Exposing The Myth of ‘Corporate Taxes’

ELDER PATRIOT – Progressives often pit the American people against corporations by demanding that corporations pay their fair of the tax burden.  That raises the question do corporations actually pay taxes?

In order for corporations to stay in business they must provide goods or services at prices that consumers are prepared to pay.  That usually means having the best price, or the best price to perceived quality.  Only through sales can a corporation generate profits.  Without profits corporations cannot provide a return on the shareholders’ investments.  If they fail to provide a reasonable rate of return to their shareholders the shareholders will move their investment from that corporation to one or more of those that do and the corporation will be forced to close their operations.

Therefore, the only way for corporations to make a profit for their shareholders and to pay taxes to the government is to pass both costs on to the consumer in the price of their goods and services.  It’s really that simple.

It has been said that corporations do not pay taxes they collect them.  That is fundamentally correct.  As the consumer you pay the taxes.

But, that’s not the only cost to the consumer that arises from the added burden of paying the corporation’s taxes.  Remember, many states have some form of corporate income tax, as well.  Then there’s the sales tax that’s added by the states (and, in some cases the municipalities) that must be paid on the incremental cost of the corporate tax that is built into the price of the corporations goods and services.

And, the costs associated with corporate income taxes don’t stop there.  Companies that are required to pay corporate income taxes will be less competitive on the world markets than those that don’t.  While the tax rate is one of many other factors that may determine a corporation’s ability to be competitive, there are others.  These other factors include (but, are not limited to) the costs of labor, productivity, real estate, energy, legal liability, other taxes and fees, raw materials, shipping, insurance, and environmental compliance.
As corporations are forced to build these costs into the price of their products, they become less competitive with similar goods produced in the emerging markets where these costs can be significantly lower.   Companies at a competitive disadvantage based on the factors listed above may forced to decide between closing, downsizing, or moving elsewhere (outsourcing.)  Or, they may opt to cut monies spent on research and development or to cut reinvestment in new equipment.  All of these options will result in the loss of jobs the company’s host country.

So the next time a progressive friend complains that corporations don’t pay their fair share of taxes don’t fall for it.  The job you save may be your own.

About Elder Patriot 119 Articles
Elder Patriot has a bachelor degree in political science and an MBA. He has worked in management for major corporations and as an entrepreneur. He has sat on boards as both a director and as a trustee. His interaction with media members, senators and representatives has been significant and form the basis for his writings and his beliefs.