Corperations do not pay taxes

President Obama is still pushing to end the nearly $4 billion in tax breaks for the oil and gasoline companies.  “”These tax giveaways aren’t right,” says Obama, “They aren’t smart. And we need to end them.”  Now, either Obama is economically inept, or he thinks the American public is.

Business do not pay taxes, regardless of what their tax rate it, they pay $0 in taxes.  I’m not talking about utilizing tax deductions either.  Taxes are a business expense like any other cost of doing business.  Just like the electric bill, heating, employee salaries, etc. taxes are built into the price of the service or product and is passed off to the consumer.  When electricity costs rise, the company doesn’t just eat the cost increase.  The price of the service or product goes up.  The consumer pays the electric costs (and every other bill) when he makes the purchase.  Eliminating the tax break only causes the price of gasoline and oil to increase to make up for the loss.  It inevitably results in more money out of the pocket of the American consumer.

But let’s suppose legislation is passed prohibiting the oil companies from increasing the price of oil and gasoline to recoup the loss.  What happens then?  Simple.  The oil companies will lay off employees in order to cut costs, otherwise they, like any other business, will close.  Sure, it might take a while, but with continued financial pressure, they will close or move their business off-shore where the tax burdens are not so punitive.

Obama hopes the American voting public does not understand this.  In fact he pretty much counts on it.

Comments

  1. Careful now you are speaking the truth. There isn’t anyone in the administration that knows anything about what you just wrote. They think that eliminating oil co. tax deductions will lower prices at the pump? Or fools us into thinking they will lower prices.

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