:-c Taxation’s Dilemma

September 27th, 2008

Tax Big Business & Huge Corporations

It sounds great doesn’t it? They are the ones who have the money. And, of course, our government has to have money to spend on what the voters say is important.

Because there are fewer big Business owners and since corporations can’t vote, there will always be more voters who will agree with this approach, i.e. “Don’t Tax Me, Tax that Guy Behind the Tree”. But does it really make sense?

Hold on now. What do these very successful businesses do because of being taxed?

*      They raise their prices to customers and/or
*      Hire expensive consultants to help tweak their tax returns to minimize the tax
*      Defer or cancel stockholder dividends.

These actions, individually or in combination, simply pass on the taxes as a cost of doing business. The people who pay these taxes, the costs of government, are those who pay higher prices to them and sometimes the shareholders who suffer reduced dividends. Businesses and Corporations don’t pay taxes; they just collect them.

The US tax system is regressive because it relies on taxing the profits of successful creators of things people can use. Not only is the tax code horribly complex, our system punishes investing and saving (for a rainy day) and encourages consumption and debt. “Buy Now, Pay Later”. This has led to inflation and the declining value of the US Dollar.

Although the weak Dollar helps US exports and encourages foreign businesses to come here, our regressive, complex tax system is very much against doing business here and encourages US businesses to invest overseas.

The proposed Fair Tax would completely replace our current outdated tax system without increasing or decreasing the amount of taxes paid or revenue received by our government. It would encourage saving, investing and job creation by taxing spending rather than taxing creative investors and entrepreneurs. (See: http://www.fairtax.org/site/PageServer).

The “Fair Tax” law was first introduced to the 108th US Congress in 2004 as House Bill H.R. 25 and Senate Bill S. 25.

The law has been reintroduced to each do-nothing congress since then without, I believe, it ever being voting on.