Corporate Taxes? Yeah Right.

Rant Warning... Again

Ok, this is another thing that really makes me mad about the left. One of their most effective strategies is to say that they will lower taxes on the poor and middle class and shift more of the burden onto the wealthy and "corporations." Here's why this is bogus: News Flash- There is no such thing as a tax on a corporation. Only individuals are taxed- either as owners of corporations, workers in corporations, or buyers of products from corporations. Any tax hike on a corporation ultimately effects individuals-owners, workers, consumers. 

Example:

Joe owns company A that makes widgets. His gross income before taxes is $1,000,000. Currently Joe makes an after tax profit of approximately $650,000 (in a 35% tax bracket). He sells 100 of his widgets for a profit of $10,000 a piece. So currently a buyer of Joe's widget is effectively paying $3,500 in taxes.

If Obama gets elected he wants to raise Joe's tax bracket to 39% making his income $610,000 all things remaining equal. Joe is a businessman and is taking risk. It is good and right for Joe to make a profit. Joe now has a decision to make, either he will: 

1. Take the pay cut and continue making 100 widgets per year and selling them for $10,000 each (this will not happen). 

2. cut the pay of his workers or the quality of his materials by $40,000 and continue to sell the widgets for $10,000 each, in which case he will continue to make $650,000. 

3. raise the price of his widgets by $400 each- still making $650,000. 

4. do some combination of options 2 and 3 (this is most likely). 

It is unlikely that Joe will take a pay cut, because every other producer of widgets doesn't want to take a pay cut, and doesn't have to. They just pass the increased cost along to workers or consumers, because that's what every other widget producer will do (assuming market forces work to drive the price to equilibrium, so that they get rewarded appropriately for the amount of risk they are taking). 

Now, under Obama's plan the workers of corporations, or the consumers of corporations pay the taxes. Joe's widget's now cost $10,400 meaning you pay $3,900 in taxes instead of $3,500 in taxes, or the worker's pay has been cut so that the profit remains. 

The reason politicians get away with this is because in figuring tax increases they don't take into account the effect of corporate taxes on the individual. Obama can say that his tax plan will reduce taxes on 95% of Americans, and it will reduce income taxes, but it will have an offsetting increase on embedded taxes in the products we all buy, thereby raising the tax burden across all classes of society. 

I guess my point is, don't be fooled by the lure of the corporate tax, it is a myth, and a ploy used by politicians to buy your vote. Think about what this means for Obama and company. There are only two possibilities (if you can come up with a third please let me know):

Either they know the corporate tax is a sham and they peddle this to the unsuspecting American people, or they don't know their basic economics and are doing this with genuine motives. They are either conniving, or innocently ignorant. 

I'll leave that decision to you,

JB 

The Hypocrisy of the Left on Charitable Giving

Warning: Here comes another rant.

Yeah, this makes me mad, really mad. Democrats are all about “helping the needy” and “taxing the rich and giving to the poor.” But when it comes time to pay up and accomplish this, what do they do? Give to these efforts out of their own pocket? No way, they want the government to pick your pocket to pay for their pet charities (just one example: the government gives $330 Million per year to Planned Parenthood- the largest abortion provider in the world).

Senator Joe Biden recently released his tax returns since 1998 to the present. While he and his wife were making $200,000-$300,000 a year they were giving anywhere from $120 to $995 per year to charity. Barack Obama’s record pre-2005 when he started his run for President was better than Biden’s but not by much. From 1997 until 2005 Obama’s average giving was well under the national household average of 2.2% per year. To put this in perspective in the year 2002 Obama and his wife claimed $1050 to charity while the average American household gave $1872. Keep in mind that their income was $259,394 that year putting them in the top 2% in terms of income earners in the US. Al Gore and the Clinton’s were not very generous during their administration either, though to their credit they have been very active in charitable giving since. Bush, Cheney, McCain on the other hand have been much more generous than their Democratic counterparts, giving an average of around 10% of their income per year to charities. They could do more and probably should, but if everyone would follow these Republican’s example in giving we would be able to take care of all the people in the United States who cannot help themselves, and let the government get out of the business of charity.

All of these facts illustrate my main point: Some High-Profile Democrats are hypocrites by claiming to be the party who is on the side of the poor and the downtrodden, yet their charitable giving tells a much different story. Your checkbook tells much more about where your heart is than anything you say with your mouth. Obama and Biden ought to be ashamed of themselves for claiming to be on the side of the poor, and yet not giving of their own funds to support the very people who put them in office.

I know what the reply will be… “But they give with their tax dollars!!” Well so do the Republicans, and that didn’t stop them from giving generously. Maybe it is a difference in philosophy. I believe that individuals and non-government entities do a much better job of getting help to people who need it than the government. Maybe the Democrats think government does a better job, but I didn’t see in any of their tax returns where they paid more than their share of taxes.

Sarah Palin’s tax returns will be let out in the next few days from what I hear and my prediction is that she and her husband have been much more generous than either Biden or Obama.
Rant over and out… until next time.
Jon