Mimsy Were the Borogoves

Editorials: Where I rant to the wall about politics. And sometimes the wall rants back.

Tax individuals, not organizations

Jerry Stratton, April 16, 2009

This may not be the best time of year to argue this, but only individuals should be taxed. Taxes on non-individuals are just a shell game to hide that the individual is being taxed. But they also have the unavoidable side-effect of increasing special-interests lobbying on behalf of businesses who want to reduce their taxes directly or by enacting tax loopholes. But the interests of businesses isn’t the same as the interests of consumers—who pay the cost of any taxes either in reduced wages or increased costs.

For example, a sales tax is better than a business tax. Business taxes are part of a business’s operating expenses. They must be passed on to the consumer if the business wishes to remain in business. A set of taxes that raise expenses by ten percent is the same as a sales tax of ten percent. The only difference is that the sales tax is visible to the consumer as a tax; an increased base price is still a tax, but it isn’t visible as a tax.

This applies to all taxes currently paid by businesses. For example, we hide the cost of social security by requiring employers to not mention half of the deduction on pay stubs. If I’m reading Wikipedia right, you see a 7.65% social security tax on your paycheck—but your employer also pays another 7.65%. Your employer gets that money either by not paying you as much as they otherwise would, or by increasing the cost of the things that your company sells (or some combination of the two). It should explicitly be added as a sales tax or as a line item on your paycheck.

One of the reasons, I think, that politicians don’t like simple taxes is that the simpler the taxes are, the more obvious they are to the person who is really paying the tax.

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