The Price Of Taxes

In my new state, Illinois, there is a heated debate going on in Springfield regarding how to pay for the massive increases in state spending. The Governors primary plan involves a 1% gross-receipts tax on all businesses with annual revenues greater than 5 million dollars. Governor Blagojevich has made class envy a major part of his message and programs, claiming, for instance “The system is not fair. It puts too much of a burden on middle class families and doesn’t ask enough of big corporations.”

Ignoring the issues of the rightness or wrongness of the need for more money and the increased spending it represents, the concept of taxes on ‘big business’ and the class envy that represents is ugly and morally wrong.  It costs the regular tax payer more no matter who the taxes are directed at, and it foments envy between members of the same society, damaging the culture and the economy further than just the cost of the tax increases.

Businesses must balance many different inputs and outputs, costs and revenue, in order to survive. The two fundamental aspects of the business/populace relationship are employment and consumption: Businesses hire people and compensate them tangibly for their labor, and businesses provide products to others (businesses or the general populace) to make more money. The old paradox, you need money to make money is especially true in the business culture in a capitalist system. If a business does not have money it must fire or lower the wages of its employees and/or raise prices on it’s products to get more money. Similarly, when the costs of business go up, they must also fire people, lower their wages, or raise their products costs.

Taxes are a cost. Do you ever wonder why businesses love Taiwan? Flat tax, no loopholes. Everybody pays the same percentage. If you make a little you pay your percentage of a little, if you make a lot, you pay your percentage of a lot. If you raise the costs of business artificially in one location at least two things occur: The businesses raise the cost of their products and services and they look elsewhere to do business. When a business moves out of a location, those employees not willing or able to relocate are now unemployed (which may not be a bad thing in this economy, with unemployment at historic lows, chances are they’ll find a better job that pays more) and there is less money going around the local economy. Prices of that businesses products also go up because they must now pay increased shipping costs to get their products back to the local economy.

It is not unfair or unjust for a business to pass its costs along to its consumers. The whole point of a business is to balance the desire for a product or service with the cost of making or providing that product or service. If the costs go up, for the business, the costs go up for the consumer. This is not rocket science.

The second, and perhaps more pernicious, issue with raising taxes on ‘big business’ is epitomized in the very phrase ‘big business’. What is bad about big business? Did you know that Walmart is the leading employer in the US and also the leading employer of older citizens? Most of the friendly old people who do small jobs at Walmart are unable to work most other places because of increase health insurance costs they represent (another government mandated do-gooder idea which diminishes freedom and costs us all so much more) and because they have trouble learning the new tools or performing the hard labor. Big business means big employer. Big employer means lots of people who have paychecks and homes and a sense of self worth based on true achievement. To set the ‘little man’ against ‘big business’ is to cause an unjust and irrational envy and hatred of one of the most powerful elements of our economy and culture. Any psychologist will tell you that hatred is bad, it causes harm to the psyche and if acted upon, it can cause harm to people (see the terrible tragedies of ideological terrorism where hate breeds destruction). Causing harm is morally and ethically wrong.

Governor Blagojevich, in craven pandering to class envy, has damaged people and lives by fomenting a hatred of the very hands which feed us, our jobs and the businesses that provide them. Ergo, Governor Blagojevich is wrong, morally and ethically wrong. I will not go so far as to say he is evil, though I don’t rule that out. I will leave the judgement of motives to God, He’s so much better at it than I.

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