Should companies pay taxes?

[baldeagle]

This thread was sparked by the diversion to Exxon's profits in the long lost birth certificate thread.

I don't think companies should pay any taxes at all. Every dime of tax that companies pay adds to the cost of the goods they sell. In reality, the cost of the taxes companies pay are simply passed on to the consumer. In addition, companies spend money on lawyers and accountants and lobbyists to 1) avoid paying taxes if possible, 2) reduce their tax bill as much as possible and 3) lobby the government for tax breaks. In the end, all of those costs are simply passed on to the consumer along with the company's tax bill, meaning that ultimately the taxpayer foots the bill anyway.

So why do businesses pay taxes? Because it allows the politicians to play favorites, pick winners and losers and buy votes by steering favorable policy toward their supporters.

In my opinion, government money should never be given to businesses for any reason. But as long as we continue to tax businesses, we will continue to have the government picking winners and losers, tax breaks handed out to the ones who lobby the best or have the most powerful politicians in their pocket and the demonizing of those businesses by the politicians who know they are hoodwinking the people but could care less.

[74novaman]

If we allowed corporations to bring overseas profits back to the US tax free, we'd be out of this recession quicker than you can say "good fiscal policy". And you're absolutely right. When a company is taxed, they pass on that cost of doing business to the consumer. Companies don't actually pay taxes. They raise the prices of their goods accordingly to match the amount of taxes they're forced to labor under.

[gigag04]

We'd pay more anyway - I know our local walmart pays upwards of $9M in local taxes. That's a whole lot for taxlayers to make up. I like your idea in principle, but it won't work in reality.

[OldCannon]

So why do businesses pay taxes? Because it allows the politicians to play favorites, pick winners and losers and buy votes by steering favorable policy toward their supporters.

Post hoc ergo propter hoc.

[Purplehood]

I suspect a lot of local government entities would respond with massive sales-tax increases on goods and services.

[SlickTX]

All companies are what the lawyers call a legal fiction. The only "real" economic/social units are human beings and you are right in that any tax taken (profit paid away) by a company to a government is money that does not ultimately flow to a human.

The government has learned that it is relatively easy to bleed humans of their money before then even see it. Evidence the withholding taxes that are not felt. Imagine the revolution that would occur if everyone was paid their full pay all year long then were sent a tax bill on April 15th!!

[JJVP]

We'd pay more anyway - I know our local walmart pays upwards of $9M in local taxes. That's a whole lot for taxlayers to make up. I like your idea in principle, but it won't work in reality.

Walmart does not pay $9M in local taxes. The taxpayers that shop at Walmart pay $9M in taxes.

[baldeagle]

I suspect a lot of local government entities would respond with massive sales-tax increases on goods and services.

Good. Then the people would be more aware of the cost of government and perhaps they might pay closer attention to what their elected representatives are doing. It's much easier to not pay attention to a gaping wound when you don't think it's your own.

[SlickTX]

We'd pay more anyway - I know our local walmart pays upwards of $9M in local taxes. That's a whole lot for taxlayers to make up. I like your idea in principle, but it won't work in reality.

Walmart does not pay $9M in local taxes. The taxpayers that shop at Walmart pay $9M in taxes.

Said another way: Walmart does, in fact, cut the check for the taxes . . . it just collects the tax from the customers in the way of a price above what it otherwise would have been.

[74novaman]

The government has learned that it is relatively easy to bleed humans of their money before then even see it. Evidence the withholding taxes that are not felt. Imagine the revolution that would occur if everyone was paid their full pay all year long then were sent a tax bill on April 15th!!

I love this idea. Neal Boortz has pointed out before that its no coincidence election day is 6 months away from tax day.

Simple plan to fix the tax problems in this country:

1)No withholding. You either pay a bill to the govt month to month, or owe a big sum on April 15.
2) Election day is now April 16th
3) All members of congress and staffers are required to do their own taxes, under the penalty of death for hiring someone else to handle it.

I predict a much saner and reasonable tax system shortly after this 3 step plan is implemented.

[Venus Pax]

I don't necessarily think that businesses woudl lower their prices if they didn't need to pay the taxes anymore. The only thing that would change would be that the residents/wager earners around them would be picking up the slack.

[RPB]

Related to this topic

Texas Senate today passed what boils down to collecting sales taxes from Internet Sales ...




http://www.capitol.state.tx.us/BillLook ... ll=SB01798" onclick="window.open(this.href);return false;

Companies incorporated in states other than Texas that benefit from electronic sales to consumers in Texas, such as Amazon.com and other e-retailers, are not collecting and remitting sales tax to the State of Texas for those purchases.
The comptroller of public accounts estimates that Texas loses approximately $600 million per year in uncollected online sales tax.

The United States Supreme Court has held that state sales tax may only be collected from out-of-state companies whose sales operations have a nexus, or connection, to the state which is entitled to tax those operations. What constitutes the requisite nexus has become increasingly confusing because of legal language that has become essentially irrelevant in an age of routine Internet transactions. The result has been to create a significant competitive advantage for out-of-state e-retailers over Texas-based brick-and-motor retailers and Texas-based e-retailer competitors.


Out-of-state companies attempt to circumvent and escape nexus through the use of two strategies. The out-of-state company uses an in-state company to solicit on its behalf. This practice is known as "affiliate marketing," wherein in-state companies post links on their websites to out-of-state e-retailers, or the company utilizes "entity isolation," taking functions that would traditionally be performed by separate divisions within the same corporation and tuning them in to separate business and legal entities. The company accordingly creates the legal fiction of separation in order to attempt to escape taxation.

http://www.capitol.state.tx.us/tlodocs/ ... 01798S.htm" onclick="window.open(this.href);return false;


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http://www.capitol.state.tx.us/tlodocs/ ... 01798S.htm" onclick="window.open(this.href);return false;


Witness list was interesting; there were more testifying "against" than "for" but it still passed .... hopefully John Woods will have the same experience.

[baldeagle]

I don't necessarily think that businesses woudl lower their prices if they didn't need to pay the taxes anymore. The only thing that would change would be that the residents/wager earners around them would be picking up the slack.

Any time a business can reduce its costs, there are two decision points that are considered. Do we add these profits to the bottom line? Or do we maintain the same profit margins we had and reduce prices? Generally (there are always exceptions), if a company or business line has strong competition, the latter will be adopted, because it may be an opportunity to gain market share.

The greater point, however, is that the taxes businesses pay are "baked in" to the economy and unseen. Changing that structure could alter the economy in ways that would wake up the people to the true costs of government. One example. Everyone who fills up their tank of gas is bothered by the price they are paying. This map shows that removing the Texas gas tax would lower prices at the pump by 30 cents or more. Combined with the federal gas tax, Texans pay $.57 more at the pump than they otherwise would. The part that people don't see is the taxes that corporations like Exxon pay, that are also "baked in" to the price of a gallon of gas. You might be surprised to discover how much tax Exxon actually pays - $78.6 billion globally. $7.7 billion of that was to the US Government.

Imagine how much a gallon of gas would cost today if those costs weren't factored in to the pump price. For comparison, Exxon's net profit for the three year period of 2008-2010 was $94 billion, or just 20% more than the taxes they paid for one year! Their effective income tax rate for 2009 was 47%.

[baldeagle]

So why do businesses pay taxes? Because it allows the politicians to play favorites, pick winners and losers and buy votes by steering favorable policy toward their supporters.

Post hoc ergo propter hoc.

I disagree.

[canvasbck]

There is another tax system (that I am in support of) in which the "hidden" taxes placed on companies goes away.

http://www.fairtax.org/site/PageServer" onclick="window.open(this.href);return false;