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Posted at 12:00 AM ET, 11/26/2010

Hiding what you are

By Tom Toles

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Friday rant: thanks for nothing edition
Seems unseemly to start up ranting again one day after we pause to give thanks for every darn thing. But let me give it a try. I say there are some people out there who just aren't saying THANK YOU in a way I as one person out here watching considers sufficient. It's not hard to take up this particular cudgel right after reading that with persistent 9 percent unemployment and no significant improvement in sight, corporate profits are at a record high.

We tend to write American history as if it's a struggle of political ideas about freedom, but an alternative history looks a lot like business interests trying to find sufficient labor to run the machinery as cheaply as possible. I'm not saying that that tells the whole story, but let's face it, from the corporate offices, we look a LOT like interchangeable parts. The implicit bargain up till now was that when corporations thrive, they hire us parts and everybody is happy. Now only half of us are happy. Make that: one percent.

And now we watch these same vastly well-fed titans pushing back from the Thanksgiving feast and declaring not thanks, but umbrage that anyone might ask them to pay taxes at the rate that they used to. This after a meal where they consumed the highest percentage of the food ever. And then there is that weird gaggle of second-cousins down there at the other end of the table cheering the titans on for their haughty disdain for the very IDEA of "sharing the bounty." Next up: Bah, humbug! --Tom Toles
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By Tom Toles  | November 26, 2010; 12:00 AM ET
Categories:  Congress  
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Comments

~~As to your point on the taxes, I have no idea what you're talking about. You pay taxes on the amount paid, not some pretend "retail" price, and the retailer/manufacturer pays taxes on the amount earned, not what they wanted to earn.
Posted by: commence~~

We pay taxes on the "retail" price, which in fact is inflated, sometimes to the extreme by the retailer...the retailer buys 'wholesale' from the manufacturer. The retailer and manufacturer usually are not one in the same.
At any rate the government wins with the added 'inflation'.

~~
The primary point is that it is reasonable to request that a corporation that takes quite a bit from the community, pay for some of what they take. Whether that is damage to the environment, or simply gaining advantage from a better educated workforce, there is a price.
Posted by: commence~~

I agree.

Posted by: bertzel | November 27, 2010 9:14 AM | Report abuse

Again, making my point.

Depending upon what type of corporation (S corp, C corp, LLC...) profits are taxed differently, but it's always profit. If distributions are made to the shareholders, that's income, and taxed appropriately - but again, in this latter case, there's more WIN to spread around.

The primary point is that it is reasonable to request that a corporation that takes quite a bit from the community, pay for some of what they take. Whether that is damage to the environment, or simply gaining advantage from a better educated workforce, there is a price.

Posted by: commence | November 27, 2010 12:13 AM | Report abuse

Corporate taxes are taxes on the rich, pure and simple. The price argument is wrong. The argument that businesses will do less R&D is wrong (that's deductible - and should be). And the idea that this will trickle down to the employees is only believable if you think that corporations are vindictive enough that they will sacrifice their business like a petulant child - if they could run their company with fewer people, they'd already be doing that.
Posted by: commence

I do not think so. I think company profits are seperate fom personal profits with a whole different tax system.
Dave

Posted by: OchamsRazor | November 26, 2010 9:14 PM | Report abuse

Well done, you just made my point. If the market could withstand the higher price, the business (whether manufacturer or retailer) would charge it. The price is lowered because that is what the product commands in the market, not because the company is being nice.

As to your point on the taxes, I have no idea what you're talking about. You pay taxes on the amount paid, not some pretend "retail" price, and the retailer/manufacturer pays taxes on the amount earned, not what they wanted to earn.

Posted by: commence | November 26, 2010 8:52 PM | Report abuse

ohh and yes, we pay tax on the inflated price not the sale...go figure.

Posted by: bertzel | November 26, 2010 8:28 PM | Report abuse

Take a moment and disabuse yourself of the infantile idea that businesses "just pass taxes along in higher prices". Rest assured that if a business could get $0.01 more for their products they already would. Pricing is set to "what the market will bear", and if it is below that they're not doing their job.~~~~

Obviously you do not SHOP much. My Biggest pet peeve is the ridiculous mark up of merchandise ONLY to be Leveled with the SALE or SPECIAL DISCOUNT price!!!
PAH-LEEEEZE. Some of us consumers realize the Bull when we see it. No matter, as of late, where I shop or what I shop for, the person at the register ALWAYS looks at the sales slip and TELLS me how much money I have saved...guess that is ONE way to offset the ridiculous inflation we are forced to endure!
NOT.

Posted by: bertzel | November 26, 2010 8:25 PM | Report abuse

Take a moment and disabuse yourself of the infantile idea that businesses "just pass taxes along in higher prices". Rest assured that if a business could get $0.01 more for their products they already would. Pricing is set to "what the market will bear", and if it is below that they're not doing their job.

Corporate taxes are levied on profits. If a company raises its prices, there will be more profit to tax. If it wants to lower its taxes, take less in profit (notwithstanding the ridiculous exceptions in the tax laws). If they distribute the profits, that will be taxed as income and everyone wins.

I am not an anti-corporatist, but let's be reasonable here, the cost of damage to the environment, social damage and economic rape continually heaped upon the taxpayers, perhaps a tiny bit of equity would be nice once in a while.

Corporate taxes are taxes on the rich, pure and simple. The price argument is wrong. The argument that businesses will do less R&D is wrong (that's deductible - and should be). And the idea that this will trickle down to the employees is only believable if you think that corporations are vindictive enough that they will sacrifice their business like a petulant child - if they could run their company with fewer people, they'd already be doing that.

Posted by: commence | November 26, 2010 3:19 PM | Report abuse

WAY back in the day, Henry Ford paid his employees twice what other employers did, knowing that (a) he was already making plenty of money and (b) higher wages for workers tend to stimulate the economy. And his employees bought Fords.

Today's employers understand that they are earning record profits and are very happy with that, but seem to have missed the concept of the lost opportunity cost that they are squandering by not being willing to share these record profits with the employees who earn them... and the greater economy basically stagnates.

People who are unemployed and people who are paid the same wages they were paid two years ago don't increase their spending... and in fact spend less. What a surprise!

(PS- Maybe, if the Federal government was to repay Native Americans what they are owed, Native Americans would also invest in the economy.)

Posted by: jonroesler | November 26, 2010 3:18 PM | Report abuse

Take a moment and disabuse yourself of the infantile idea that businesses "just pass taxes along in higher prices". Rest assured that if a business could get $0.01 more for their products they already would. Pricing is set to "what the market will bear", and if it is below that they're not doing their job.

Corporate taxes are levied on profits. If a company raises its prices, there will be more profit to tax. If it wants to lower its taxes, take less in profit (notwithstanding the ridiculous exceptions in the tax laws). If they distribute the profits, that will be taxed as income and everyone wins.

I am not an anti-corporatist, but let's be reasonable here, the cost of damage to the environment, social damage and economic rape continually heaped upon the taxpayers, perhaps a tiny bit of equity would be nice once in a while.

Corporate taxes are taxes on the rich, pure and simple. The price argument is wrong. The argument that businesses will do less R&D is wrong (that's deductible - and should be). And the idea that this will trickle down to the employees is only believable if you think that corporations are vindictive enough that they will sacrifice their business like a petulant child - if they could run their company with fewer people, they'd already be doing that.

Posted by: commence | November 26, 2010 3:18 PM | Report abuse

So why are we not addressing the trade deficits that exist between the US and China, India & Japan? How is it that we still give China a "most favored nation" trade status, when they refuse to manage the value of their currency fairly? One of the biggest factors in our downward spiraling economy is that we import everything and export nothing. All our hard earned cash goes overseas, along with the jobs. Seems to me that China and India's growing middle classes will be demanding more and more consumer goods, they should be buying those things from us, too bad America doesn't actually make anything anymore.

What we really need to do is start imposing heavier tariffs on imported consumer goods, start buying American made products, keep our money in our economy and quite financing the growth of other emerging nation's middle classes. So you say it is a global economy? Than why is it that we are stuck on the consumer/importer side of the equation? If the nations of the far east want us to keep buying their products, then they need to balance the equation. They ought to be purchasing American made products, or we need to tariff the hell out of their goods to force the American consumer to start supporting our fragile economy.

Posted by: pete1013 | November 26, 2010 3:12 PM | Report abuse

People will always try to find ways to avoid taxes through exemptions, deductions, credits, etc.--it's the American way. But I'm not at all sure that it is the wealthy who are saying they don't want to pay higher taxes. Rather, it is conservatives in and out of government who don't want them to pay high taxes. I can recall back when Bush 43 was trying to get his tax cuts through that many people of higher incomes said "we don't need tax cuts, we're fine." So place the blame where it belongs" libertarians, conservatives, Republicans, Tea Partiers. It was during the Reagan, Bush 41, and Bush 43 administrations that we accumulated most of the national debt that we now have. The pattern of irresponsibility in the management of our economy falls squarely on the shoulders of these people. Carter and Clinton were saints by comparison.

Posted by: ptgrunner | November 26, 2010 1:24 PM | Report abuse

The definition of a Banana Republic was always a place where 5% of the people have 95% of the money. The definition of a healthy Democracy always included a large, thriving middle class. Are you thriving now?
Posted by: B_Al_Zebub

My Reply...
The bottom line is that we need an efficient economic system that supports a just and equitable society.
If there is going to be justice and equity; it is necessary that the law enforces the equitable distribution of wealth.
Equitable distribution of the wealth is the responsibility of congress. That is why they are called "Law Makers". Our "Law Makers" are subjugated to large contibuters to their election which corrupts the economic system.
Economics is the life blood of the society.
The equitable distribution of economic exchange of goods and services makes an efficient, just and equitable society possible.
A failure of the economic system is a disaster for everyone at all levels of the wealth scale.
Our present system of economics can no longer support our society.
It is bankrupt just like our moral ethics is bankrupt.
We change the system or we self-destruct; it is that simple.
Dave

Posted by: OchamsRazor | November 26, 2010 1:19 PM | Report abuse

Tom, When do you think that people will wake up to the fact that the economy will remain weak until the huge imbalance between the earnings of the top 20% of earners and the rest of us is addressed. When the working class is unable to buy the products they help to manufacture, business shrinks. When not enough product is being sold or services being used, the managing class must lay off workers. And down and down we go until it all comes crashing down. Maybe if you and others continue to point this out, someone will take action before the situation becomes critical.

Posted by: clw743 | November 26, 2010 1:00 PM | Report abuse

Excellent point Goodgovernment, that taxes are simply passed along to the consumer. However, if I demand to be paid more, my CEO will just as simply, find someone else to work for a lesser wage far off-shore and then I'm left unable to purchase the goods that ultimately pay the piper. Then the Obama-haters will blame it all on the administration. What then???

Posted by: cmarston99 | November 26, 2010 11:10 AM | Report abuse

Bah Humbug, indeed ! I feel more like Bob Cratchet every day. Scrooge just made record profits, and I'm lucky to have a job.

BTW folks, don't expect other jobs to come back anytime soon, regardless of whose in charge. They went to China and India, where, so are most of the customers (billions are served !). It's not an American economy anymore. Our corporations have sailed on to global dominance. They have proven they don't need the (American) middle class. It's not about political ideology anymore, so don't waste your breath on right or left.

The definition of a Banana Republic was always a place where 5% of the people have 95% of the money. The definition of a healthy Democracy always included a large, thriving middle class. Are you thriving now?

Posted by: B_Al_Zebub | November 26, 2010 11:04 AM | Report abuse

Timanddori presents an opportunity for an existential argument. Actually, "none of us pay taxes" is a rational statement, if you follow his/her logic that a corporation does not pay taxes, but merely passes the cost of taxes on to the consumer of its goods/services.

So, if I have to earn more money to pay MY taxes--because I'm paying more for goods/services I purchase from the corporation that is paying more taxes--my employer actually pays my taxes because he/she will pay more for my labor/skill/expertise.

And, my employer will deduct the cost of employing me as an expense against her/his income, reducing the taxes that she/he pays.

But, with a really good accountant the corporation/business that employs me will end up paying NO TAXES. He/she also has a really good lobbyist who inserts loopholes in the legislation that my lobbyist has written so that the legislator I have paid for can introduce a bill to further reduce my taxes.

So, nobody ends up paying taxes, and we all profit from escaping the burden--of paying taxes.

Whew! That was fun!!!

Posted by: goodgovernment | November 26, 2010 10:53 AM | Report abuse

Toles, you typical Liberal idiot! Don't you understand that these "well-fed titans" of Corporate America do not, per se, pay taxes? Raising taxes on businesses is simply passed on to consumers (us) in the form of higher prices for goods and services. Wise up and get off your class-envy horse, fool!

Posted by: Timanddori | November 26, 2010 9:54 AM | Report abuse

It has been such for centuries. Didn't Adam Smith write about the tension between labor and management?
You'd think both sides would learn.
Season's greetings.

Posted by: GeneTouchet | November 26, 2010 9:05 AM | Report abuse

Thanks for the early Christmas gift, Tommy. I so enjoy watching you choke on your own bile.

Posted by: jpost1 | November 26, 2010 8:08 AM | Report abuse

Employment is a lagging indicator.

But I might as well say "Violets bloom in the spring."

Mr. Toles seems not to understand.

Not to worry Mr. Toles. The violets do.

Posted by: GaryEMasters | November 26, 2010 7:37 AM | Report abuse

Maybe if all the high level Democrat politicians actually paid their taxes we could all get a bigger piece of pie. The Post had a story yesterday about Native American tribes from Virginia paying their annual two deer and a turkey tax to the Governor fulfilling an agreement going back 333 years.

Posted by: jornolibist | November 26, 2010 6:31 AM | Report abuse

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