The Role of Businesses in Society: It's More than Just Taxes

I often revisit the topic of taxing the rich and big businesses because I think it's crucial to understand it in a different way than we usually tend to. Although, I will admit, it's probably a rather controversial thing to say, I think it's likely in the best interests of most Americans to maintain the current system, even if it appears unfair.

If we view taxes as a contribution to society and our way of life, as they fund essential public services, infrastructure, and social programs like Social Security and Medicare, forming the glue that keeps everything functioning, similarly, businesses contribute enormously too, even if they pay a lower percentage in taxes than the average working-class citizen.

If we consider taxes as a means to enhance society, ensure smooth functioning, and in some circumstances, redistribute wealth, businesses also play a crucial role in achieving these goals through what they produce.

Consider that businesses provide employment, helping people support themselves and their families. They drive innovation, creating new products and technologies that improve our lives. Although they may not send a physical check to the IRS, they significantly contribute to the tax base by stimulating economic growth through their goods and services, which generate tax revenue. Businesses also make substantial contributions to society by supporting communities through charity, sponsorships and volunteer efforts. For example, Anheuser-Busch has donated cans of water for disaster relief, and Elon Musk made Starlink available for communication in hurricane-affected regions. Additionally, businesses heavily invest in infrastructure, including communication networks like telephone and Internet services, as well as rail and shipping services.

In other words, when we demand the rich and the businesses pay their fair share, are we overlooking the valuable contributions they already make? We all play a role in a functioning society, and if we solely measure contributions in dollars and cents, we're missing the point. We're focusing on the wrong things.

How would we feed our families without the jobs that businesses provide? Beyond that, how much wealth would we miss out on without the opportunity to invest in these businesses through stock sales? Without the profit incentive, what inventions that enhance our lives might never have existed?

Taxing businesses or the wealthy more pulls money out of the real economy and places it in the hands of the government who are not equipped to function as drivers of innovation and growth. The rich, with less to invest, would be hindered in creating new ventures or expanding existing ones. Instead of fostering economic growth, as the government suggests more taxation would achieve, taxing businesses more actually depletes resources, leaving less money available for meaningful contributions to society.

Sure, it can seem disheartening to see the top 1% getting richer and richer, and it may seem like they're holding back the lower rungs of the financial ladder. But I believe the opposite is true. Without strong businesses growing and generating massive profits, society would be in far worse shape than it is today.

As I said before, we all have a role to play. I think understanding our place in the world is important, and rather than undermining the achievements of one class, what another class achieves should be an incentive to have loftier goals for ourselves—on top of that, success should never be something that we should ever want to penalize. 

When it comes to taxation, we have to ask ourselves what truly improves our lives? Is it economic growth that fosters better opportunities for working Americans, or the artificial redistribution of wealth that fails to lift anyone out of their current class and circumstances?

Regardless of what anyone thinks "fair share" really means, I think businesses are already paying their dues and we have more to be thankful for than to be angry about. No matter how unfair it seems. When we look around us, all we see are the businesses and the massive profits they generate. We fail to see how our lives might be very different if they did not exist, or what opportunities might not exist without what they contribute for them to even be possible.

The United States is the richest nation in the world for a reason. And that's because we allow people to become rich and be more in control of their own wealth. You can say my commentary here is a commentary on trickle-down economics and claim it doesn't work. I contend it has always worked, and the only problem we have with it is that some people simply don't open the spigots to their faucets.

Taxing the rich and businesses more is not the solution to our own financial problems we face. Allowing the free markets to work and educating people on how they can participate in it is the answer. Taxes do not contribute to better opportunities for society as a whole. It robs us of them.

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© 2024 Jim Bauer

Free Stuff Ain't Free, Folks

With the democrats getting going in their "race to the White House," we are of course hearing the beginnings of all sorts of promises they are making that are supposed to make your life better, and perhaps in some ways more prosperous even.

But, it's "free" stuff they are mostly chattering on about, folks.

Free college tuition, free healthcare, and even one of the contenders, a businessman by the name of Andrew Yang, is talking about just simply cutting every single citizen over the age of 18 a guaranteed monthly check for $1,000 to help boost your bottom line and supposedly, level the playing field.

But the reality is that nothing that is government funded is actually government funded. It is taxpayer funded.

The reality is, folks, that at the end of the day SOMEONE has to pay for all of this stuff that the government wants to "give" you. Remember, the government DOES NOT operate as a FOR PROFIT organization. EVERYTHING the government takes in in revenue comes directly from you...the TAXPAYER.

The government is not out there opening up a few McDonald's franchises to take in a few extra bucks. They are getting every single dime of what they take in from the people who pay taxes.

So what is a free college tuition? It is a tuition that you will ultimately actually pay for anyway. And depending on how things go, your children and grandchildren, and even your great grandchildren will have to pay for as well.

What is a free $1,000 per month? It is basically taking from Peter to pay Paul. You give the government your tax dollars, and they give it back to you in the form of a guaranteed monthly payment.

Anybody should be scratching their head at that.

Beyond that, you might be saying hey, there are enough of those evil millionaires and billionaires out there who can pay more into the system certainly to help to cover all of this free stuff. So then, if that were the case, it is actually free, right?

But hold on a minute here. Here's a little fact that you need to know.

Even if you literally confiscated every single dime of every single millionaire and billionaire in the country, you would not even come CLOSE to covering the amount of money needed to pay for all of this free stuff, let alone make a dent at all in the deficit NOR the debt itself.

And eventually, the money would run out. No matter how you look at it, the only way any of these programs stands a chance to be viable, everyone would have to pay something. Ultimately, the tax code would have to be rewritten to now find ways of getting more money from the hands of even those in the 50% who don't technically pay any taxes at all.

By the way, it should be noted that if you paid $5,000 in taxes but got a refund check of $7,000, you are part of that 50% that does not pay any taxes at all.

Paying taxes is NOT sending the government a check, or having them pull money out of your paycheck. Paying taxes is either getting less back than you paid in, or owing more than you paid in.

If I paid the government $5,000 and got a refund for $2,000, I paid taxes. They kept $3,000. Catch my drift?

I only bring these examples up since many people think they are taxpayers just because they send some of their money to the government. But unless you get less back than you paid in...you are not a taxpayer.

Look, the main point here is that nothing in this world is ever free. Everything ultimately must be paid for by someone. And there is not enough money, believe it or not—but it's the truth—to cover the expenses of everyone in the country when it comes to just college tuition and healthcare alone, let alone anything else the government may want to promise to hand out to you.

Free is not free, and the more you take, ultimately the less you will get in the end.

No one ever got ahead from a handout. Anyone on welfare or food stamps has not gotten rich from that money. Nor has anyone who collects social security alone ever get ahead.

As the democrats get up on their podiums and start making promises to give you this and give you that, keep in mind that what they are actually giving you is something you have already, or will eventually have to pay for one way or another.

Tax the Rich?

It's an idea that looks great on paper, and certainly the masses enjoy the idea of taking money out of the pockets of the rich. While the vote in the recent reelection for President Barack Obama was not a clear mandate for higher taxes, the Obama administration is definitely interested in continuing its pursuit of diminishing the wealth of the most wealthy people in the country. In fact, he recently announced that he wants to raise $1.6 trillion in new tax revenues, which is double the amount he originally said he wanted.

The question is who ultimately pays the tax? I think the answer is very clear. It's not the rich.

In order to understand how taxes affect everyone and not just the rich, one has to keep in mind what businesses do when they have to incur higher costs to run their businesses. Higher taxes are costs.

While it is not a direct comparison, I can use my rental property as an example of what happens when the cost of owning and operating that property increases. As a part of the rent I offer my tenants "free" heat. I put the word free in parenthesis because whether or not the heat is truly free is a bit of sleight of hand, is it not? So long as my rental property produces cash flow, the actual cost of the heat is being paid by the tenant. So, what happens when the cost of my heat bill goes up? Of course this cost is ultimately passed on to the tenant in the form of higher rent.

The same applies to the cost to insure my property, or the cost of repairs to the property. You can also apply this to higher costs incurred through higher property taxes. All of these costs are ultimately passed on to the tenant in the form of higher rent as well. Perhaps the costs are not immediately passed on. But at some point they must be, otherwise I have no reason to own the property.

I've made the point before that businesses do not pay their overhead. In fact, they recoup their overhead.

In addition, it's important to note that any money that the government collects from the private sector are essentially removed from the real economy. I've heard many people on the left argue that dollars collected in tax revenues are simply spent by the government, and that those monies ultimately wind up in the economy as a whole inevitably.

The problem with this thinking is that it is not exactly true. Consider that much of the dollars that the government collects must go to repaying debts and interest we owe on those debts. That means that a lot of the money goes to other governments we've borrowed money from—China would be one of the larger ones. We also spend hundreds of billions of dollars a year in foreign aid. Again, that money does not necessarily return to our own economy. The money essentially just disappears.

At the end of the day higher taxes on the rich and on businesses means less money will be spent on investing in new company startups. It means less money will be spent on research and development, and on capital expenditures. It means less money will be available to hire more workers, or provide pay raises. It means less money will be available to pay, for example, certain benefits like healthcare for their workers. It means less money will be available to make matching contributions to their worker's 401k plans. It means less money will be spent on marketing that helps their businesses to grow.

And let's not forget the first example I made about investment. Less money will be in the real economy for people to help companies obtain the funds they need to expand the business. All of this leads to higher unemployment, less job creation, and higher prices for all of the goods and services that the middle class, and the poor buy.

When it comes to taxes, people really need to see the forest for the trees. Sticking it to the rich is sticking it to ourselves, and there really is no way of getting around that. If President Obama does not cut spending, and reduce taxes across the board, the people who will be hit the hardest are the very people who he says he wants to help.