Wednesday, January 30, 2013

Best of Biblical Conservatism - Dissecting the Liberal Talking Points: Raising Corporate Taxes Costs CONSUMERS

Today, we bring you a new feature on Biblical Conservatism that we'll be test driving throughout the next couple months: a mid-week Best of Biblical Conservatism Post, to compliment new posts on Monday and Thursday.

Today's post comes from July 13, 2011. At that time, we were in the heat of the last Debt Limit Battle.

This week, as the Debt Limit battle continues, we've been explaining the truth behind the liberal talking points that the Drive-By Media won't tell you. Today, we're going to dive into the truth behind the liberal idea that raising taxes on big businesses won't effect us, the middle class taxpayer.

As usual, liberal are applying an expectation of static consequences to a new tax. liberals always assume businesses don't change their behaviors or, in this case, their prices, when taxes are increased. There's an unfortunate truth behind it: Corporate taxes are ultimately passed along to the consumers. That means YOU are paying for it. Liberals would have you believe that if government imposes a tax on Proctor and Gable, for example, that means Proctor and Gamble just pays the extra tax out of their profits. In reality, the cost of that tax is rolled into the cost of that bottle of Tide you're buying. Either that or they step back production to continue to maintain the same profit margins. (1) Lower production means fewer employees, by the way.

That's the problem with liberal economic assumptions; they always assume the rosiest of scenarios. Unfortunately, raising those corporate taxes hurts you. It means either the company cuts production and people lose jobs or the price goes up. Either way, it hurts the middle class. That's the problem liberal don't tell you: you pay for that tax increase.

Don't believe me? Did you know that the United States Fuel Tax and state fuel taxes were hypothetically supposed to be levied on the gas station? Guess what, it isn't. You pay it. It's included in the prices. (Somewhere in the history of the gas tax the gas stations and the government dropped all pretenses and just advertised the price as "all taxes included). Before you lambaste the "evil gas station owners," the current Federal gas tax is at $0.18 per gallon and the average gas station's profit on a gallon of gas is $0.07-$0.10 per gallon. (For those of you from Palm Beach County, FL, that means the tax is somewhere between $0.08 to $0.11 per gallon OVER their profits.)

For the most part, gas stations make their money selling you a Mountain Dew, a pack of Twinkies and a tin of Altoids, not on gas. Even on a full tank they're only making a buck or two profit. If I fill my car's 13 gallon tank (I drive a Chevy Malibu for those who care), that means a gas station on the high end of the profit range is making $0.91 - $1.30 of profit on me, once a week. Meanwhile, the government is making nearly twice that amount taxing you. So who's the one who is gouging you again?

No, there's no legal way to force the corporations to not roll those taxes into their prices. By the way, they aren't doing anything wrong. They are simply maintaining a net profit margin that makes their investment (aka risk) worthwhile. It's either going to lead to cutting production (which means cutting workers) or raising prices.
Don't believe the liberal lie: Raising taxes on corporations isn't raising taxes on millionaires and billionaires. It's raising taxes on you.

(1) Reality Check: Liberal Tax Policy Has Not and Will Not Succeed

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