Tags: Why | Business | Tax | Needs | the

Why Business Tax Needs the Ax

Tuesday, 22 May 2001 12:00 AM

OK - maybe tossing the anti-American Kyoto treaty in the toilet is in strong contention, but this idea is correct and a long, long time coming.

I'm talking about Treasury Secretary Paul O'Neill. O'Neill has laid out his version for a complete reform of the tax system and, guess what? This man is not afraid to tell the truth! He knows that corporations and business never pay taxes, they only collect taxes and pass them off to the government! He wants to abolish the corporate income tax and all capital gains taxes on businesses!

The main obstacle to this proposal is the economic stupidity of the American people - an economic stupidity gently nourished by statist politicians for decades.

Every single item or service an American consumer purchases has the seller's tax burden incorporated in the price. Corporate income taxes account for about 10 percent of federal revenue ... and every bit of this 10 percent is passed on to some individual somewhere; either a customer, employee, owner or shareholder.

Yes, abolishing the corporate income tax and business capital gains taxes could, in the absences of spending cuts, increase the straight income tax burden on individual Americans. At least we would have a better idea of what we have actually been paying all along!

Also, don't forget - the cost of doing business would go down and competitive pressures would cause this cost reduction to be reflected in prices! Not only would businesses save on the actual amount of taxes paid, but also on the administrative costs associated with paying those taxes. This could lead to price reductions that could outpace any tax increase on individuals. The result? A net savings!

Again, though - it takes some degree of economic literacy to understand that. Where are we going to find people with economic literacy? Certainly not from our government indoctrination centers.

Some of you may remember me hosting CNN’s "Talk Back Live" several weeks ago. It was their "Free for All Friday.” One of the guests was leftist talk show host

This past weekend Tim Russert pulled the same stunt on "Face the Nation." He was questioning Vice President Dick Cheney about the price of gasoline and oil company profits. In one breath Russert mentioned that oil company profits had increased 53 percent. In the next breath Russert flatly stated that oil companies were making 53 percent profits.

Know this - there is no oil company out there chalking up a 53 percent profit margin. Not one. There’s not one making half that. Tell that to the average American, though. My guess is that you wouldn’t have any trouble at all finding co-workers and friends who would bet you money that these evil oil companies are making 50 percent profits on this expensive gasoline we’re all paying for.

The facts? Well, Exxon-Mobil recently announced something like a 53 percent increase in its profits for the first quarter of 2001. That’s not a 53 percent profit – that’s a 53 percent increase in profits. There is no way on earth that you could figure out what Exxon-Mobil’s actual profit margin was for that quarter with that 53 percent increase figure. To arrive at the true profit margin you have to ask "Fifty-three percent of what?”

OK - here are your figures. In the first quarter of 2000 Exxon-Mobile realized around a 4.1 percent profit. You could have done better with a certificate of deposit. For the first quarter of 2001 that figure increased by 53 percent (There’s that magic 53 percent number!) to 6.3 percent!

So - while the great unwashed run around bemoaning this huge 53 percent profit that the oil companies are supposed to be making – those with some economic knowledge know that the true figure is just over 6 percent.

You would think that some network newscast would take the time to explain this little misconception to their viewers. Yeah, sure. It’s not as if they actually want an informed electorate. Remember, knowledge trumps liberal hysteria – every time.

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OK- maybe tossing the anti-American Kyoto treaty in the toilet is in strong contention, but this idea is correct and a long, long time coming. I'm talking about Treasury Secretary Paul O'Neill.O'Neill has laid out his version for a complete reform of the tax system and,...
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2001-00-22
Tuesday, 22 May 2001 12:00 AM
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