glenn, was that you can have extensive regulation, OR you can have high business taxes, when you have both, you don’t have a competitive marketplace anymore

    Tell that to Germany.

    Cannonshop, among OECD nations we have the second-highest nominal corporate tax…but we have the second-LOWEST effective corporate tax. This was NOT the case before Reaganomics came along…and our corporations (as unionized and as regulated and as taxed as they were) did just fine in the 1950’s through the 1970’s, thank you very much.

    And as I’ve pointed out before, corporations do NOT pass on all taxation to the consumer…because every successful corporation, every successful business charges no more and no less than what the market will bear…and this fact is completely independent of the taxes they pay.

  • Cannonshop

    #68 you miss the part, Glenn, where a business is required to make a profit, or it goes out of business. Germany gets around this the way most European (continental europe) gets around it-massive subsidies, Trade Barriers (protectionism) and a lack of smaller competitors, and if your values swing that way, you probably DO think it’s a good idea.

    It’s just not a HEALTHY idea unless the concept of Corporate Welfare turns you on.

    y’see, Glenn, they get those taxes BACK in teh form of direct subsidy and protection of markets. (Of course, it also helps that Germany hasn’t had to pay for its own defense for the last sixty years or so. THAT bill’s been carried on the back of the American Taxpayer.)

  • gbuddha2012

    another game of semantics that proves corporations are or are not people depends upon the amount of taxes willing to be paid

  • gbuddha2012

    most businesses don’t make profits in this country… the ones that do have very generous exemptions and writedowns that make them look less profitable than what they really are. most businesses are very clever in disguising revenue especially if they deal in cash or barter

  • gbuddha2012

    big business hides their profits overseas, small business does it in a shoe box…

  • Igor

    Cannon is naive: “…way most European (continental europe) gets around it-massive subsidies, Trade Barriers (protectionism) and a lack of smaller competitors,…”

    Excessive subsidies and protective tariffs are actionable under WTO rules, and that has been very effective in promoting Free Trade.

    The oil companies, Exxon, Chevron, Valero, paid no corporate taxes last year, mainly because of the Foreign Tax Allowance (FTA), which allows them to take foreign taxes not as a deduction but as a credit, which is far more valuable. That’s the main vehicle by which money is sucked out of the US treasury by foreigners. We ought to change it.