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Editorial: What are the misunderstood ‘hidden taxes’?
By Glen Terrell and Paul Livingston
This is the third in a series of articles about the FairTax Bill (HR25 and S122).
One problem with our current taxing system is that of hidden taxes, which are those unknowingly paid by the taxpayer. Then there are “partially hidden” taxes, but perhaps the most misunderstood of all are corporate and business taxes. Most probably regard taxes on businesses as a good thing, i.e., as a tax someone else has to pay.
Sounds good, but it’s all a myth, and to make matters worse, such taxes hurt the economy. Consider an imaginary XYZ Inc. company.
It has costs associated with the production of goods and services, income derived from the sale of those goods and services, and the difference is the company profit.
The purpose of every company is to make a reasonable profit.
Suppose our XYZ Inc. has been operating in a stable and profitable environment, successfully competing with its foreign competitors, when the government suddenly decides to increase its tax on XYZ Inc. by 10 percent.
How will company management handle this increase? They could reduce costs by laying off workers, buy cheaper materials, or they could take the money from profits, thereby reducing dividends to shareholders.
Or, they could raise the price of their goods and services.
Possibly, they could try some combination, but there are no other alternatives. Regardless of the decision, some employees, the stockholders, or customers (all of whom are people like you and me) will ultimately pay the tax.
That’s how it works. Businesses collect the money and pass it on to the government, but the origin of the money was people (consumers). The same is true of any tax on business. Businesses do not pay taxes. Only people pay taxes!
The situation may actually be worse than it seems. What are the unintended consequences if the price of goods and services is increased to “come up with the money” to pay the tax bill? If XYZ Inc. has competitors all over the world that don’t experience the 10 percent tax increase, the cost of XYZ’s goods is higher than its foreign competitors. The worldwide demand for its goods shrinks, its share of the market drops, and employees are laid off.
The management at XYZ Inc. begins talk of moving its operation to another country where the business tax climate is more favorable. Does this sound familiar?
Studies have found that the consequences of the federal tax code add an average of 22 percent to the retail price of American goods and services. Considering the consequences, ask yourself why our national tax policy on business is anything other than zero. Did the professional politicians in Washington, D.C., never study taxation 101? Or could the real answer be something more sinister?
There is one, and only one, proposed tax policy that would have zero taxes on business. That is the FairTax. From page 106 of The FairTax Book by Neal Boortz and John Linder, “Economists estimate that in the first year after the FairTax Act becomes law, the economy will grow by 10.5 percent. Exports will grow by 26 percent. Capital spending will increase by more than 70 percent.”
Has there ever been a day in your lifetime when the American economy was this robust?
Please contact your representative and senators and explain why we need the FairTax system.
The FairTax eliminates income tax, payroll tax, capital gains tax, gift tax, estate tax, and self-employment tax. The FairTax bill is 133 pages long, double spaced.
Read it for yourself. Go here: http://1.usa.gov/XDXRoU and click on GPO site.
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March 21, 2013 9:54pm
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Section A: General News Archives
American Legion ceremony (May 25, 2016)
Annexation for fire services will be on November ballot (May 25, 2016)
Boy Scouts, Girl Scouts to honor fallen heroes (May 25, 2016)
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Chief Hull resigns from Poth police (May 25, 2016)
County sets sights on new tax (May 25, 2016)
Court Update (May 25, 2016)
Editorial: Grim choices have put America in a grave situation (May 25, 2016)
Editorial: On the other side of politics in a world of digital divide (May 25, 2016)
Fire, EMS services — Who’s got you covered? (May 25, 2016)
It’s okay to take control (May 25, 2016)
Letter: Free ride over hard work … a no-brainer! (May 25, 2016)
Letter: Housing Foundation expresses gratitude (May 25, 2016)
Letter: Mainstream media ‘brainwashing’ Hispanic/Latino voters (May 25, 2016)
Meeting Watch: Wilson County Memorial Hospital District (May 25, 2016)
Memorial Day office closures (May 25, 2016)
One viewpoint: Making Floresville marketable with recreational facilities (May 25, 2016)
Parish plans Cemetery Ceremony (May 25, 2016)
Police arrest man in case of burned body (May 25, 2016)
Police Blotter (May 25, 2016)
Police ticket six for violating cell phone ban (May 25, 2016)
Post 539 service (May 25, 2016)
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SSCA ceremony (May 25, 2016)
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Editorial: Narrow views promote intellectual, moral dry rot (May 18, 2016)
Editorial: The political climate in America goes from bad to worse (May 18, 2016)
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Letter: An open letter to Congress (May 18, 2016)
Letter: Illegal immigration: Who will laugh last? (May 18, 2016)
Letter: What Hispanic vote? (May 18, 2016)
Lone Star Greys to meet (May 18, 2016)
Meeting Watch: La Vernia City Council (May 18, 2016)
Meeting Watch: Poth ISD (May 18, 2016)
Police Blotter (May 18, 2016)
Police recover one of two stolen trucks (May 18, 2016)
Register for free watercolor lesson (May 18, 2016)
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Stockdale City Council approves electronic payment processing (May 18, 2016)
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Cub Scout Roundup (May 11, 2016)
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Editor: Trump’s candidacy sets in motion affliction in future elections (May 11, 2016)
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Lack of super majority vote keeps Clean Water Rule flowing (May 11, 2016)
Leetter: The government is a terrible investor (May 11, 2016)
Letter: Injection well site is near river, creeks (May 11, 2016)
Letter: Stop being negative (May 11, 2016)
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Meeting Watch: La Vernia ISD (May 11, 2016)
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Miss LV Pageant, Bluebonnet Parade, graduation fill La Vernia calendar (May 11, 2016)
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Personalized brick for Veterans Memorial (May 11, 2016)
Police Blotter (May 11, 2016)
Precinct 3 primary runoff is May 24 (May 11, 2016)
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Tanneberger qualifies for Executive Club membership (May 11, 2016)
Voters respond: One bond passes, another fails (May 11, 2016)
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Celebration Mass June 12 (May 4, 2016)
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Court Update (May 4, 2016)
Crime Stoppers aids police anonymously (May 4, 2016)
DA, DPS bust nets 86 charges (May 4, 2016)
Debate over citizens comments dominates Floresville council (May 4, 2016)
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Editorial: Overbearing city council threatens boards’ independence (May 4, 2016)
Editorial: Taking personal responsibility will bring possibilities (May 4, 2016)
Editorial: Trump is the same old song with one more verse (May 4, 2016)
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Hall of Fame inductees: Joe Kotwig, Malcolm and Beverly Talley (May 4, 2016)
Letter: Alamo Colleges: A bust for Floresville (May 4, 2016)
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Meeting Watch: Wilson County Commissioners Court (May 4, 2016)
National Day of Prayer May 5 (May 4, 2016)
Police Blotter (May 4, 2016)
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