Corporations Don't Pay Taxes, Consumers Do.

There is some discussion going on in the media about corporate taxes and who pays what. It turns out that ExxonMobil pays as much in US Corporate Income Tax as the bottom 60% of individual taxpayers. But is it really the corporation that pays? No, it is the consumer.

Corporations spend money and make capital outlays for new equipment based on Net Income After Tax. The higher the tax rate, they more they have to charge to earn a return on their invested money. The higher prices corporations charge make it harder to generate the revenues they need to be profitable. After all, each of us buy fewer goods when the price is high. On the other hand, lower tax rates mean it is easier for corporations to generate the revenues necessary to be profitable because their prices are (can be) lower.

American today has some of the highest corporate tax rates in the world. In fact, according to a recent study by PriceWaterhouseCoopers the US now ranks 102nd out of 176 countries. This means it is easier (as far as taxes are concerned) for corporations to earn returns on investment in 101 other countries besides the US. So is it any wonder that corporations are moving operations overseas? The US is becoming evermore uncompetitive because of government policy, not cheap labor or other cost concerns.

In addition, consumers are the ones that pay taxes corporations pay. We consumers pay those taxes in the form of higher prices for goods and services. At a time when other countries are lowering corporate tax rates, we have Congressmen and Presidential candidates hollering for higher taxes on our corporations. This means we will become more uncompetitive in a global economy and we will experience higher prices for the items all of us buy every day. We need to immediately lower our corporate tax rates if not eliminate them altogether. This will insure our corporations, the ones that employ most of us, stay healthy.