Who really pays corporate taxes?

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When discussing Trump’s reference to a possible 20% tariff on goods from Mexico this morning, CNN anchor Chris Cuomo astutely pointed out that consumers would end up paying for it through higher prices. He’s basically correct. Of course, the higher prices would drive some consumers away, but let’s assume most would be willing to pay the difference.

This line of reasoning is hypocrisy at its finest. CNN (and most left wing) commentators have railed against cutting the corporate tax rate, arguing that corporate taxes come out of the pockets of the rich owners, not consumers. But you can’t have it both ways. A tariff is merely a corporate tax on exports. Firms don’t distinguish between tariffs and income taxes when setting prices. Either taxes are passed along to consumers in the form of higher prices or they are not.

I would like to think that this is real progress for CNN, but I’m convinced the network’s grasp of economic reality is only temporary. It’s all about opposing Trump. The next time they discuss the President’s corporate tax cut ideas, they’ll conveniently return to their original (flawed) position and argue that lower taxes would simply line the pockets of the rich shareholders.

7 Comments

7 Comments

  1. Arthur W.  •  Jan 28, 2017 @8:50 AM

    Suddenly how we’re going to pay for something is important. It didn’t matter much while the national debt was doubling in last eight years. It is also in interesting that the emphasis in the press is on paying for the wall not if it should be built in the first place. I don”t know if Trump is responsible for this diversion but pretty sure he is okay with it.

  2. liberty-1989  •  Jan 28, 2017 @10:11 AM

    They haven’t gotten any smarter at CNN. It’s all about opposing Trump.

  3. Gerry  •  Jan 28, 2017 @11:09 AM

    It’s great to see libs becoming fiscally conservative for the next 4 years. What about the billions squandered on social programs? I don’t like everything about Trump, but at least he is focusing on economic growth. And that can help up pay for the spending.

  4. Arthur W.  •  Jan 28, 2017 @11:40 AM

    Mexico isn’t gong to pay for the wall and there isn’t going to be a border tax. They don’t have the pesos. Nieto is in trouble like every Mexican president before him. This is the Negotiator In Chief at work. He’s a few moves ahead of us but I’m thinking this is just an opening gambit, something he can give up later to get something better. There is much more at stake with Mexico than paying for a wall and Mexico needs us more than we need them. It will be fascinating to watch this develop.

  5. Kerrie  •  Jan 30, 2017 @4:14 PM

    This doesn’t make sense. If you tax a corporation, of course they pay the tax.

  6. Arthur W.  •  Jan 31, 2017 @11:00 PM

    Think of it this way. When the corporate tax rate is increased, earnings don’t necessarily go down. That is because the taxes are passed along to the consumer through increased prices.

  7. Jordan G  •  Feb 1, 2017 @1:02 PM

    Hey Kerry, corporations have to price their products to they can make a profit. When taxes go up, the prices have to rise to make the same profit. When taxes go down, the prices can drop. This is why consumers end up paying the taxes.