I know I'll catch allot of incoming for this comment, but I just gotta ask the question.
Do the wealthy really pay a lower percentage of their income than the middle class? I'm curious about this.
Every year round tax time, citizens against gov. waste, taxpayer alliance this or that publish reports of giant corporations such as GE, Verizon, IBM and the like generating billions of dollars in profits yet pay zero or close to no federal income taxes.
The reports come, inflame the middle class, then disappear until next April 15th.
Is it indeed true that large corps pay little to no tax? Is it true that the middle class pays a larger percentage of their income in taxes than the wealthy? Do the wealthy hide hundreds of millions in foreign bank accounts to avoid U.S. tax rates?
I'd like to know definitively once and for all. This is not about paying down the debt by taxing the wealthy. In my opinion, this would be about right and wrong.
Anyone know the answer?
Taxes paid by "corporations" on annual gross profits(as opposed to salaries/bonuses, etc earned by individuals within the corporation) falls into the category of "expense" to that corporation. Put another way, those taxes are a cost of doing business. If the government decides to increase taxes on corporations, then it is deciding to increase the cost of doing business for those corporations.
What does a corporation do when its cost of doing business goes up? Here are some of the options:
1. Increase the price of their products/services
2. Reduce costs elsewhere, such as laying off some employees, shutting down a portion of their operation, etc
3. Absorb the increased cost of doing business by cancelling planned expansions
4. Move operations to another country that is more business friendly
5. Decide to reduce or postpone paying of dividends to shareholders
6. Close down the business altogether (which will happen primarily with small businesses who are already operatiing on razor-thin profit margins)
7. Some or all of #1-5 above
Keep in mind that increasing the burdens of taxation/regulation will also keep some businesses from getting off the ground in the first place. Such government actions are the opposite of pro-growth policies and exacerbate an already enemic economy.
Personally, I favor the idea of a "fair tax" rather than continuing to add to the already massive tax code. But that would be a discussion for another thread.