True’s Miscellany: Corporation Taxes / Good or Bad / Sounds kind of boring, I know.

Recently, the State of Oregon passed a new tax on corporations (allegedly) to fund schools.  First, I have my doubts that the schools will see many of those dollars.  Most of the dollars will probably go to the general fund and to shore-up the grossly underfunded and poorly managed PERS program (Public Employee Retirement System). 

But... The subject is about taxing corporations.  Why am I discussing this?  Yes, I know it doesn’t seem to fit with my blog’s theme.  I suppose it’s timely, and anyway it was just on my mind this evening.

Politicians (whom, as I’ve said before, I hold in very low esteem) like to spin this new tax like it’s pretty much money from heaven with no strings attached.

Well, to answer the question as to whether or not taxing corporations is a good thing or a bad thing, it is neither.  It’s just another tax.  But please understand... 

Corporations do not pay taxes and they never have paid taxes!  People pay taxes.

What does that mean?  Corporations are business entities.  When Corporations are taxed, the Corporation simply adds the additional cost of the tax to the product produced; which, in turn, is paid by the individuals that ultimately purchase the product.  In other words, it is a stealth sales tax.  If a Corporation can’t pass the cost along to those who purchase their product, they must cut costs in other areas like laying off employees, cutting wages, robotics or automation – or, in some cases, deciding to produce the product in another country where labor costs are much less. 

So, if you favor higher taxes on Corporations, that’s fine.  Just understand that people (possibly you) will be paying the tab.

True Nelson