Tuesday, August 12, 2014

Why No Corporations Pay Taxes

I mentioned to an attorney recently that corporations never pay taxes. She looked surprised and said, "Well, of course they do."

I replied in the contrary; they did not pay any taxes.

She looked perplexed and said she was certain that corporations paid taxes.

Again, I assured her that no corporation had ever paid any taxes.

Befuddled, she looked at me and said, "Well, in law school, I was taught that corporations use government resources and that was why they have to pay taxes."

I explained to her that if her law school professors had taught her that, they were mistaken.

She insisted, once again, that I was wrong about this, so I decided to explain.

Every corporation benefits three groups of people. First, they benefit the consumers who use the company's products and services. Next, they benefit the employees who earn their livelihood working for the company. Finally, they benefit the shareholders who invest in the company's stock.

And when the government "taxes" a corporation, they're taking the money from the consumers, employees and investors who are associated with the company. Real estate doesn't pay real estate taxes. Cars don't pay car taxes and corporations don't pay corporate taxes. Only people pay taxes.

Exactly how the cost of taxes is shared between the investors, employees and consumers is a difficult question. But if you buy things, work for a company or have a retirement plan that owns stock, you are paying corporate taxes.

Corporate taxes are not very transparent. Many people are happy to "stick it to corporate America" without realizing they're taxing their own retirement plan.

. . .which is one more reason that replacing all income taxes, corporate and personal, with a national sales tax would make this a better country.
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posted by Bob Fischer at 0 Comments

Wednesday, August 6, 2014

How to Fix Congress


I have an idea that I think would fix Congress. The problems are obvious to everyone. Congress continues to be beholden to special interest. People and organizations with lots of money can buy access and influence, and laws are designed to protect the wealthy and powerful.

It takes lots of money to get elected to Congress. It's a great job with a fat salary, a generous pension and superb fringe benefits, so once they've done all the work to get elected, congressmen and senators normally want to stay there. So their primary job becomes getting reelected, which means they frequently need to vote a certain way to keep the support of their party - and their jobs.

The problem is not with the people who are elected to Congress, who for the most part are good people. The problem is with how the money corrupts them. So let's eliminate it.

My solution? I think we should select Congress by lottery. All college graduates over the age of 25 would be eligible for the lottery. All one would have to do is pass a basic civics test and be willing to serve four years. People could only serve once in a lifetime.

Instead of a bunch of lawyers, Congress would be made of school teachers, salesmen, doctors, businessmen, corporate executives, stay-at-home parents and tradesmen. In other words, it would look like America. Only people who really cared about America would be willing to leave their careers for four years to serve the nation.

It might sound silly, but is this not the exact system that we use to seat juries? And don't we trust juries to decide things as important as taking away people liberties - or even their life?

We would still elect our President, who could veto congressional action subject to the override with a two-thirds majority. I'm confident that a random selection of patriotic people who cared about the nation could do a much better job than the people who are beholden to special interests.

Let me know what you think.

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posted by Bob Fischer at 2 Comments

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