The truth about who pays taxes: Everyone and No One Simultaneously
|December 9, 2011||Posted by Anthony under Blog, General, politics, taxation|
Conservatives often challenge the logic and rationale behind taxing corporations because the tax is essentially a ‘pass through’ item; the tax is paid by the consumer, in the form of higher prices for the product or service. On this view, then, a tax on a corporation is actually a tax on the end user. And this view is essentially correct. It cannot be disputed at its core, because it is exactly the way the real world works- and will always work.
However, you can nibble around the edges, and since people will want to sock it to ‘big business’ they will make the attempt, saying, for example, that a corporation might choose to eat the lost revenue themselves, rather than pass the cost themselves, in order to retain a competitive advantage. This type of calculation certainly does happen, since businesses know better than bureaucrats what the markets will bear for an item. However, this is no salvation for the Occupy Wall Street crowd or your standard liberal, either, because in their quest to stick it to Big Business in support of Small Business (ostensibly), the entities more likely to be able to eat that kind of loss will be the Big Business. If the same situation is foisted on the little business, it is a more serious issue. Walmart can build an empire by making 1 penny in profit per item, but your local mom and pop would have closed their shop long ago, and gone to work at Walmart.
Trying to make the tax load ‘progressive’ ‘helps’ in some ways but generally just obscures what is really going on. But you can see the general outline: in the end, it is the smallest entities that bear the bulk of the burden regarding taxes- even when, and perhaps especially if, the policy is directed against the bigger entities.
Given the above, it is a bit ironic that not too long ago, General Electric paid little to no income tax, and the liberals pretty much gave the company a pass, but the conservatives were outraged. One would have thought that conservatives would be happy that a company was keeping more of its money, and one would have thought liberals and OWS would be besides themselves. No doubt, the respective attitudes had much to do with the buddy-buddy relationship between GE and the Obama administration, and this colored the response greatly. As indicated in the article I linked to, it is likely that GE did pay some taxes, but for my next point let us assume that in fact GE did not pay any taxes, and ask if that is really the proper view of things.
So, assuming that GE did not pay any taxes at all, can we really say that GE did not pay taxes? The question seems like tautological nonsense until we remember that GE employs 304,000 people. Wow! That’s a lot of people. And guess what! Those people pay taxes. They pay taxes on the income they receive from their employer, property taxes, sales taxes, and so on and so forth.