I’m getting a little tired of presidents of the United States repeating things that could only be spoken by an idiot or a liar, and then trying to intimidate people out of contradicting them.
The latest (though of course not the most egregious) offender is one Joseph R. Biden, who told the country today that he can raise corporate income taxes without imposing any additional tax burden on anyone who earns less than $400,000 a year. Because in the United States of America, nobody with an income under $400,000 owns any stocks or mutual funds. And if you disagree, he’ll stare you in the face and repeat himself. Like I said, this is getting old.
Aside from managers, employees, customers, and shareholders, it doesn’t raise taxes on anyone
The effect of the increase in corporate income taxes will not be reflected as taxes due on the 1040 or related filings of any individual whose taxable income, as calculated on those same forms, is less than $400,000.
Those individuals, almost to a person, will not perceive an increase in their personal taxes, which, in this context, are only understood to be their income taxes. Virtually no-one will try to calculate the total impact on *all* taxes they pay. There will be no form on which the difference in their taxable income, with and without this corporate tax change, will be displayed, if it’s even calculable without unreasonable effort.
Indirect taxation such as this is not typically *felt* as taxation by many who are not economists or rather deep in the weeds of financial reporting that does not go into their own direct filings.
I don’t think presenting things in this way is either idiotic or lying. But then again, maybe I’m also an idiot.
I suspect that he considers “tax burden” to be money spent on taxes
while you consider “tax burden” to include money you didn’t get because of taxes as well.
Sort of “tax laundering” by making the money go through an intermediate step.
We are not in recession, because the definition is not a two quarter GDP decline. Inflation is not so bad, because that has been redefined also. We are not at war, because we are just sending $50 billion in military aid. We are pro-democracy because we prosecute political opponents.
Ted Thibodeau: So let’s run with this logic. Suppose you have a desk drawer where you keep your retirement savings (all in cash). You periodically add money to this drawer, but I happen to know that you never count how much is in there. So the next time I’m visiting you, I open that drawer and remove $500. I claim this does not count as taking your money, because you will never notice that it’s gone. Do you buy my claim? And if not, how does it differ from Biden’s (apparent) claim that his tax policy does not count as taking money from people, because those people will never notice that the tax policy has affected the value of their savings?
Landsburg #5: nice summary of tax incidence, Steve.
More generally, no matter how many times economists (or at least some) repeat the tax incidence issues, the public at large and the press simply ignores it.
My suggestion Steve – do not despair, and keep pounding. You did in the past, and I miss those posts.
Steve: I understand your point, but wouldn’t your logic apply to almost every regulation passed by government? There is always a trickle-down effect. I’m an attorney for an agency that regulates utilities, and when we hold rulemakings for new regulations, the new rules, particularly the green energy rules (mandated by our General Assembly), will affect all ratepayers, which is everyone.
Is that raising taxes? When do indirect financial hits qualify as tax hikes? Honest question.
I am a shareholder and I make less than $400k a year. I own a sliver of the companies in which I have shares. Granted, it’s a tiny sliver. Granted, I off-load the minutiae of running the companies and filing the taxes to the board of directors. However, when my fellow shareholders and I look at the annual reports and financial statements from those boards, we are looking at assets and entries we own. So I don’t see how Biden’s new tax is not a tax directly on me.
Are there financial consequences to the deficit? Do those consequences bear on private citizens–including citizens earning less than $400,000?
I suspect that pretty much everything government does affects everyone. Likewise, everything government DOESN’T do affects everyone. Thus, if we interpret Biden’s statement as being “this policy won’t effect people who earn less than $400,000,” then the statement is false–as is the statement that refraining from adopting the policy won’t effect people who earn less than $400,000.
I’m reminded of Obama’s statement: Under Obamacare, if you like your current doctor, you can keep your doctor. People cried in outrage at this blatant lie: In fact, Obamacare did not authorize patients to enslave their doctors; doctors would still retain the discretion to decline someone’s business (when, for example, they retired). Obama didn’t mean to imply that Obamacare would repeal the 13th Amendment; he merely meant that Obamacare didn’t include laws barring a patient from seeing her current doctor. This was clear to people following the policy discussion. But not everyone was–and people who were arguing in bad faith were happy to exploit that fact.
Off-topic: I look forward to hearing Landsburg’s response to this: https://www.nytimes.com/2022/08/05/opinion/the-case-for-longtermism.html
(From the long-term perspective, is this comment off-topic–or merely PRE-topic?)
#2 Ted Jr – also without knowing anything about your leanings etc., this strikes me as the type of extremely charitable interpretation most of us like to extend *only* to people & positions we are otherwise inclined to support
#9 nobody.really – see above…but nice try (sincerely…your unique angles are often enjoyed)…what Biden said was you would not be affected *in a particular way*
(A bit of a tangent but the reason Obama’s statements you reference were just as disingenuous and had to be walked back (after failing fact checks) is because what he “really meant” was you could keep your plan / doctor…IF it didn’t change as a direct result of the regulations involved in the new law…which they knew all along would in fact be the case for some people (and yes of course assuming the doctor themself also agreed to keep it…which is not what anyone was worried about).)
So corporations do not pay taxes at all. They collect them. Which seems to be a very inefficient means of raising tax revenue.
If we regard corporations as “persons” for purposes of free speech and free exercise of religion, why would we not regard them as paying taxes? Soon corporations will have the right to bear arms–and I look forward to the day when Texas puts one in the electric chair….
@nobody.really I’m not Landsburg, and might not be able to give as good of answer as he could give, but I’ll give it a shot.
Taking the future in to account, even to some extent the very long term future, probably makes sense. But only to a point. Your guesses of how your actions will actually impact the very long term future have a good chance of being wrong. Also people in far future will probably be much richer than we are and more able to deal with problems that might arise. The author of that piece talks about living through the lives of earlier humans, hunter gatherers, primitive farmers etc. Would you have them pay some big cost to make the life of modern Americans slightly better now? Its an esp. bad idea to pay a significant cost to make the future slightly better if that cost lowers economic growth. Any significant long term impact to growth will be very likely to have a much bigger negative impact on future generations than the likely long term benefit from forgoing that growth.