I saw a certain celebrity tweet about the need to raise corporate taxes the other day. It’s amazing how someone who thinks themselves so intelligent that they speak for everyone else is too stupid to understand the simple methods of business. I get it. It’s easy to think that these large corporations and businesses should pay more of the taxes in this country. People want some of their wealth, but there’s truly no real way to collect more in corporate taxes without hurting the very people you claim to help. It’s just a matter of math, or business, whichever you choose. It’s easy to see why an average American could consider raising corporate taxes as the right thing to do, and for a politician, well it’s easy to see that they just see more $$ signs and more money to spend. Realistically, this isn’t necessarily a political argument. There are people on both sides of the aisle who believe that corporate taxes or taxes to business in general should rise.
But simply put, these people who think this is a good idea are either extremely ignorant of the ways of business or they simply use it as a way to rile the masses against the very core of capitalism (much like leading sheep to the slaughter, if you will). Whether we’re talking about corporate business or a Mom and Pop, business is business. You have to stop looking at corporate tax as a way to get more money into the government’s coffers or to even the playing field between Middle Class America and the Rich, and start looking at it as it is — a business expense. Raising taxes on any business, corporate or main street, raises the cost of doing business. Costs of doing business impact profit. Profit is the only reason a business is IN business. If a business is not in business for profit, they aren’t a business; they are a non-profit organization.
Simply put, if the cost of sugar goes up for a baker or the cost of meat goes up for a butcher, then the cost goes up for the consumer. The baker and the butcher have to make a certain profit just to stay in business. Of course, they want to make more than what it costs to stay in business — we all want to make more. We want to see the costs of our daily lives go down – our water bill, our gas bill, our medical bills. If our bills go down then we have more money to use where we want it. It is no different for business. EXCEPT, they have someone they can pass their costs [bills] to — you — the consumer. And they do that by raising their prices. You don’t have that option.
Now, if they raise their prices too high, then they just might lose business. Unless they are the only place you can get what you want or all the other businesses are having to raise their prices as well. They might be able to get sugar and meat from a different supplier and lower their cost, but they can’t do that with taxes. When taxes go up for one business, they generally go up for all business.
Another thing they could do to lower their cost of doing business, is to reduce their biggest cost of business — labor. Yep, they could “can” a few employees and save some money. It might impact customer service, but it helps them make a profit. Look, when I got laid off, it sucked. But I’d been in business for thirty-three years. I knew it was just business. My former employer could save money by getting rid of guys like me (higher paid managers) and hire lower paid employees to fill the gap. They saved money by getting rid of me, and they invested it in a different area. It is business, as sucky as it feels.
Raising taxes on any kind of business just shifts the burden. Yes, you can claim you have collected $$$ from corporate taxes and you lowered the taxes of everyday Americans, but you just raised their cost of living or even cost them their jobs to do so. You can even try to create hidden taxes or taxes that are on something besides sales or income, but you’re still raising the cost of doing business. It still gets passed on. In reality, business doesn’t pay taxes, their consumers do. There is NO TAX that you can put on corporate business which will not get passed along to the consumer. It is either STUPID to believe so (terrible ignorance of business practices) or willful deception on the public. Either the person espousing the glory of raising corporate taxes is stupid or they believe you are stupid enough to fall for it.
Just stop and think. What would you do? IF you were in business, your taxes go up, your cost of operation just increased – how are you going to pay your bills, your staff, and support your family? You’re either going to throw up your hands and quit; raise the prices on what you sell, or fire Sally so you can keep Sam. It is that simple.
The truth is, many things we argue about are that simple. It just gets swirled into the cloud of bloviation and we can’t see it. One side is trying to one-up the other side, or someone may be trying to drum up support for their idea by intentionally masking reality. It’s easy to get people to hop on the “stick it to the corporations” bandwagon. They’re an easy target. They make lots of money. When one person has a bigger portion of the pie, there’s always someone who feels they have a right to gather their share. Well, in this case, theirs comes from yours. And if you raise their taxes, they’ll just take more of your money to make up for the money they are losing. It is that simple.
We do need to look at the rules Corporate America operates under. There may be places where there should be restriction, control, or ways to keep them inline. Perhaps there are ways to ensure they are better neighbors and contributors to our society as a whole. And if you want to get into rules for the stock market, well, I’m there (beginning with restricting short selling). However, we have to be careful of anything which actually raises the costs of doing business. We can’t be stupid. We’ll only hurt ourselves in the end.
