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Business collects taxes, but doesn’t pay them

Steve BucksteinQuickPoint!

As Multnomah County voters make up their minds about the new county income tax measure, newspapers are printing letters to the editor pro and con. One misguided writer said he’s voting no because only people will be taxed, not corporations.

There is plenty wrong with Measure 26-48, but the fact that it only applies to individuals is not one of them. Taxing business may be popular, but economists understand that business only collects taxes, it never pays them. Only people do.

When government saddles business with additional burdens, we really don’t know who takes the hit. Sometimes customers pay through higher prices. Sometimes employees see their pay cut, or benefits slashed, or jobs lost. Other times owners (often retired shareholders) receive smaller dividends, or suppliers see fewer orders.

Taxing business may hurt the very people we are trying to help. Placing a greater burden on a company that employs public school parents, for example, might result in more students having unemployed parents. Trying to solve the perceived school funding crisis this way might simply hurt students closer to home.

The solution is simple. Stop asking business to collect taxes. Instead, place the burden directly on specific individuals. If someone thinks taxes are needed, they should be honest about who they think should pay them. Then, tax those individuals directly, and stop hiding behind the myth that business has some pot of money that doesn’t belong to people.

Steve Buckstein is senior policy analyst at Cascade Policy Institute, a Portland, Oregon based think tank.

© 2006, Cascade Policy Institute. All rights reserved. Permission to reprint in whole or in part is hereby granted, provided the author and Cascade Policy Institute are cited. Contact Cascade at (503) 242-0900 to arrange print or broadcast interviews on this topic. For more topics visit the QuickPoint! archive.

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