Reagan-Lovers: Stop the Bull

[atlcomedy]

I have never said the nobody pays business taxes. In the long run the consumer bears all of the cost of all taxes on a business regardless of how it is organized.

[Rudyard K]

Originally Posted by atlcomedy

Let me know when you are done editing your remarks and I will read your final version and respond

Uh...I'm not sure what I edited...if anything. But if I did...feel free to respond to any one of them. I screw up spelling all the time.

[Rudyard K]

Originally Posted by atlcomedy

I have never said the nobody pays business taxes. In the long run the consumer bears all of the cost of all taxes on a business regardless of how it is organized.

Then I guess we might as well stop talking about Federal Income Tax...because they are all paid by the consumer anyway.

I guess I just don't agree with that conclusion.

[atlcomedy]

@RK if the consumer doesn't ultimately pay corporate/business taxes (let's ignore structure), who does? Over the long term, if you can't pass them to the consumers you are a poor business owner & deserve what you get. Again the caveat, "over the long term." If you own a McDonalds franchise, if say 15% of your costs are taxes of one sort or another, are you telling me you don't build that into the cost of a cheeseburger?

I'm not saying all business taxes are fair or charged at the right amount but ultimately the consumer pays them.

[Rudyard K]

Originally Posted by atlcomedy

@RK if the consumer doesn't ultimately pay corporate/business taxes (let's ignore structure), who does? Over the long term, if you can't pass them to the consumers you are a poor business owner & deserve what you get. Again the caveat, "over the long term." If you own a McDonalds franchise, if say 15% of your costs are taxes of one sort or another, are you telling me you don't build that into the cost of a cheeseburger?

I'm not saying all business taxes are fair or charged at the right amount but ultimately the consumer pays them.

First, if your theory is applicable to business income or other taxes...then why would it not be applicable to personal income taxes. In other words...I must be stupid if I can pass my personal income taxes off on the consumer of whatever product or service I am producing.

Second, since I obviously dont agree with the above, what makes taxes any more magic that any other costs? Different businesses have different ROE's. And different businesses have different ROA's. Some business operate on a concept called an 'operating ratio". This is the ratio of total operating expenses to revenue. High volume, low margin businesses operate on a very thin operating ratio. Low volume, high margin businesses operate on a much better operating ratio. It depends on the business model.

Typically, interest expense, depreciation, and corporate income taxes are not part of the operating expenses. But they are real expenses of the operation nonetheless. Sometimes corporate overhead is also not included in the operating expenses. But those corporate overhead expenses are also expenses nonetheless. Thes methodologies in presentation are more for an evaluation of the enterprise value of the business.

But a business that operates with a 90% operating ratio means that 90% of the revenue is eaten up with expenses. So, in such a case it is costing the owner 9 out of every 10 cents it makes in revenue to operate its business. To claim that it is only a foolish business owner that cant pass on most of its expenses to the consumer is a bit myopic...and not reflective of reality. Any increase in the expense of the operation (of a 90% operating ratio business) is probably going to be borne some 90% by the business...and 10% by the consumer of the service or product. That's not smart or foolish...that's just the business model.

Yes...I fixed a couple of typos.

[atlcomedy]

Maybe I am missing something....

Things like payroll taxes, sales taxes, excise taxes, etc. are all expenses that on an income statement all occur above the line or are deducted from revenues as expenses before we ever get to a net income number upon which a corporate tax is levied.

As far as passing pricing ( whether it is a a result of a tax or a commodity price increase or just an attempt to boost profits); it is tough in the short run. That is why in my last few posts I've bolded "in the long run."

I think to some extent we are talking past each other here over the interwebs. I suggest we both get laid

Originally Posted by Rudyard K

First, if your theory is applicable to business income or other taxes...then why would it not be applicable to personal income taxes. In other words...I must be stupid if I can pass my personal income taxes off on the consumer of whatever product or service I am producing.

Second, since I obviously dont agree with the above, what makes taxes any more magic that any other costs? Different businesses have different ROE's. And different businesses have different ROA's. Some business operate on a concept called an 'operating ratio". This is the ratio of total operating expenses to revenue. High volume, low margin businesses operate on a very thin operating ratio. Low volume, high margin businesses operate on a much better operating ratio. It depends on the business model.

Typically, interest expense, depreciation, and corporate income taxes are not part of the operating expenses. But they are real expenses of the operation nonetheless. Sometimes corporate overhead is also not included in the operating expenses. But those corporate overhead expenses are also expenses nonetheless. Thes methodologies in presentation are more for an evaluation of the enterprise value of the business.

But a business that operates with a 90% operating ratio means that 90% of the revenue is eaten up with expenses. So, in such a case it is costing the owner 9 out of every 10 cents it makes in revenue to operate its business. To claim that it is only a foolish business owner that cant pass on most of its expenses to the consumer is a bit myopic...and not reflective of reality. Any increase in the expense of the operation (of a 90% operating ratio business) is probably going to be borne some 90% by the business...and 10% by the consumer of the service or product. That's not smart or foolish...that's just the business model.

Yes...I fixed a couple of typos.

[Rudyard K]

Originally Posted by atlcomedy

Maybe I am missing something....

Things like payroll taxes, sales taxes, excise taxes, etc. are all expenses that on an income statement all occur above the line or are deducted from revenues as expenses before we ever get to a net income number upon which a corporate tax is levied.

As far as passing pricing ( whether it is a a result of a tax or a commodity price increase or just an attempt to boost profits); it is tough in the short run. That is why in my last few posts I've bolded "in the long run."

I think to some extent we are talking past each other here over the interwebs. I suggest we both get laid

I agree with the getting laid part. But I do think that the disparity we are having is you seem to view taxes (whether corporate income, excise, severence, sales or whatever) as some kind of special expense that should not be considered as "my" expense for generating my income. I view those expenses just like any other expenses...payroll, rent, cost of goods sold, utilties, etc. They are all variable and are, to some extent, controllable costs.

This whole line of discussion centered on your and PJ's view that those taxes listed above as not being "my" expenses. I guess that is since they are business expenses. I don't know what you do for a living, but I know what PJ does. I know his "income" centers primarily on his getting paid for his time and services (wait a minute...it seems maybe he is a provider ). Therefore his income taxes are the primary taxes he pays. That is not the case for me. I have service businesses...but I also build or manufacture things. Income taxes are just one of many of the type of taxes that I pay. So, I view them much the same way as any other tax.

WTF's view is that the poor man's tax burden is so much higher (as a percentage) than the wealthy man's burden...becuase he spends a big portion of his income on saales taxes. Since the poor man is not really required to spend money on things that generate sales tax, I view sales tax of the poor man as no different than the elective expenses (taxes or otherwise) a businessman pays for his business.

I guess I don't view the fact that I generate my income based on providing goods, or thin margin services, as making the fact that I pay lots of other type taxes...in addition to income taxes...as meaning that those other type taxes are not a tax burden on me. I think they are. The salary that I pay myself is relatively deminimus...as a portion of my income. But income taxes on that other income is not the only taxes that burden my person.

If, in caluculating my (me individually) contribution to society by paying taxes, should include federal income taxes as well as sales taxes on consumer goods (just like the low income folks)...why do we exclude my business sales taxes, or excise taxes, or severence taxes, or even payroll taxes not withheld from my employees, etc...from that calculation of my contribution to society. Those taxes burden my income, just like any other expense. It is as simple as that. I count 'em.

[atlcomedy]

For the record I am a small business((es) owner....

I guess the disconnect you & I have is I separate my business spending from my regular life. If I go into Best Buy (or send an employee) and buy a couple hundred dollars worth of printer ink and get taxed on it I don't view the tax as my tax burden but rather the cost of getting the cartidges I need to conduct business.

[Rudyard K]

Originally Posted by atlcomedy

For the record I am a small business((es) owner....

I guess the disconnect you & I have is I separate my business spending from my regular life. If I go into Best Buy (or send an employee) and buy a couple hundred dollars worth of printer ink and get taxed on it I don't view the tax as my tax burden but rather the cost of getting the cartidges I need to conduct business.

If you go to Best Buy...and buy yourself a dvd for you personal viewing pleasure...do you view the sales tax you pay as your tax burden?

[atlcomedy]

Originally Posted by Rudyard K

If you go to Best Buy...and buy yourself a dvd for you personal viewing pleasure...do you view the sales tax you pay as your tax burden?

yes

[pjorourke]

Originally Posted by Rudyard K

Oh hell...I know all those supply and demand curves too. But no real person (I guess that would exclude an economist if they believe as you just said) really believes that if you remove 25% of the employee cost that such will not effect after tax profits of the business or reduce the product cost....probably both. I'm not sure how you can believe that everything else remains fixed when employee costs changes. That makes about as much sense as saying that if you increased payroll taxes by 10% to the employer that the only effect would be on increased product prices.

Obviously, if they raised the "employer share" of taxes, you would do something to offset it -- hire less people, increase pay by less, etc. In the short-term it would be an increase in costs to you. Over the long term, the guy in my example is only worth 85K so if the government says you have to pay another $8,800 you will do something about it.

The converse is easier to see. Lets assume, god forbid, that your entire workforce is unionized -- but its a "reasonable" union (granted, an oxymoron). The law changes as I suggested in my previous example so employer taxes were now 0% and employees were 15%. If the union suggested that you increase salaries by the same 7.5% tax you were paying before, you'd take that deal -- no net change in your cost. That tax is clearly borne by the employee -- its all part of the compensation they get from you for their labor.

I (or I guess in your view...my companies) pay very little corporate taxes. Virtually every entity I own is a flow through entity (Ltd partnership, partnership, S Corp or LLC). So the income tax is actually assesed on me...the individual...not some corporation.

Down boy! We are saying the same thing.

It is a bit shocking to me that you all have bought into the fact that corporate or business taxes aren't really taxes assesed on anyone. They must be being assesed on the great bugaboo in the sky. Lets get the great bugaboo to pay all taxes. That way the rest of us won't have to.

Who said that?

I said payroll taxes were borne by the employees in lower wages.

I said income and property taxes were borne by the business owners. Changes to either are not automatically passed to consumers and doing so changes the supply/demand curve.

And lastly I said that sales and excise taxes are borne by the consumer because they affect all suppliers uniformly. In the printer ink example you and ATL discussed, I would view the tax on those cartridges as a tax borne by the business (and thus ultimately the owners of the business), but as a practical matter most people see it like ATL does, as a cost of the printer ink.

[pjorourke]

Originally Posted by Rudyard K

I don't know what you do for a living, but I know what PJ does. I know his "income" centers primarily on his getting paid for his time and services (wait a minute...it seems maybe he is a provider ).

Except my clients have requested that I keep my clothes on.

[WTF]

Originally Posted by Rudyard K

WTF's view is that the poor man's tax burden is so much higher (as a percentage) than the wealthy man's burden...becuase he spends a big portion of his income on saales taxes.

That is not my view. In fact in the past I have provided a link showing where people making between 20k-500k pay around 40% of income in total taxes(regressive/progressive) I have said that when people talk about 50% of Americans NOT paying Federal taxes that most Americans wrongly think that they do not pay ANY taxes. They do. They pay regressive taxes and I try and point that out to the ignorant masses that may falsely believe such nonsense .

Originally Posted by Rudyard K

Since the poor man is not really required to spend money on things that generate sales tax, I view sales tax of the poor man as no different than the elective expenses (taxes or otherwise) a businessman pays for his business.

If the poor man quit buying all the shit the rich man produced, I wonder how the rich man would make any money to pay all those taxes for those poor useless non Federal tax paying bastards who buy the shit that from your point of view that they electively buy? You're right, I mean nobody is holding a gun to their head to buy a lawnmower to cut their grass that the local city ordinance says must be maintained and nobody is holding a gun to their head to buy an auto to get the lawnmower to the house that the locals say must be mowed and you are again correct in that nobody is forcing them to get a drivers license to drive the car to pick up the mower that the local city ordinance says must be maintained and lets not forget the inspection sticker and related cost that a person making 20k a year struggles to pay. I say struggles because it is a REGRESSIVE tax that you always fail to mention when talking about taxes. Probably because after reading this thread you think you are paying everyone's taxes!


You are all about solutions Rudyard. What do you suggest we do? Raise the minimum wage high enough to where ALL Americans pay Federal income taxes or raise the taxes on the 50% who do not make enough to pay Federal taxes at the present moment.

[Rudyard K]

And I guess my view is who the tax is assesed upon?...not who is chanrged with collecting it?

We withhold personal income tax on most all employees. I am charged with collecting it...but the tax is borne by the employee.

There is a 7.5% SS tax that is charged to me to withhold from my employee...but it is borne by the employee. But there is another 7.5% SS tax...that is charged to be collected by me...and is borne by me. I couldn't lay it off on my employee, even if I wanted to. If they changed the law as you postulated?...then it would be borne 100% by the employee.

Sales tax is borne by the purchaser...but is collected by the seller at the sales point. This is confirmed by the similarly named "Use tax". While very few people ever do it...any purchase of a product, even from another state, is subject to a use tax in the State of Texas. The purchaser is supposed to submit that use tax to the state.

All taxes...even personal income taxes...affect the supply/demand curve for products and services. So ultimately, I guess all taxes are borne by some ultimate purchaser. But by the same token then...all employee costs...or raw material costs...or litigation expenses...or rents and royalties...are borne by the ultimate purchaser of the goods and services. If that is the case then we really don't need to talk about lowering or raising income tax rates...because it is all borne by the consumer anyway.

[Rudyard K]

Originally Posted by pjorourke

Except my clients have requested that I keep my clothes on.

A wise, wise request.