Myth: Corporations pay taxes. Fact: They collect taxes for the government. Taxes are a business cost and are factored into the price of their goods and services. It is the end user who pays that tax.
Accepted premise: 70 percent of our economy is based on consumption.
Arguments are being advanced to reduce corporate taxes as being good for the economy, because with more profit, there will be more money for investment, or with less taxation you could see a reduction in the cost of those goods or services, thereby putting more money in circulation and expanding the economy. So the theory goes. Or would it be retained as added profit? Just how would this windfall be utilized? Many corporations have become accustomed to high rates of return on capital employed and don’t seem to be interested in investments that won’t yield high rates of return. This has left them awash in cash to provide for stock buyback. How this helps the economy I don’t know. As I see it, all it does is increase shareholder value, which just sits there.
Can someone education me? I’m all eyes and ears.
Robert Lewicki
Matawan