Why Joe Biden’s Plan to Increase Corporate Tax Might Not Directly Impact Amazon
Recently, the discourse surrounding corporate taxes has escalated, with many focusing their attention on Joe Biden's plan to raise the corporate tax rate. A common misconception is that this increase will directly affect companies like Amazon. In reality, the situation is more complex and involves a series of economic and legislative intricacies.
The Myth of Corporate Taxation
Democrats, and often the political left, often assert that corporations and businesses, including Amazon, bear the burden of corporate taxes. This notion is deeply flawed. Corporations and businesses do not pay taxes in the same way individuals do; rather, they are a pass-through entity for tax purposes. The taxes levied on corporations ultimately flow through to consumers and individual taxpayers.
Amazon's Tax Deductions
Amazon, as a growing and expanding business, benefits from legitimate deductions. These deductions include a variety of legitimate expenses, such as capital projects and increased employment. All of these costs are deductible from their taxable income, and they are entirely reasonable given the growth of the business. It is normal for a growing business to be able to deduct these expenses, and in fact, it is beneficial to the economy.
American Politics and Corporate Donations
It's also important to note that simple facts sometimes rule politics. For instance, Amazon has been one of the largest donors to Joe Biden's presidential campaign. This donation context does not affect the legitimacy of the corporate tax debate but serves as a reminder of the complex dynamics of political contributions and their public perception.
The Persistence of Democratic Mythologies
A recurring theme in Democratic politics is the myth that corporations and businesses pay taxes. This narrative sells well to a segment of the electorate, particularly those deemed to be "low information voters." It has populist appeal, suggesting that the "rich corporations" are being taxed and, thus, relieved of some of their perceived excesses.
Counterproductive Taxing Schemes
Biden's push for a higher corporate tax rate is part of a broader effort to address income inequality and fund progressive policies. However, the reality is that any corporate tax increase will ultimately be shouldered by consumers, not by corporations themselves. Corporate taxes are often designed as a form of hidden taxation, where the burden is shifted to individual taxpayers without their direct awareness.
The Impact on Poor and Middle-Class Workers
The biggest irony of corporate taxes is that they disproportionately affect poor and middle-class workers. This is due to the nature of corporate taxes being effectively a type of sales tax, which applies a higher percentage to lower-income workers. For example, gasoline taxes, which are a form of consumption tax, also impact those with lower incomes more heavily. The effect is similar for corporate taxes, as a higher tax on corporations is eventually passed on to consumers through higher prices.
Conclusion
The debate around corporate taxes remains contentious, with many on the political left pushing for higher rates to address income inequality. However, this push may not yield the intended results, as corporate taxes often result in increased costs for consumers. Understanding the intricacies of how corporate taxes operate is crucial for informed civic engagement. It is important to recognize that the ultimate burden of corporate taxes lies with individual taxpayers, not with corporations themselves.