How many times have you heard class warfare proposing to tax businesses more, and to raise taxes on “rich” people (those making more than $250,000 per year, according to President Obama) to fill the budget gap in America? Businesses versus People. Rich versus Poor.
And I’m sick of it.
First, businesses do not pay taxes – they collect them. The universal definition of price is as follows:
Price = Cost + Profit + Taxes
Whatever a corporation pays in taxes it first collects from you, the consumer, via the price paid for goods. Raise taxes on businesses, especially in a market environment like this, and it will fuel the inflation fire. That’s crazy.
Second, raising taxes here will only cause more unemployment. Think about it. If corporate taxes are increased they’ll have less profit to cover expenses. Are we supposed to believe that in spite of having less capital, corporations would actually add employees and/or increase health benefits to current employees?
Not likely.
Speaking of healthcare, one of President Obama’s main objectives was to reduce the cost of healthcare. Up here in the tri-state metropolitan northeast, I’m not sure how many doctors make less than $250,000 – but I suspect very few. And I bet the same is true for most of the east coast, west coast, and Midwest. If you raise taxes on “rich people” then you raise taxes on doctors. Are we supposed to believe that this will lower healthcare costs?
These are silly debates to have when simple solutions exist.
If you want healthcare costs to go down – tax it less. And if you want more people to be covered by insurance programs then provide incentives for corporations to pick up the tab. How? Tax them less.
For instance, healthcare benefits are a tax deductible expense for corporations. Despite this deductibility, many corporations have recently chosen to reduce healthcare coverage due to skyrocketing costs. To reverse this condition, and to encourage corporations to expand coverage, simply make the amount that corporations pay for employee healthcare benefits double-tax-free.
This is a low tax, free market solution to a silly debate.
And “the market” would love it.