Who Really Pays For Corporate Taxes?
10th November 2011
Walter Williams, a Real Economist, explains some inconvenient truth.
Let’s look at corporate taxes and ask, “Who pays them?”
Virginia has a car tax. Does the car pay the tax? In most political jurisdictions, there’s a property tax. Does property pay the tax? You say: “Williams, that’s lunacy. Neither a car nor property pays taxes. Only flesh-and-blood people pay taxes!”
What about a corporation? As it turns out, a corporation is an artificial creation of the legal system and, as such, a legal fiction. A corporation is not a person and therefore cannot pay taxes. When tax is levied on a corporation, who pays it?
Hint: Where do corporations get their money?
November 10th, 2011 at 11:06
The problem with the legal fiction that Corporations Are Persons is exactly the one outlined in the article, and anyone who has half a brain knows that it’s a corporation’s customers who ultimately pay any taxes levied.
The way to fix this is to do away with corporate taxes altogether, and institute an “earnings tax” levied pro rata against all of the investors and owners of a corporation for their “share” of the corporations earnings. No more double taxation, and shareholders might actually wake up and pay attention to what the board of directors is doing. We might see some of those stratosphiric executive salaries pared down a little, more in line with their “value” to the earning ability of the company.
Just sayin’.
November 14th, 2011 at 21:19
The “legal fiction” that corporations are persons is why they have to obey the law, are bound by the contracts they sign, and can be sued. You can’t sue, arrest or hold to contract a dog or a tree, because they aren’t persons.
The law makes a clear difference between a natural person, who can vote, marry, etc., and the sort of person who cannot do these things, but is nonetheless subject to obeying the law.
Everybody wants the distinction between natural persons and other persons, and it exists. Everybody wants corporations to be subject to the law, and they are. Everybody who has learned anything about legal jargon knows what it means that corporations are persons.