Taxes and Corporations

There is an important difference between individuals being taxed and corporations being taxed. If the government raises a tax, people effectively have less money. They take some, you have less to spend.

Corporations don’t work that way. When you tax a corporation, they add the tax to their expenses. They have to, that’s what a tax is to a corporation, it’s an expense. It raises the cost of the product. They pass it on to the consumer. Every time, all the time.

Say you go to the lumber yard for a 2×4. The company that cut down the tree pays taxes. It pays taxes on fuel, profits, pays out for unemployment insurance, vehicle registrations, road use taxes. When it has a truck fixed, it paid more to cover the tax that mechanic’s business has to pay. To make a profit and stay in business, the logging company raises the cost of the logs to cover the taxes he incurred.

Anyway, the log is sold to the lumber mill. The lumber mill pay taxes too, mostly the same sort as the logger, but maybe property taxes and who knows what. Where does that expense go? Into the price of the finished lumber, which already includes the cost of the log. The lumber mill sells the finished 2×4 to the local home improvement store.

That business pay shipping, which includes fuel taxes again, along with the wholesale cost of the 2×4 that includes all the previous taxes, and puts the 2×4 out on the rack. They have a building, lots of employees, and pay corporate taxes too. You come up and pick out that 2×4 as part of your order. It costs somewhere around $3.50, which you pay at the register along with your sales tax.

Who paid all the taxes on that product? You did. Every bit of it. You can’t tax a corporation, it’s not possible. Taxes are passed to the consumer. It isn’t just the taxes the corporations paid, either, but the cost of all the accountants, clerical staff, computers, and lawyers needed to keep the necessary records that go with the taxes. All that is passed right on to the consumer, too.

Every single product, from corn flakes to automobiles is the same. Any politician, from any party, that points at greedy corporations and hollers that he just wants to tax them is lying through his teeth. He wants to tax you, he’s just willing to let the corporations collect the money.

We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
–Winston Churchill

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4 thoughts on “Taxes and Corporations

  1. You can see the result of this in a country that uses a VAT tax, everything there is expensive. I travel to Europe a lot for my work and sometimes wind up in a country that has a VAT tax (Norway my most recent). On a recent trip my fellow travelers went to a Steak shop for dinner and I was astounded by the cost for a lousy steak, it was a $75.00 a plate for a simple steak! Not a Ruth Crisp steak mind you, not an Omaha steak or Angus beef, this was plain ole meat and it was $75.00. The VAT tax rolled up into that meal killed it as far as price goes.

    Our next stop was in the Czech Republic where they don't have a VAT and we had huge steaks and only paid $25 bucks each including wine and desert!

    They can keep that VAT thing over there!
    BT: Jimmy T sends.

  2. Glad to see that posting. With all the nitwits in congress saying to tax corporations, people need to read this sort of thing. Joe Democrat doesn't realize he's saying “please tax me more!”

    wv: pudge – hey, I resemble that!

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