P R O F E S S I O N A L . . . C O N T R O L L E R S
Businesses
Pay No Taxes, People Pay © 2003
by Adrian W. Hollander, C.P.A., CISA,
CIA, CBA, CFSA,
President of COMPLUS Inc. – Professional Controllers
Businesses are collectors and
remitters of taxes, but they don’t really pay taxes. For businesses, taxes are expenses which are
covered by the prices that you and I pay for products and services produced by
them. Individuals pay all taxes
because we can’t pass on the expense to someone else as every business can, and
does. There is a potential problem -- if
taxes, among other costs, are too high, a business may not be able sell its
wares competitively and may not survive.
Tax costs are an easy scapegoat because no individual is obviously to
blame.
To get to the core of the
issue, why do we have to pay taxes at all?
The two primary reasons are (1) to pay for government services and (2)
to influence population behaviors. Many
tax laws are designed to make us pay more for activities that the government
wants to discourage in order to subsidize those things that the government
wants to encourage. The paradox can be
illustrated this way: Why do we tax
income and wealth while we subsidize growing tobacco and welfare for
illegitimate children?
How much of your income (and
that of all the rest of us) should we have to give to “government” in the form
of taxes -- 2%, 5%, 10%? I am willing to
give to “government” up to 20% to pay for services relating to regulation (to
assure equal opportunity) and defense (to assure our security and safety from
threatening forces). Lots of goods and
services are necessary to support these objectives. This would require giving to “government”
about $1.5 trillion (12 zeros) per year.
Does this sound like a lot? With
a
Let’s consider what we are
paying already. Even if you are not
wealthy, you pay about 40% of your gross earnings in taxes to all forms of
government in various ways. “How (?)”,
you say. “I got a refund after I filed
my income tax return last year.” Here
are the major components:
(1)
Federal and state
income tax – 15% or more of gross income
(2)
Payroll taxes –
16.6% or more of gross income
(3)
Sales tax – (in
(4)
Property taxes –
directly or as part of rent expense -- ???
(5)
Business taxes
(excluding payroll taxes) included in the price of the goods we buy
– about 5% of
the cost of goods and services
(6)
Other licenses,
fees and fines assessed for various purposes -- ????? more
If you are paying much less
than 40% of your gross income in taxes, you are unusual. You must have adjusted your behaviors (reason
#2 above) to take advantage of tax deductions and credits (or just tax
avoidance) offered by the tax statutes.
send e-mail to: AHollan700@aol.com