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Posted on 11/10/2011 6:49:31 AM PST by SeekAndFind
Many Wall Street Occupiers are echoing the Communist Party USA's call to "Save the nation! Tax corporations! Tax the rich!"
There are other Americans, on both the left and the right — President Obama and House Speaker John Boehner, for example — who call for reductions in corporate taxes.
But the University of California at Berkeley's pretend economist Robert Reich disagrees, saying, "The economy needs two whopping corporate tax cuts right now as much as someone with a serious heart condition needs Botox."
Let's look at corporate taxes and ask, "Who pays them?"
Virginia has a car tax. Does the car pay the tax? In most political jurisdictions, there's a property tax. Does property pay the tax? You say: "Williams, that's lunacy. Neither a car nor property pays taxes. Only flesh-and-blood people pay taxes!"
What about a corporation? As it turns out, a corporation is an artificial creation of the legal system and, as such, a legal fiction. A corporation is not a person and therefore cannot pay taxes. When tax is levied on a corporation, who pays it?
There's an entire subject area in economics, known as tax incidence, that investigates who bears the burden of a tax. It turns out that the burden of a tax is not necessarily borne by the party or entity upon whom it is levied.
For example, if a sales tax is levied on a cigarette retailer, the retailer does not bear the full burden of the tax. Part of it will be shifted forward to customers in the form of higher product prices. The exact amount of the shifting depends upon market supply and demand conditions.
(Excerpt) Read more at news.investors.com ...
Dr. Williams is exactly right! AGAIN!
It's a hidden tax paid by the consumer.
The consumer always pays the tax.
Corporate taxes are an expense of product production which is built in to the price the consumer pays.
RE: Corporate tax is a VAT.
It’s a hidden tax paid by the consumer.
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Which leads back to the next question — What happens if you LOWER Corporate taxes to just 9%? Will they pass it on to the consumers?
Some FReepers argue NO, they’ll keep the original price in order to maximize profits.
Which leads back to the next question — What happens if you LOWER Corporate taxes to just 9% (proposed by you-know-who)? Will they pass the 26% savings on to the consumers?
I’ve read some FReepers argue NO, they’ll keep the original price in order to maximize profits.
EXACTLY right!
They will too in a competitive market
These are the same idiots who think that the price of gasoline at the pump should fluctuate in synchrony with the price of crude oil, and if it doesn't there is a conspiracy.
Excellent article that frames the tax issue the way it should be framed. Consumers are the forgotten entity in all arguments on taxes. It is clear that consumers and workers pay all corporate taxes.
The progressivity of the tax code as relates to personal taxes also assures that consumers and workers don’t get off scott-free.
Let’s remember the “rich” are our employers and investors, as such, the engine of our economy. By making them the declared enemy of tax policy, capital formation is also stunted. All investment comes ultimately from individuals.
The fact that in the end consumers and workers pay for all taxes is the argument we should make when confronting the tax issue.
What happens if you LOWER Corporate taxes to just 9%? Will they pass it on to the consumers?Depends, 9% of what?
Cain's 9% is a percentage of adjusted gross. Todays top rate is 35% of profits (AFTER deducttions). Cain's 9% could be a huge corportate tax increase. Some FReepers argue NO, they’ll keep the original price in order to maximize profits.
Bush tax cuts lowered the top corporate rate from 39% to 35%. That's a 10+% reduction. Can you point to ANY price reductions as a result of the Bush tax cuts?
In a competitive marketplace they will have no choice but to do so if they wish to maintain their market share.
Except for the stupid 99%ers.
RE: Cain’s 9% could be a huge corportate tax increase.
I am not getting this. How does lowering corporate taxes from 35% to 9% amount to a huge corporate tax increase?
They will either reduce their prices or spend the extra income on other things. It does not matter where the reduction in taxes goes as long as it stays out of the governments pockets. That is the key to this! Money created in the private sector and KEPT in the private sector is wealth. Once a dollar is taken by the federal government its value drops like a rock. It is no longer worth much because it cannot be used to create additional income. In fact, it has to be continually replaced, year after year, all while producing little if anything. You might as well burn it.
The goal should always be to keep as much money on the street as possible. Because that money makes money. It is a very simple thing. So the answer to your question really is "who cares" as long as the federal government does not ever get their hands on the money.
” - - - Therefore, it is people, not some legal fiction called a corporation, who bear the burden of the tax.”
Even I cannot improve on the above quote!
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