Thursday, August 09, 2007

Business Don't Pay Taxes, They Collect Them

From today's Washington Post:

President Bush said yesterday that he is considering a fresh plan to cut tax rates for U.S. corporations to make them more competitive around the world, an initiative that could further inflame a battle with the Democratic Congress over spending and taxes and help define the remainder of his tenure.

The administration said the U.S. corporate tax rate, once modest compared with international competitors, is now second only to Japan's among 30 member states in the Organization for Economic Cooperation and Development (see chart above, click to enlarge, note that Germany's rate is now slightly lower at 38%). Moreover, officials said, Germany, France, Japan, Britain and China have signaled that they will or may cut their rates.

"Our tax structure makes us less competitive, and if we want to be a competitive nation, we've got to analyze a lot of things, including taxes, dependence on oil or good education policy," Bush said. "And so we will work through possible suggestions for Congress."

As the Foundation for Economic Education reminds us, "Businesses don't pay taxes; they collect them." Consumers pay corporate taxes through higher prices, workers pay corporate taxes through lower wages, and shareholders pay for corporate taxes through lower dividends.


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