Aug 16 2012

We all pay large corporations’ taxes

Category: taxesharmonicminer @ 10:43 am

The fact is that our income goes to pay everyone else’s taxes until April or May of each year. The article below makes it sound as if taxpayers “subsidize” CEO pay, but the fact is that we all pay the taxes of everyone with whom we do business, including corporations and small businesses. These are taxes on income, capital gains, property, luxury items, etc., and fees of all kinds that the government charges and which boil down to taxes.

The government (federal, state and local) now confiscates about 30% of the national GDP, all told.

Taxpayers Subsidize CEO Pay, Report Says – Yahoo! News

The Institute for Policy Studies, a self-described “progressive multi-issue think tank,” analyzed the link between tax loopholes and excessive executive compensation and concluded that the loopholes created an “uneven playing field” between large companies and small businesses and led to lost tax revenue. The latest edition of the institute’s annual Executive Excess compensation study found that in 2011, 26 CEOs received more in compensation than their companies paid in taxes, and that the four major tax loopholes contributing to excessive executive pay cost taxpayers about $14.4 billion a year. “The report is timely at a time when the tax debate is so intense in this country,” Sarah Anderson, the institute’s global economy project director and the report’s co-author, told ABC News. “Some leaders are saying we need to reduce the corporate tax burden even more while major companies are taking advantage of loopholes to lower their tax bill.”

Is there anyone reading the article above who is ignorant enough to think that the taxes and government fees paid by corporations, small businesses, etc., are not calculated directly into the price of every item we buy?   The next time you go to the grocery store and buy a box of cereal, think about all the companies that participated in growing it, processing it, packaging it, and transporting it, all of whom paid taxes, all of whom paid each other’s taxes, and all of whose taxes you are going to help pay as well, when you buy it.

It is a myth that the poor don’t pay income taxes.   They pay Exxon’s taxes every time the fill up the tank at an Exxon station, along with the taxes of the station owner, the trucking firm that delivered it, the owner of the refinery that made it, the ships that brought it here from Saudi Arabia, etc.

There are lots of misleading articles like the one above that pretend to have found a “loophole” (really just the letter of the law) and pretend that there is something unusual in taxpayer’s “paying the taxes of the rich.”

Taxes on corporations and businesses, along with government fees and impounds, are built into the price of everything you buy, whether you are rich, poor or middle class.

You may think that if the taxes of those nasty corporations and businesses were cut, they wouldn’t pass the savings along to you….  but if you think that, it means you don’t understand the fundamental laws of supply and demand, and the way pricing works in the marketplace.   Do you really think that if Walmart can sell the same item for less than K-Mart that it won’t do so?   Any given business’s self-interest is in attracting more customers by offering the lowest possible price consistent with making a profit.

The only rational thing is for the poor to campaign loudly for tax cuts for corporations and businesses, and reduction of capital gains taxes, all of which will result in more products at lower prices, in the end….  not to mention more jobs available so that the poor don’t have to stay that way.



3 Responses to “We all pay large corporations’ taxes”

  1. Tom says:

    Great post, shared it on Facebook.

  2. innermore says:

    If I were to take what you’re saying to its peak, I’d say raising or cutting taxes on any class of people is a myth. The politicized term “taxes” is about as impossibly nonspecific as silent elevator gas, which is why it’s also the preferred fodder of high-minded gasbags. How else could cutting “taxes” mysteriously increase government revenues, while raising “taxes” usually does nothing but cause an emotional class envy buzz. It seems “taxes” have an unlimited number of emergent definitions.

    I applaud your mention of all the fingers in the pies we buy at the store, but that pales in comparison to all the other ways consumers consume. Especially services. When I go to the doctor with a stiff back, I don’t just swipe my debit card at the front desk on the way out. No no no, by law my employer must hold back an unimaginable amount of my wages for health insurance. So I’m essentially paying my employer to pay an insurance company to pay a health service to pay my doctor. Now that’s 1000 udders on a tax cow right there! Worse still: how bout government managed health insurance. Oh boy, now we pay government to pay our employer to pay an insurance company to pay a health service to pay our doctor, and if we don’t like the service, everybody pays the government AGAIN! The pie’s not big enough for all those fingers.

  3. harmonicminer says:

    Innermore, as is often the case, too much to respond to.

    But look up the Laffer Curve for an answer to why cutting taxes can increase revenue to the government.

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