CORPORATE TAXES AND OTHER LIBERAL IDEAS

Liberals are always griping about "Big Business" or "Big Oil" and complaining about the money that the CEO makes or pitting the rich against the poor. One of the dirty little secrets is that their corporate taxes don't hurt the corporation or even the CEO. In fact, I am convinced that when they complain about "Big Business", what they are really doing is publicly blackmailing that corporation for campaign donations. Now that the Democrats are in charge of both houses of Congress, you don't hear nearly as many attacks against "Big Business". That is because the "Big Businesses" are now giving them money to influence their votes.

There is another aspect to consider when we talk about corporate taxes. American corporations are selling a product or service, and in this global economy, they are competing not just with other American companies, but with companies all over the world. To makes those products or deliver those services, they hire people. Now that corporation is already paying double taxes, they pay taxes on the money they make and the money they pay out to their shareholders(who are more middle class Americans with 401K's and IRA's). In addition, the corporations have to match the social security and medicare taxes for each employee (think about that for a minute - that is money that could have been part of your income, but the government takes it in such a way that millions of Americans don't even know it is paid).

Alright, so the government raises corporate taxes. Now this corporation is losing some of its income and is less able to compete with countries who have lower corporate taxes. Now they have to choose, do they eat the income loss and thus hurt their shareholders? Do they cut back on their workforce and thus recoup the loss that way? Do they put a freeze on income raises for their employees and risk losing them to other companies with the ability to pay more? Do they raise the prices of their goods and services and risk being less competitive? Look at those choices and see who gets hurt.

• Let the taxes lower their income - hurts middle class stockholders who own stock in their IRA's or 401K's.
• Lay people off - hurts the people who get fired, the middle class worker
• Freeze incomes - hurts the middle class worker who is not getting that raise and puts the company at risk for losing business which could eventually lead to another cut back in their work force and/or loss for their shareholders.
• Raise their prices - hurts the consumer, the poor and middle class get hit the worst, but this could make the corporation less competitive and thus cause the loss of jobs or income thereby hurting the stockholders and employees too.

Now lets consider the minimum wage. The liberals are always demanding we raise the minimum wage. Only about 2.5 percent of American workers made minimum wage in 2005. Of that percent, only 479,000 were paid the minimum wage of $5.15/hr, the remaining 1.4 million made less than the minimum wage, which means they also received tips (and like a lot of people, didn't report those tips as income). One half of those making minimum wage are 25 years old or younger. Now - lets look at what happens when the minimum wage is raised. First, most of the people making more than minimum wage (that is 98.5% of workers) will not get a raise. The companies with a lot of minimum wage workers (McDonalds, Burger King etc.) will have to pay out more money (and thus face the same decisions as they did with corporate taxes). They will often raise their prices and/or hire less people. Those of us who don't get a raise see prices rise for various products, even though we are not making any more money than before. How many people seriously think that they can support a family with a job at McDonalds anyway? Most of those jobs are held by high school students and retired people. The bottom line is, when the government gets involved with trying to regulate business, the people who really get hurt are the American workers. Government doesn't fix things, it breaks them. We are less competitive than we used to be. Currently the average American works over 100 days to pay all of their federal and state taxes. Nothing is going to change until the American people demand a change and you have to participate in voting if you want that to happen.