Corporate Tax Burden Again
29th October 2017
The Grumpy Economist (love that name) points out some inconvenient truth.
I think every economist in this debate admits, if some reluctantly, that “corporations” pay no taxes. As an accounting matter, every cent corporations pay comes from higher prices, lower wages, or lower payments to shareholders. The only question is which one. And indirect general equilibrium effects are central. The question is not just, how do corporations respond immediately, but how do wages, prices, and capital in the whole economy adjust. “Make corporations pay their fair share” is just nonsense.
The only pool of money from which corporations can ‘pay taxes’ is the pool of money they get from their customers. Neither mangers nor shareholders reach into their own pockets to give this extra money to the government.
‘Corporate taxation’ is merely a stealthy way to get more money out of their customers. In that sense, it’s really a form of sales tax — which, as every economist knows (and every proglodyte ignores) is one of the most regressive forms of tax there is. So every proglodyte screaming ‘Tax the rich!’ when corporate tax rates are discussed are actually screaming ‘Tax the poor!’ without knowing it. (Screaming Without Knowing is what proglodytes do best.)