More taxes for rich corporations?
The problem is that we’re the ones footing their tax bill
As our perpetual campaign season heats up, corporate taxes are again a major issue. Should we reverse the tax cuts? Should we increase taxes? There are powerful arguments on both sides, but the central reality seems to escape everyone. It’s never even mentioned.
We pay taxes to have roads and bridges, fire departments, police protection, national defense and a host of other things. It’s always tempting to get someone else to pay our taxes so we can enjoy the benefits for free. Why not let those rich corporations pay more?
Are you ready for this? Drum roll please! Businesses don’t pay taxes; we pay their taxes when we buy their products and/or services!
Taxes are a legitimate business expense. Look at any P&L statement, and you will see the tax expenses. These include corporate income taxes, property taxes, etc. You will also find things like unemployment insurance, workers’ compensation and other costs not called taxes, but try running a business without paying them.
Businesses have to increase the prices of their products and services to cover the expense of their taxes. Guess who pays that?
My friend Bill Taylor has long been a proponent of having businesses conspicuously announce the total taxes they pay. These totals could be eye-opening. I’d like to take this one step further.
When you’re buying a car, the sticker price on the window lists the costs of the various options and the total price of the car. Suppose we added another line that identified the portion of the vehicle’s price that pays their tax burden? We would see how much more we’re paying for that car to cover the manufacturer and dealer taxes.
We could do it for a lot of things. For instance, what percentage of the cost of an iPhone contributes to Apple’s tax burdens? What percentage of the cost of your favorite meal contributes to that great restaurant’s tax burden? How much more do we have to pay so we can pay their taxes?
I imagine I’m getting the deer-in-the-headlights look from some people, but this is real. Yes, we pay taxes to the IRS, our states and our towns. But that’s not all; every time we buy something, we’re paying someone else’s taxes on top of our own.
We’re not even capable of finding out just how much we really pay in taxes! There’s no free ride. Whether we tax the business or pay the tax ourselves, we’re still paying either way.
Unfortunately, making businesses pay these taxes makes it harder for them to compete. It’s one of the reasons so many corporations have moved their operations and our jobs to other countries, where such burdens are much lower.
Gone are the days when U.S. companies reigned supreme. Now they compete with other companies all over the world, and we compete with people all over the world for our jobs. If we strangle our companies, we lose our jobs.
Yes, it’s a free country, and we’re all entitled to our own opinions, but please, we have to base our opinions on reality. A little study and research would go a long way toward changing many opinions. Very few of us would ever want to knowingly make our situations worse, but we do it unknowingly all the time.
We will, of course, continue to tax businesses, but the question is, how much? There are many variables that decide how competitive a company will be. Taxes are only one of them, but they’re a big one.
We have a choice: We can pay the taxing authorities and/or pay our suppliers to pay our taxing authorities for us. One choice is fraught with untoward consequences. The other may help us to exercise some fiscal restraint. Either way, we’re paying.
Why not help our companies become the most competitive in the world? Tax them at a lower rate so they can sell more. Their total tax bills may be higher, but they’ll make it on volume, and we’ll have more and better jobs.
Ronald J. Bourque, a consultant and speaker from Windham, has had engagements throughout the United States, Europe and Asia. He can be reached at 603-898-1871 or RonBourque3@gmail.com.