Your turn: Corporate income tax truth - WECT TV6-WECT.com:News, weather & sports Wilmington, NC

Your turn: Corporate income tax truth

(Source: Hank Montgomery) (Source: Hank Montgomery)

By: Hank Montgomery

I had a 40-year career in real estate appraisal … which means that I understand basic economics theory well.  I am also an independent voter with a long-time distaste for both national political parties.  Why?  Because career politicians are masters of the “game” of smoke and mirrors.

What do I mean by, smoke and mirrors?  Watch the news as national politicians wrangle over “tax reform.” 

Specifically listen to the back and forth about the corporate income tax rate. 

One side wants to lower this tax rate to 20 percent. The other side argues that corporations already are not paying their fair share of income taxes … yet both political parties seem to be quite content to have small businesses pay a higher tax rate.

This entire discussion about corporate taxes is intentional misinformation for public consumption! 

Does any business pay its fair share of the nation’s income taxes?  No!  Are you surprised?  If the price for any product or service you buy from any for profit enterprise does not include an amount to pay the business’s current year income tax, that business would go out-of-business within a few years!

For example, this little container, whose contents I will greatly enjoy, clearly cost me $1.  Notice that it is also crystal clear that I paid $0.07 to state and local government.  State and local governments play important roles in our lives and must be supported.  I have no problem with paying a tax that I can see.  

Now look again at my $1 sale price – this reasonable price contains a hidden part of this restaurant chain’s income tax for this year! 

Also, consider this; the franchised fast food restaurant that sold this delicious dessert to me owns no farms, nor did it manufacture the equipment its staff used to produce the dessert. 

Therefore, the vendor of my desert also paid the income tax of all farmers, the equipment manufacturer, the income tax of the transportation company that brought it all together locally, and the income tax of any “middlemen.”  My little $1 purchase paid a lot of business income taxes!

No business pays income taxes without first collecting part of that tax from every customer!

You also hear a lot of discussions that the corporate tax rate will ultimately be higher than twenty percent, or that the tax rate reduction to twenty percent will be postponed for one or more years.  Fine!  Postponing that tax rate reduction simply means that you and I:

• will continue to pay higher, hidden business income taxes for one or two years; and/or

• that all businesses will postpone new expenses, such as marketing and expansion (new jobs or promotions and raises, new manufacturing plants, et cetera), for one or more years.

Those whose income is too small to worry about April 15 do pay the income taxes hidden in every purchase made!  Just as my sales tax of seven cents is VISIBLE, no tax we pay should be INVISIBLE.  

Shhh … Politicians don’t want us to know that PEOPLE PAY TAXES, and that BUSINESSES DO NOT!

References

Bohannon, C. and Styring, B. (2016). Taxes are paid by people, not corporations. Indianapolis Business Journal, 37(30), p. 2. Retrieved 11 25, 2017, from https://search-proquest-com.proxy. nclive.org/central/docview/1826883374/F34921A483DE4E4APQ/1?accountid=12779

McMahon, M. J. (2016). Rethinking Taxation of Privately Held Businesses. The Tax Lawyer, 69(2), pp. 345-399. Retrieved 11 22, 2017, from https://search-proquest-com.proxy128.nclive.org/ central/docview/1783697336/D35B4EAF56B84F87PQ/1?accountid=12779

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