richmondeagle (AT) comcast DO.T net wrote:
>> Hummm, at least you qualified your statement, so your thinking a little
>> more about the concepts. If a corporation passes the tax, or tax
>> increases, on to the consumer, then what about the business that is not
>> incorporated, (eg a sole proprietor or partnership), where all income
>> and expenses are pass through the the individual who pays the tax on
>> income from his businesses on his form 1040. Are these personal taxes,
>> or personal tax increases also passed through to the consumer who
>> purchases good and services from the sole proprietor or partnership, and
>> if so isn't the individual passing such taxes, or tax increase, back to
>> himself? It kind of reminds me of the sprint commercial where the CEO
>> is taking to a junior executive about abusing the company phones:
>>
>
> First of all, as you should know, a corp is a separate entity and it's taxes are an expense. For the sole proprietor, the taxes he must pay are still factored into his cost of doing business. I know this is not the academic/government response, but it is the real world... something the academic/government community is too far removed from to understand.
>
> Larry Miller
>
You and I are also separate entities, just like a corporation. You and
I pay taxes, just like a corporation. Do we ,as separate entities, pass
on our tax expense? It could be argued that we do, perhaps by demanding
pay increase form the government, (eg congress) in the form of increases
in the minimum wage, for example. Perhaps the taxes you and I pay are
factored into demands made by unions for better living wages and benefit
plans from the corporation served. Why would only corporations pass on
tax expense, as there are many other type of entities that pay taxes and
are also separate. When we pay taxes to the government, we are paying
taxes to an organization we ourselves own as Americans.
Anyway, going back to the focus that started the thread, America cannot
continue indefinitely to operate the government through deficit
spending, so at some point in the future we must:
1) Pass fiscal policy that reduces spending or increases taxes.
2) Service the deficit through inflationary spending, which is a hidden
tax whereby the government creates new currency devaluing the currency
in the peoples hand, resulting in increased costs for all thing the
American people consume.
The idea that additional government programs, or the deficit for that
matter, can be financed by lowing taxes is a myth. Although, the
economy can be given a boost within very narrow ranges of tax
reductions/incentives over short periods of time, the idea that reducing
taxes would increase government revenues is misplayed. The theory
begins to break down as the tax rate approaches zero. With a zero tax
rate the government would have no revenue, regardless of how vibrant the
economy grew. Likewise the theory breaks down as the tax rate
approaches 100%.
We need a government that produces a balanced budget that would result
in some surplus for emergencies. In this way the government could pay
expenses as it when along without the need to issue war bond to finance
deficits, for example.
Although the below link does not deal with how government can finance
deficit spending with currency creation that causes a hidden
inflationary tax, it a good primmer on the evils and perils of deficit
spending.
http://www.greatreality.com/DebtFAQ.htm#WhoOwe
Regards,
LelandJ
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©2007 Leland F. Jackson, CPA |
