Businesses pay tax, but not the burden

OlympiaJanuary 29, 2013 

The Jan. 21 article in The Olympian by Vince Palazzo of the Board of Contributors argued that “businesses do not pay taxes.”

Businesses do pay taxes. Palazzo apparently means that businesses don’t bear the burden of the tax, but instead pass along the burden to their customers.

In reality, the elasticity of supply and demand for the good or service determines who bears the burden of the tax.

Also, has every recession been caused by “someone with power/money manipulating a market for their advantage”? David Colander, a well-known academic economist, believes most recessions are caused by fluctuations in demand. I’m skeptical that market manipulation alone accounts for all recessions, as Palazzo says.

Palazzo further argues that homes should be tax-based only on their purchase price or refinanced value because assessed values are speculative and inflationary. The inequities of taxing homes using Palazzo’s approach appears to far outweigh those of our current system.

To argue that borrowers who lose their jobs should not have to make payments on their homes, cars and credit cards for a year or more, ignores the hardships this might create for lenders. Palazzo’s approach also ignores the reasons some people lose their jobs, such as employee theft, laziness and incompetence.

Also, if more Americans established an emergency cash reserve of six to 12 months of living expenses, Palazzo’s debt deferment would likely be unnecessary.

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