I am trying to understand why some folks think that raising corporate taxes will solve all the “unfairness” in this country. Why would raising the costs for the companies that sell everything you buy result in anything other than raising your costs for those same goods and services?
If you are giving your child your last $20 each month in an allowance and your taxes increase by $10 every month, chances are you aren’t going to be able to give your child $20 any longer. It is all the same principle. Your household is run just like a corporation. Income comes from investments and services rendered (to your employer, if you aren’t self-employed), expenses are subtracted, the remainder is either held or distributed to various family members. More expenses (taxes) results in less distributions or the necessity for cutbacks.
I don’t know about you, but my husband lost his job the first week in August. He just found another job in his field last week. He was fortunate to find that one, as all the employers in his industry are laying off and cutting hours. We really don’t need to give them more reasons for additional cutbacks. How high do Obama supporters want the unemployment rate to go, anyway?
I think we need to take a look at who pays what taxes in this country. Caroline L. Harris, Director of Tax Policy at the U.S. Chamber of Commerce, clears up some misconceptions regarding corporate taxes in this article. What about personal taxes? The reality is that many folks have been led astray regarding just how the tax burden is distributed. In this New York Times article, Gregory Mankiw explains that the richest 1% of the country’s population pays over 31.1% of its income in taxes, the top fifth of the population pays 25.1%, the middle fifth pays 13.9%, and the poorest fifth pays only 4.5%.
The bottom line is this: raising taxes does not benefit anyone. Raising personal taxes not only makes life more difficult for families, it reduces spending and slows the economy. Raising corporate taxes results in the trickle down effect, where the additional expense is passed on to the consumer by way of increased retail pricing of goods and services, or else it is passed on to families by way of job layoffs and cutbacks in sheduling and benefits. Either scenario is not what this country needs right now.
Update: I just found a more recent breakdown of the distribution of the personal income tax burden at Americans for Tax Reform’s website. This report indicates that the top 1% of earners pay 40% of federal income tax while only earning 22% of the income. Tax them to death, and then who is going to pay that 40%? Certainly not the bottom 50% of earners who only pay 3% of the taxes, and never the bottom 40% who paid a negative 3.8%. That means not only does the government provide services that cost money to these individuals, they also got paid to be citizens, even though they contribute the least to the economy. What more do they want?
