People, not companies, pay corporate taxes
Many years ago, school taught us reading, writing, arithmetic, history, thinking, reasoning, and common sense as just part of getting an education. While learning about simple economics, an instructor asked the question, “Who pays corporate taxes?,” and we were instructed to write and defend our answer.
After we had turned our papers in, we were asked how many answered the question by answering the consumer/customer. Most had answered with a myriad of names and reasons why some paid and some didn’t. He then gave us a simple explanation of who pays.
I make a product, let’s call them widgets, and, like cell phones, everybody wants a widget. In producing a widget I have to invest $1,000. Now it’s been determined that we need to earn 5% on the $1,000 we spent to make a widget, that’s $50. So the selling price would be $1,050, but the IRS wants 30% ($15), the state 8% ($4), and the city 2% ($1) of the $50, which leaves only $30. If I were to add that $20, 30%, 8%, and 2% taken would become $27.10. That leaves $43. To end up with a $50 return, I need $82.80. So, instead of selling for $1,050, I will be selling for $1082.80. If I can’t sell for that amount because it’s cheaper made in China, then I must cut the cost of manufacturing.
This shows you the customer pays the taxes the politicians tell you only cost the corporations.
For people not familiar with capitalism, a 5% profit is really low, because, most times, the money spent could be lent out for 5% or 6% with no worries about production, employees, materials, government rules and regulations. We the customers PAY the tax.
DONALD E. BARTOSH,
Alpena