Irregular Blog
As expected, Thomas G. Donlan, editor of Barron's, made a pitch against taxes on corporations ("A Halloween Fright", Barron's, Oct. 6, 2006). "Corporations don't pay taxes, they pass them on to people: Customers pay higher prices; workers get lower wages and shareholders get lower returns on investment."
But when workers are taxed, they want more money from their employers or their customers. That also means customers pay higher prices. So, we shouldn't tax workers? Then who do we tax for all the government services we want? Imports? That was what many of the Founders thought would provide national revenue. But an import tax by one country (A) leads the exporting country (B) to tax imports from country A, resulting in less exports from each country and higher prices for consumers in both countries.
Do we privatize all government services so that nobody pays taxes? How much do you think you'll pay some private fire company to come to your house when your neighbor's house catches fire, especially if he didn't pay any fire company to come to his house because his house "would never catch fire". Do you want to pay a toll to drive on a street to get to the grocery store?
If corporations shouldn't pay taxes, should they be treated as legal persons? The Founders probably didn't forsee this twist. To them a corporation was a chartered organization to provide a good or service that a person or the government could not provide. At that time, most shareholders were actively involved in the company.
But what about the government services a corporation receives? Should a corporation not pay property taxes for police, fire, and an educated work force? How does a community tax shareholders for these services when the shareholders live in other states or countries?
Finally, if there are no corporate taxes will there really be more money for shareholders and workers and lower prices for customers? Or will there be more money for executive perks and salaries?
