The Myth of Corporate Taxes

Some politicians claim that they’re not going to raise your taxes; instead, they say, they’re going to raise taxes on corporations. Those nameless, faceless, greedy corporations will shoulder more of the tax burden instead of Joe American.

This is utter nonsense.

Here’s the reality: corporations do not pay taxes. Corporations collect taxes. People pay taxes.

Corporations may be legal entities, but money always comes from someone. Real people. And when it comes to corporate taxes, that someone is either consumers, employees or investors.

Here are the three ways in which “corporate” taxes are automatically, ultimately paid by real people:

1) By increasing the price of the product or service. Corporate tax is passed on to consumers as a hidden sales tax.

2) By reducing employee wages and benefits. Corporate tax is passed on to employees as a hidden income tax.

3) By lowering returns to investors. Corporate tax is passed on to investors as a hidden capital gains tax. This drives down the value of the stock market and lowers the rate of new investments and job creation.

That’s it. Those are the only three ways in which a corporation can “pay” taxes, and they all come from actual people’s pocketbooks. People like you and I. There’s no other choice. Because corporations do not ultimately pay taxes: people do.

Ask yourself these questions:
– Do you buy products or services from businesses?
– Do you work for a business?
– Do you own mutual funds, stocks or bonds?

If you answered “yes” to any of the above, that means your taxes are going up if corporate taxes are increased. Period. Be it via a hidden sales tax, a hidden income tax or a hidden capital gains tax, your taxes are effectively going up.

So the next time someone tells you that they’re not going to raise your taxes, but that corporations will foot the bill instead, the only question you should be asking yourself is whether they’re economically illiterate or trying to fool you. And wonder which is worse.

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