The best economic stimulus plan that Uncle Sam can provide is to NOT take away so much money from the hard-working American taxpayer. Increasingly heavy tax burdens eventually bring down the economy. We have more than enough examples throughout the world – and throughout history.
We have a lot of different forms of taxes, but they all reach into one pot – the productivity (wealth) produced by a working individual. Call it an income tax, a property tax, a sales tax, etc., etc., etc., but they all are paid from the income of the working individual.
Among the most deceptive and counterproductive taxes is the corporate tax. I understand it appeals to those engaged in class warfare. Taking from the rich and giving to the poor has a universal appeal. It explains the popularity of an otherwise common criminal named Robin Hood.
The problem with the income tax is that it is NOT a tax that touches those millionaires and billionaires. The salaries, bonuses and benefits of the boardroom business leaders are set by the Board – and they are usually influenced by the profitability of corporation. I cannot conjure up a single example of an officer or senior manager of a major corporation taking a salary decrease due to a tax levied on the business.
In most cases, a tax increase does not impact negatively on the profits of the business. That is because the corporations maintain their profit margins in the face of tax increases by (1) cutting the workforce or (2) increasing prices – the most common response.
Now guess who winds up paying for that corporate tax increase? The rich owners or officers? The corporation, itself? You?
The fact is that YOU pay for all those corporate tax increases every time you buy gas, purchase a pair of socks, hire an attorney, or get a happy meal at McDonalds. Taxes are just another cost of doing business – along with supplies, salaries, insurance, etc. You find taxes listed on the left side of the balance sheet under “expenses.” They are part of the calculation of ALL sale prices. Taxes go up on the business—prices go up in order to maintain the profit that pays the folks in the oak-paneled offices and gives stockholders a return on their investment.
Not only is a corporate tax a tax on YOU, but it is also a regressive tax – meaning it hits hardest on the poorest. We do not have varying prices on milk and bread based on the purchaser’s income. The millionaire and the lowest paid worker pay the same at the cash register for that box of cereal.
President Biden is proposing to boost the corporate tax from 21 percent to 28 percent – a 33 percent increase. If he is successful, YOU will be paying for that increase in your next trip to the grocery store or gas station. Biden is hoping you are not noticing the scam – that you are gullible.
If you think that it is a good idea to tax corporations – and that the corporate tax “sticks it to the rich” — you better go to the top and read this commentary again.
So, there ‘tis.