Taxes and myths

Opinion

July 29, 2010

BOB HARPER CNHI The Daily Southerner Thu Jul 29, 2010, 10:47 AM EDT

TARBORO — They say that the only two things we can always count on is death and taxes, and someone once said, “At least death doesn’t get any worse.”

Most of us think we’re over taxed, except for the very rich. When it comes to taxes there are a lot of myths that most people really believe in, and will continue to embrace regardless of contrary evidence.

One of the most misunderstood myths about taxes is that corporations pay taxes. They don’t. Have you ever seen a concrete and steel building reach into its brick and mortar pocket and pay anything? Inanimate objects don’t and can’t pay anything. People pay taxes. Corporate taxes are paid by people … by you and me with the increase in the cost of the products or services that the corporations produce.

There are nations that don’t have corporate taxes. Although products and services would become cheaper (because of competition and less overhead) we’ll have to keep this tax and myth because too many people and virtually no politicians will acknowledge inanimate objects don’t pay taxes. But when we hear that the government is going to raise corporate taxes we should know that indeed it is an increase of taxes on us.

Supportive evidence to show that inanimate objects don’t pay taxes: Does your house reach into its pocket and pay your property taxes, or do you pay it? The same thing is true with automobiles, farmland, etc.

Another big myth is that the very rich pay very little taxes and if they were taxed more and the rest of us were taxed less we’d be much better off. First let me say that I’m in a fairly low income tax bracket because of my fairly low income. However, when we look into just how much taxes the wealthy pay we find that the top 5 percent pay 50 percent of the taxes and 50 percent of our citizens pay almost nothing in individual income taxes.

I know of no current individual income tax proposal that wouldn’t benefit me in the taxes I’d have to pay, but if taxes are increased on the wealthy I’m still going to be worse off and so will most of the rest of us. How on earth could this be? When taxes are increased on the rich it takes investment money out of private sector … money that is invested to create more jobs along with products and services. When this investment money is taxed away we see the economy slip backwards and this can hurt all of us.

Of course, I know we need a certain amount of taxes to pay for needed governmental services, but we must remember that in a democracy there can be no public sector without a strong private sector. The financial trouble that Greece (and pending in other nations) is in now wasn’t caused by being too conservative, but by being too liberal with government deficit spending.

The socialistic nations all have several things in common. They all have very high unemployment, too many people on the government payroll, too many people on the dole and they are not financially able to have any kind of strong military. They depend on the USA to bail them out in case of any kind of war.

Another myth is that huge government spending is needed to bail the nation out of a deep recession, and this will call for higher taxes or deficit spending. The truth is that the prescription that has always worked to get us out of recessions is to cut taxes across the board. This kick starts the economy in the private sector. It enables companies to keep their employees and even expand … customers have money to spend and an up-trend begins to expand. And actually tax revenues increase too as incomes go up.

But didn’t President Franklin Roosevelt’s big spending polices lift us out of the Great Depression, in the 1930s. No, it didn’t, this too is a myth. Actually the opposite is true, the policies of FDR prolonged the depression.

A whole alphabet of federal agencies was established to dictate to private businesses how they could operate. Virtually all of FDR’s plans seemed to call for more government control. The results were stagnation and the prolonging of the depression.

After two terms for FDR (eight years) unemployment was still in double digits, 14.6 percent in 1940. Only after the nation began to mobilize for World War II did we start to pull out of the Great Depression.

Taxes that are too high, too much deficit spending and too much government over the private sector can and will put a nation’s economy into a dangerous state.

Bob Harper, 76,of Tarboro is a retired radio executive.

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