Due to the recent proposals to tax Nevada Corporations and Casinos, this issue of the CATS Las Vegas Chapter Newsletter is dedicated solely to the myth of business paying taxes and the resultant ‘hidden tax’. This topic is relevant at both the state and federal level and affects all taxes.
Taxes 101
I am writing this because it has repeatedly and painfully been brought to my attention that the vast majority of people are totally unaware of the fact that all taxes are ultimately paid by them. People still do not realize that any tax on a business is, and must be, taken into consideration by that same business as a cost of doing business.
Since every business that hopes to stay in business had better figure in all associated costs when determining the final price of their product or service, we see that taxes and the cost of complying with those taxes is nothing more than a cost of doing business. Any business that fails to calculate in all costs of doing business is inviting certain bankruptcy.
So, taxes must be added in to the formula when figuring price. Therefore, it is the customer, not the business itself who really pays the tax bill for the business. This is a fundamental rule and basic axiom of taxes.
But, we still witness people of all persuasions attempting to subvert this principle by creating new ways to tax businesses; all in the name of 'fairness'. "We must tax this business so that they will pay their fair share", the experts and politicians declare.
The public, uneducated in the basic principles of taxation, is duped once again into demanding that these businesses 'pay their fair share', not realizing that it will be them, the public, who will foot the final bill for this new or added tax.
This is not limited to federal taxes; as we even see these types of ill-conceived tax schemes pushed at the local or State level. Witness the recent proposals here in Nevada for a corporate tax to pay for education, and the Casino tax proposed by one of our own Nevada State Senators.
A recent survey showed that Nevadans do not approve of the proposed tax on corporations to pay for education, but there is overwhelming support for a tax on casino profits. Wake up people! Who will end up paying for both of these proposed taxes? That's right... you and I!!
The more you tax business, the higher prices will become. Ever wonder why a $3.99 buffet dinner is now $8.99? Inflation? You bet. And a large part of inflation is due to tax increases.
Observe what happens when new business taxes are created or old business taxes are increased. Within a short span of time you will observe prices going up again.
So, what should we do? I don't know about you, but I for one would like to see how much I am actually paying in taxes. Sure it may come as quite a shock, but the only way I will realize how much of my money goes to support government is for all taxes on businesses to be abolished.
That way, the cost of taxes and complying with them will never be entered into the equation of figuring the price of any product or service. This is our only hope to get rid of these insidious 'hidden taxes' and to thereby know the full amount which we pay.
Of course, most of those in government don't want you to know these fundamental laws of taxation. They are busy trying to obfuscate the matter by creating more and varied types of taxes so that you will always be in the dark as to how much your tax burden is as a percentage of your total income.
There are those of us who would like to simplify matters by changing the form of taxation over to a sales tax, i.e., a consumption-based system. If we got rid of most of these various taxes and in their place had a simple, fair, broad-base sales tax on all goods and services, both at the federal and state level; we could then see the true cost of having a government.
But, you might ask, why tax all goods and services?
Well, since in reality you are paying these taxes anyway on all goods and services in the form of the above mentioned 'hidden taxes', why not have a tax system that truly reflects that fact.
Remember, you are paying this 'hidden tax' on everything. You are already paying taxes on food, clothing, shelter, transportation, utilities, doctor's visits, prescription medicine, etc., etc., etc. On everything you buy. Even business to business transactions contain this added cost!
Some will say that sales taxes are 'regressive' and hurt the poor and those on fixed incomes. But ask those same people to explain what is fair about a tax that increases the price on the very necessities the poor and those on fixed incomes need to survive. If you examine the income tax in this light you will see that it is actually income taxes that are 'regressive'.
In conclusion, I submit that we must first do away with any and all taxes on business. Then we shift over to a broad-based sales tax and eliminate all income taxes, both at the federal and state level.
Personally I do not mind paying taxes, but I do mind the fact that I can only see, and take credit for, some of them. Let the people see the genuine cost to them of having a government.
How much do you actually pay in taxes?!?!
(or...Why things cost as much as they do!)
Do you actually, really, truly, positively know how much you pay in taxes every year? What if that amount was much greater than you presently believe? Read on to find out a simple way to calculate a more realistic estimate of your annual federal tax burden.
First, we must address a common misconception held by the vast majority of individuals in this country. The misconception that a large portion of taxes are paid by businesses or corporations.
Nothing could be further from the truth! Businesses only collect taxes from us, the consumers, by way of higher prices.
Study after study has shown that federal taxes today increase the cost of all products and services by between 20-35 percent - the so-called “hidden tax”. State and local government taxes further raise that share to between 38-48 percent.
Keep in mind, these taxes are paid by all consumers and are in addition to the almost 35 percent tax rate most families pay in income and payroll taxes already.
Now, get some paper and something to write with and do this simple exercise:
1. Write down your last year's before tax income.
2. Subtract how much you paid in taxes.
3. Next, subtract your total savings (410k, savings, etc.) The remainder should be what you spent last year.
4. Now, multiply that amount by 25% (the approximate hidden tax in everything).
5. Last, add that figure to the amount you thought was the total you paid in taxes from #2 above.
Example: Joe Citizen. made $50,000 last year (1), paid $5,000 in taxes (2) and saved $5,000 in his 401k (3). Twenty-five percent of the remaining $40,000 that was spent is $10,000 (4). Added to the visible tax paid, Joe now sees his federal tax paid is $15,000, not $5,000 as he previously believed (5).
But remember, this does not even take into consideration state and local taxes, fees, property taxes, etc. Figure in those taxes and it’s enough to make anyone ill!
Being sick will not accomplish anything, though. It’s time to get MAD! When we become outraged enough over this gross injustice we will insist something be done about it.
Only when people learn the true cost of a bloated and inefficient government and how they have been fooled into paying invisible taxes on every purchase, will they become angry enough to demand a change.
Consider it our duty - you and I -to educate the public, and those who represent us in government, about how much we really pay in taxes!!
Now, what does all of this have to do with the proposed national retail sales tax (NRST)? Plenty! Under a NRST businesses are not taxed. This eliminates the necessity of passing those costs along to the consumer.
But, will prices go down? In answer to that we ask, “Are businesses competitive?” Think about it. At the very least with a national retail sales tax you will be able to see how much you are truly paying in taxes with every purchase made.
Don’t you think it’s time to change to a tax system that reflects the true cost of government? One that is simple, fair and most of all...visible to all. So do we!
TalkToGov.com
Would you like to communicate with the Government, but don’t know...
* Exactly what the issues are all about.
* Where to send your e-mail.
* Will it make a difference?
TalkToGov.com makes the issues easy to understand and puts the communication back between the government and the people.
Point your browser to talktogov.com today!
“Tell ‘em Bracken sent you!!”
