Economic Rules? What on Earth are Those?
It is going to be really hard for conservatives to keep educating people about basic economic facts if the stinking New York Times can’t get it right. The paper had to print one whale of a correction.
The story in short is that two Democratic Senators asked the GAO to find out how many businesses pay taxes in this country. It is their earnest belief that businesses do not pay enough taxes here and they need more money for their rapacious nanny state government. The GAO came back and told them that 2/3 of them didn’t. This, the Times reported, is a bad thing, a sign that US corporations are trying to get out of “paying their fair share” or whatever new catchphrase the progressive left has concocted to get out help shaking down the people they’ve decided have too much money.
The article accepted this uncritically without looking into what it means. The secret to the entire report is in this bit of the article:
Either way, the nearly 1,000 largest United States corporations were more likely than smaller ones to pay taxes.
In 2005, one in four large United States corporations paid no taxes on revenue of $1.1 trillion, compared with 66 percent in the overall pool. Large corporations are those with at least $250 million in assets or annual sales of at least $50 million.
Do you know why that is? The New York Times sure as heck doesn’t, even though it should, considering that this article appeared in the Business section. John Hinderaker saw it right away.
As Levin and Dorgan undoubtedly know, most small businesses, and many large ones, don’t pay federal income taxes because they don’t make any money. Most companies, especially small ones, pay their employees, after which there is nothing left to report as profit. Those salaries, of course, are taxed as ordinary income. If the corporations are Subchapter S, any earnings are passed through to the owner(s) and taxed at that level.
Yeah, see, the multiple layers of reporters and editors and more editors missed that completely. It was so bad that in the original edition of the article, the reporters whipped out their calculators and found that if all those scheming, thieving corporations paid their due, the Federal government would have gotten another $857 billion in taxes. That’s enough to pay for Universal Health Care, Universal College Educations, all the other stuff that Barack Obama has promised, and new ponies for everyone!
Of course, that ain’t true and the fantasies of the left again crashed upon the shores of reality. The correction is the sad result. I imagine that the editor who approved it probably had to wipe away a tear at the unfairness of it all.
An article on Wednesday about a Government Accountability Office study reporting on the percentage of corporations that paid no federal income taxes from 1998 through 2005 gave an incorrect figure for the estimated tax liability of the 1.3 million companies covered by the study. It is not $875 billion. The correct amount cannot be calculated because it would be based on the companies’ paying the standard rate of 35 percent on their net income, a figure that is not available. (The incorrect figure of $875 billion was based on the companies’ paying the standard rate on their $2.5 trillion in gross sales.)
Stupid, stupid economic rules that make companies pay on net income instead of the gross!
And that, folks, is why Democrats must never be allowed to run our economy.
Other Posts of Interest:
- The Dems Cant Even Bring Their Convention In on Budget
- The Nanny State Tax Scam Comes to Maine
- And They Want My Healthcare, Too?
Category: Oh, THAT liberal media., The Economy and Your Money
Additionally, you can't actually tax a corporation only people (employees, investors, customers). If the government raises taxes on a corporation it can do one or more of several things. Raise the price of the product. Reduce the cost of labor(i.e. wages). Reduce the amount of dividends or other profit disbursements. Reduce quality/quantity of the product at the same price point. Go out of business. etc. etc. etc.
I wonder who would actually pay a "Windfall profits" tax on the oil companies?? Hmmmm.