Friday, May 31, 2013

Corporate Taxation

I was talking to someone about the Apple taxation debacle that is going on right now, and he was going on and on about how unfair it was that Apple wasn’t paying taxes on a large portion of its income for overseas sales. 

He thought that Apple should have to pay corporate taxes on all the money they make, whether foreign or domestic, since they are based here in the US. 

I told him that he was barking up the wrong tree. 

You see, in my opinion, we should eliminate corporate taxes altogether.  It doesn’t matter to me whether a corporation makes its money here in the US, in a foreign country, or on the moon; we should not tax corporations at all. 

I know that this comes as a bit of a shock, but hear me out. 

The reason that I believe this is because no matter how you tax a corporation, the end user – the consumer – ends up paying the tax.  The corporation will ensure that they are making profit, and so whatever costs they have associated with taxes will just be passed on to the end user through increased product prices.  It all comes back to the middle class – it always does. 

And so, in my opinion, if we are going to be paying the taxes, anyway, it would be a very good thing for us to know how much we’re paying.  You see, the corporate tax is a stealth tax: levied on the taxpayer without them knowing how much it is and how much they’re paying.  Rest assured, they ARE paying it.  My feeling is that if we are paying it, anyway, why not pay it directly, without the corporate markup and with the knowledge of exactly how much we’re paying?

As I’ve said before, if the American people truly understood how much they are paying in taxes, there would be torches and pitchforks on the Washington Plaza tomorrow.  So why hide it?  Why not have a line item showing how much you’re paying, and just get it from the end payer and cut out the middle man (and his requisite markup)? 

I’m not talking about reducing taxes – I’m talking about being honest and upfront about how much you’re charging, and that’s why Washington will never allow it – they don’t want us to know how much we’re actually paying, because they know it will be torches and pitchforks soon after, and any talk of actually raising taxes, as they’ve done every single year of my life, would result in rope and lampposts.    

1 comment:

  1. I have only one minor addition. removing corporate tax will generally result in a lower market price which in turn will result in both lower state sales taxes, further reducing the final cost to the consumer, and an increase in demand. You will most likley see a corresponding increase in production, resulting in potential increases in the demand for labor. the increased wealth will result in economic growth.

    funny how that works.