Oregon Magazine

Oregon's Hidden Sales Tax  (Some basic economic realism for the envious.)

(From the Drudge Report:
Andrew Lloyd Webber Warns of U.K. Exodus Over High Taxes. )

April 19, 2009 -- It is not common knowledge, but every state in America has a sales tax, Oregon included. 

Oregon has dallied with an official sales tax many times.  A state with an initiative process is a perfect venue for the subject.  Pure democracy.  Direct public vote, up or down.  Legislatures in states where the idea is unpopular can process the attempt by way of initiative.  Win or lose, whatever happens isn't their fault.

In this state, taxation is rampant.  Property taxes, income taxes, specific sales taxes on things like tobacco.  We have lots of taxes.  The one we're referring to here is the corporate tax. 

Success breeds envy

Let's say that you manufacture tennis shoes.  Let's further say that you are very successful at doing it, and even though to keep your prices competitive you have to go offshore to make your product, you still have a giant corporate structure here in America, and provide a bucket load of decent-paying jobs. One of the first things you notice as you keep growing is jealousy.  There are people who hate you because you make good money.  They even hate your stockholders for receiving a solid financial benefit from their investment in the company.

We at the magazine have wondered about that last item for years, because if you look at the investments in union retirement funds, they aren't all government bonds.  For decades, the Teamsters, for example, filled their bank accounts with corporate stocks.  The same stocks the non-union, capitalist investors bought and held. The bigger the corporate profits, the stronger were those union retirement funds.  So, the hate some union people had for corporations struck us as odd. 

Our guess is that this hatred is based in jealousy. Socialists know that.  They also know that after spending most of their first two decades in public schooling in this country a great many citizens when handed the correct knife will gladly cut their own throats. Corporate taxes are just that sort of knife.

Here is the simple truth

When you buy a pair of Nikes, you are paying Nike's corporate taxes, Nike's property taxes, all the income taxes of Nike's employees from the CEO to the janitor and every nit-picking government license or other fee that is levied against that company and its employees.   Ditto with respect to the store where you purchased them.  Ditto with respect to the trucking company that hauled them to that store.  If, when you hear that Oregon corporate taxes have been elevated, you grin and say, "Those rich S.O.B.s are finally paying their fair share," you are a victim of your own ignorance. 

Here's the truth: all of every company's costs are covered in the price of what they sell.  If they weren't, then the only way the company can keep its doors open is if it becomes a government-owned operation.  Governments do not have to break even, let alone make a profit, doing what they do.  If there's no statutory requirement for them to limit what they spend to the tax revenues they get, then they don't even have to worry about such things. They can either raise taxes or borrow what they need.  If we're talking about the federal government, they can simply print the money.

But private companies, unlike governments, cannot force people to give them money.  And, the minute they stop making payments on their loans, down they go.

All their costs have to be in their prices.  That includes corporate taxes.  From the world's largest recreational shoe maker to your local mom and pop grocery store, every time the taxes on their business goes up, that cost is added to the price you pay for what they sell.

So, call off the cheering the next time you see Oregon corporate or other busines taxes going up, because if that added cost of doing business is on a business with which you do business, the retribution on the rich is actually nothing more than a hidden sales tax, and will come out of your own wallet.


© 2009 Oregon Magazine