No one really likes taxes. As one wag put it, a good tax is one that the other guy pays. This, of course, leads us to corporate and business taxes.This is a tax that we think someone else pays!
Every so often the press goes wild over some major corporation that has paid little or no federal income tax. They never point out that this is perfectly legal and the company merely used the law as written. The law writers include stuff that leads companies (& people) to spend the money this way or that. These tax advantage provisions are 100% legal.
But when a business pays a tax…any tax, who really pays that tax?
The business pays the tax on profits. That seems simple enough, but where does the business get it’s profits? Profits come from sales.
Sell something for more than it costs, and you have a profit. But what is the cost? The cost is whatever you are selling (the item or service) plus whatever it costs you to sell it (the effort) plus the taxes you will need to pay on whatever you sold (and various items of overhead, of course). So, the business taxes that the company pays are in the price that the buyer pays. If it were not, the business would not have the money to actually pay the taxes due. A business must plan for the taxes when it prices a good or service.
Simply put: when any business pays any tax, the cost of that tax is included in the price of whatever that company sells.
To put it even more simply: any tax paid by a company is paid for by the consumer…..ie: the people. You and I are paying the tax in our purchase price of the product.
So, what we are dealing with is yet another hidden tax. We can blame the big corporations for not paying more taxes all we want, but the reality is that it is we who are paying this hidden tax.