Letter: Guess who pays for corporate taxes?I keep hearing people say we have to tax those big businesses making all that profit.
By: Tim Hoopman, town of Kinnickinnic , River Falls Journal
I keep hearing people say we have to tax those big businesses making all that profit.
People need to realize that corporations don’t pay taxes, only people pay taxes. Let me explain with a simplistic example.
The Widget Company makes widgets and you buy widgets for $30. You see in the news that the Widget Company is doing well and you decide it should be taxed so your taxes can be lowered.
In this simple example for each dollar in taxes you save, there is a dollar tax on a widget at the Widget Company. Originally, the manufacturing cost of a widget was $10.
It went through the system of distributors, wholesalers and retailers and cost you $30. The cost of manufacturing of a widget is now $11, the original $10 plus a dollar of new taxes.
Now when it goes through the same system of percentage markups, a widget will cost you $33. Your tax savings results in a net loss of $2.
All taxes on businesses are part of the cost of providing their goods or services. All of the taxes will be multiplied through whatever system gets those goods and services to you.
Typically it will cost you two to five times the corporate tax in the cost of the goods and services. What a bargain.
You are much better off to just pay the taxes yourself.