Friday, May 14, 2004

Squeeze 'em 'til it hurts.

You are being lied to and robbed.

I want you to think about corporate taxes. Most people think that it's a due and just and that corporations deserve to pay tax just like everyone else. They envision an amorphous blob sitting in a desk-like or office-like area counting money and paying out a tax bill.

The problem is, a corporation isn't a person -- it’s a business. That means it buys stuff, does stuff, and sells stuff. Money goes in and out pretty much continuously. Thing is, it is continuously pressured by other businesses to sell its stuff cheaper than the other company, or it goes out of business. (That would be the equivalent to a person dying.)

Don’t get caught up in the zeros. A successful company can make millions. In order to do that it has to move hundreds of millions of dollars through itself. That’s not much of a take in the long run and as our productive numbers (which really means automation) get pushed higher and higher, this percentage will get smaller still.

Now put a tax on both the company and it's competitors, what happens? Do you think their profits go down? No, they're already selling stuff as low as they can afford to keep competing against the other guy. If you tax them, the prices of both their services/products go up by the tax amount. The consumer pays. The little guy who has to buy a new microwave because his brats broke the old one pays.

You pay.

You can be assured that the stockholders don't pay, nor do the CEOs. Possibly, it means that the company has to operate with fewer employees, though, so they pay too.

But what about all the government services that the government provides to business? Shouldn't they have to pay for that? Sure. It can be paid with usage fees as they go. If they need fire protection (perhaps it's required by their insurance), they can pay a monthly fee to the county. If they need police protection, the same applies. If they need roads built, they can pay the fee. But make no mistake, they still will pass their costs on to the consumer, so in essence it's no different than the consumer sending in the check.

This is important: The government knows this perfectly well. There are certain realities to raising a trillion dollars from a population of 125 million workers. The big one is that you just can't do it if you go after the top earners. Sure you can collect a lot of money, but we're talking about a million million dollars -- you just can't come close that way. You HAVE to tax everyone to get the math to work, and you have to tax them a LOT.

Politicians will preach that they're going to reduce the tax burden on the middle class and the poor. It's a lie. They know it's a lie because you can't get trillions any other way.

So we have Corporate Tax. It allows the government to squeeze the highest numbers of people for the most amount of money.

Go to a grocery store and buy a loaf of (cheap) bread for $1.00. If your state doesn't have sales tax on groceries, you pay how much in tax? (Don't say zero.) A full 50% of that dollar makes its way back to the government in terms of corporate taxes on all the suppliers by way of their taxes and by way of the tax on the labor involved. The ovens require electricity, which is taxed. The bread requires flour, transportation, inspection, insurance, and a million other sundry items that are all taxed.

So even the poorest of the poor (in the 0% tax bracket) pay 50% taxes. And it's all so the politicians can play stupid promise games and get votes. And it's all a lie.

The sane approach is to simplify it, tax the poor schmuck his 50%, tell him to suck it up, and eliminate the mountain of paperwork. But that would put lots of accountants and politicians out of business.


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