Wednesday, July 23, 2008

Who Pays? Who Doesn't?

As Bob is my witless, I will never know why people say things like this (from yesterday's edition of the local rag):

    In her letter in the July 9 Argus Leader, Lorri May praised Sen. Tim Johnson for voting to tax the windfall profits of the U.S. oil companies. Hello! Corporations do not pay taxes. They just pass the tax increase on to you and me with higher prices.

And so on. This is not the first person I've encountered who seems to have studied economics on the Bizarro World. Nor, I suppose with a sigh, will he be the last. Nevertheless, I posted the following pithy rejoinder to the rag's website:

    So if we rely on this kind of muddled "logic," we would conclude that corporations also "don't pay" electric bills, water bills, phone bills, insurance, etc., etc....they just "pass it on to you and me with higher prices." Hello! Corporations most certainly DO pay taxes, and all of the above. (Except when they dodge their tax responsibilities by moving off-shore.) Does some of it get "passed along"? Of course! That's how the economy works.

I might have added that it's simple-minded to imply, as do the letter-writer and his ilk do, that the entire tax burden automatically is passed along to the consumer. That's ludicrous. If any corporation raised the price of its goods or services that much in one fell swoop, it would soon find itself bleeding customers. And it needn't be taxes, although that's the favorite bete noire of the right-wingnut crowd: The same is true if, say, the price for hand soap in the bathrooms: Someone gets the fun task of deciding whether and how much of the expense can/should be absorbed in the form of higher prices, and how much can/should be absorbed from profits. The idea that if Conglomeroid Company has to pay a dollar in taxes it will raise its rates to get back that dollar is addled.

I am similarly amused/amazed/annoyed by the various business types who warn against any proposed increase in minimum wages because it will "force" them to increase their prices or lay off workers or sacrifice a virgin over an active volcano or whatever the issue is supposed to be. Again, it's only their having to pay workers that will cause their business to teeter on the brink of's never the price of the goods and services they must buy in order to do business. (Damn that Abraham Lincoln for ending slavery! Just another example of the government butting in and crippling the small-business owner! They should let The Market decide what wages should be paid. If any.)

But now that the minimum wage has gone up, well, it develops that it wasn't such a big deal after all. This too from the daily rag:

    Minimum wage hike won't have big effect
    Many Sioux Falls jobs already pay more

    South Dakota's minimum wage Thursday will rise 70 cents to $6.55 an hour, but it appears the increase will have little effect on most Sioux Falls businesses.

    The South Dakota Department of Labor estimates that of Sioux Falls' 132,000 workers, only about 3,900 or 3 percent will be affected by the latest increase in the minimum wage.


No pandemonium? No rampage in the streets? Not even a little one?

Well, I could hardly let that pass unnoticed (obviously), so I posted this to Hearing Voices or In Your Voice or The Voice in My Head or whatever they call the comments section:

    Golly...when the new minimum was being discussed awhile back, we were assured by several local businesspeople that it would be the end of civilization as we know if it they were "forced" to pay a semi-decent wage. Now we're told that it "won't have big effect" because "many Sioux Falls jobs already pay more." It's almost as if the sky wasn't really in danger of falling after all!

Personally, I'm of the opinion that a business, large or small, that "can't afford" to adequately pay its workers doesn't deserve to stay in business. Isn't that the way of The Market that we're all supposed to bow down and worship?

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