Senator Dorgan Fails Economics
August 14th, 2008 by 
Kevin
Oh how cute, Senator Dorgan (D – ND) is in a tizzy about corporations and how much in taxes they pay.
The study by the Government Accountability Office, expected to be released today, said two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, and about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.
Collectively, the companies reported trillions of dollars in sales, according to GAO\’s estimate.
\”It\’s shameful that so many corporations make big profits and pay nothing to support our country,\” said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.
Sigh.
Let me make this easy for you Dorgan. Companies don\’t pay taxes, income or otherwise…..ever. However, companies do occasionally incur costs, imposed by the government, that they simply pass on to their customers in the form of higher prices. You may call these costs taxes, but businesses call it \”cost of doing business\”, and taxpayers (and voters) call it high prices they can\’t afford.
In much the same way, companies don\’t really have profits. Profits end up going to either stockholders, or else they are invested in further business, which creates more jobs. This investment may or may not make them more \”profits\”.
It\’s really that simple guy. Try to keep up.
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1 Comment »
August 19th, 2008 at 12:12 pm
Methinks you should take an introductory course in economics as well, especially if you truly believe what you’ve written above.
It is impossible for a company to “pass on” a cost to the consumer in the form of higher prices. As the great economist Murray Rothbard proved, taxes cannot be shifted forward (as you claim)…they can only be shifted backwards (i.e. higher costs on capital goods). Ultimately, the costs levied on companies by government inhibit production numbers in companies, they don’t increase prices. There’s a distinct difference.
Anyone in business will that the company is already charging the highest possible price that will maximize profit for the company – to otherwise would cripple production numbers or short-change investors.
Also, I take issue with your contention that companies don’t really have profits. You don’t really believe that…right?
Finally, government intervention (including taxes, restrictions, licensing, etc.) is the biggest inhibiting factor when it comes to succeeding in the business world. Our fascist, militaristic economy is rife with intervention, and the elected fools blissfully overlook that fact because they stand to benefit handsomely through intervention.
To summarize, you and Dorgan agree more than you disagree – both of you are wildly off the mark when it comes to economic analysis. It would do you some good to read anything from the Austrian School of Economics (Murray Rothbard, Ludwig Von Mises, etc.)