Posted by
Andrews on Saturday, December 06, 2008 5:39:28 PM
As I have been saying for some time, all the current proposals for bailouts, lowering interest rates, and so on, as they are not backed by taxes of comparable worth, or by spending cuts, are nothing but new inflationary measures. Until now, I have not heard many pundits, or any, putting out the I-word with regard to these "solutions". Now I see
John Stossel is finally, and correctly, calling a spade a spade, and saying this is a massive inflation, or in his analogy, giving painkillers to an athlete with an injury. (My analogy was curing addiction by giving increasingly large doses of the drug, his is more elegant, mine probably more accurate. After all, painkillers have some beneficial effect, our "bailout" efforts promise nothing but more of the same.)
By the way, I saw a familiar old error in the comments to Mr. Stossel's post I need to correct. Corporate taxes are not "only passed along as higher costs to consumers", some, perhaps most, are. However, in many markets they cannot pass along 100%, so those taxes come out of profits. If they do not drive the company from business, they are taken out of the profits, in other words, coming from shareholders, be they wealthy investors or housewives with a few hundred in a stock fund, pensioners or 401K holders.
So, the problem isn't that 100% of corporate taxes are paid by customers, but that 100% of corporate taxes are paid not by corporations, but by individuals, and individuals we have no way to identify. So some is passed along to random customers, the rest is passed along to random share holders. It is a scattershot tax which hits rich, poor and everyone else in random, unpredictable ratios.
That is the problem with corporate taxes. Especially given our apparent dedication to "progressive" taxation, it seems odd to add a second tax which may hit the poor at a rate 100 times that of the rich, or vice versa, or switch from one to the other without warning. Even were corporate taxes not a drag on the economy, discouraging investment and business growth, this scattershot passing along of the costs of taxation would be a strong argument against them.