This page was last updated on March 8, 2012.
Industry should be taxed for protection; Christina Sarson; Beaver County Times; March 7, 2012.
Two previous Sarson letters I critiqued were “Global warming is beyond ‘bigot’” and “No reason to bar gays from military.” Two letters I did not critique were “Taxing the pavement” (9/8/11) and “Do the benefits outweigh the risks?” (10/5/10). The latter letter is no longer on the BCT website. In “Taxing the pavement,” Ms. Sarson appears to imply she believes in manmade global warming.
Below is a detailed critique of the subject letter.
[RWC] Before I get into the critique, here’s my position on business taxes. I oppose so-called “business taxes” for at least two reasons. First, corporation income taxes are double taxation. That is, the government taxes a corporation’s taxable income and then taxes the dividends (after-tax profits) shareholders [including pension plans, IRAs, and 401(k)s] receive. Second, business taxes are a scheme to hide true taxation from the ultimate taxpayers, you and me. That’s also the reason for the mythical “employer match” regarding Medicare and Socialist Security taxes. In some cases, businesses are prohibited by law from itemizing taxes on their invoices. You see, businesses - like government - don’t have any money; it all belongs to the owner(s). One way or another, business taxes are paid by individuals - customers, employees, and owners. According to the Tax Foundation, the average U.S. taxpayer worked eight days in 2002 to pay federal income taxes levied on corporations. In addition, we worked a fraction of a day to pay other business taxes. Business taxes are approximately seven percent of our total personal tax burden. That is, seven out of 100 tax dollars we pay are business taxes. Unfortunately, a lot of people don’t know this fact or choose to ignore it.
According to the Tax Foundation in 2010, “If Pennsylvania were its own country, it would have the highest overall corporate tax rate in the world at 41.5% (federal plus state, accounting for the state-local deduction).” If you don’t care about PA’s position in the world, BCT editorial “Snow job” noted “[PA’s] business tax climate index ranks 26th in the nation for fiscal 2011.” If you want to put a “positive” spin on this, PA is #1 in the bottom half. If we were addressing the Steelers, would we consider finishing 17th out of 32 teams (the equivalent of 26th out of 50 states) at the end of the season a good situation?
The above applies to general business taxes like income, gross receipts, et cetera. Should a business require special infrastructure or services beyond what the community would ordinarily need, the business should pay. The same is true for regulatory expenses. For example, let’s say a business has hazardous materials on site that require specialized firefighting equipment and training. It would be completely appropriate for the business to foot the bill for the required equipment and training. This is not an uncommon practice; a company where I worked did this. At the same time, there should be provisions for the business to recoup an appropriate portion of its expenditure should other businesses come in and want to use common facilities paid for by the first business.
“In ‘State shouldn’t have to offer bribes,’ the letter writer opposes a special tax incentive for the Marcellus shale industry, but is for lowering corporate taxes in general. This is the same subsidy by a different name, taken from tax dollars and given to an entity that has little interest in the long-term wealth or health of Pennsylvania or its residents.”
[RWC] How is reducing tax rates for all businesses the same as giving special treatment to a specific business or industry? Ms. Sarson referred to “lowering corporate taxes in general” as a “subsidy … taken from tax dollars and given to an entity.” This is similar to language used by President Obama. “Spending in the tax code” and “tax expenditures” are leftyspeak for provisions of the tax code Mr. Obama doesn’t like, including tax rates he believes are too low. Here is the logical extension of this position. Whatever you get to keep from your gross income (wages, interest, dividends, etc. for families; sales revenue, etc. for businesses), Mr. Obama considers a “tax expenditure” and Ms. Sarson considers a “subsidy … taken from tax dollars.” In other words, the fruit of a business’ efforts and a family’s labor belongs to the government and it’s up to the government to determine how much your business or family is allowed to keep.
Though Ms. Sarson mentioned “corporate taxes,” the author of the referenced letter wrote, “we need to ask our state lawmakers to lessen the burdens on business,” not a specific type of business entity. While a corporation is a business type, business and corporation are not synonyms.
The left constantly pitches the notion that businesses want to kill their customers and drive them into poverty while government is benevolent and has only our best interests at heart. Intentionally or not, that’s the sentiment expressed by the comment about “an entity that has little interest in the long-term wealth or health of Pennsylvania or its residents.”
Even the BCT finally conceded taxing Marcellus gas is “a tax that is paid by consumers” and acknowledged “Raising taxes could slow the economy.”
“Have we not learned from coal and steel? Creating an economic climate conducive to business is important, but we are giving away our state. When the Marcellus industry inevitably picks up and moves on, who will repair our scarred landscape, replenish our air and water, give our residents jobs and heathcare [sic] for their long-term health problems?”
[RWC] Given the Tax Foundation business environment info mentioned above, it’s hard to see how “we are giving away our state.”
As I’ve written previously, companies harvesting natural resources must do so in a responsible manner and must have the financial and technological wherewithal to handle worst-case scenarios. It is our responsibility to make sure the rules don’t cross the line between responsible and punitive. It is government’s responsibility to enforce these rules and to make sure everyone involved [businesses and government (local, state, federal)] is prepared (via drills, for example) to execute disaster plans.
Is it the responsibility of “the Marcellus industry” to “give our residents jobs” when it “inevitably picks up and moves on?” I’ll go out on a limb and guess placing such a requirement on business would discourage businesses from operating in Pennsylvania.
“If the corporation doesn’t pay now, we taxpayers will pay later. The shale gas is here; even if the industry does leave in response to taxes, it will be back. And then? Well, every boom has a bust! Taxing this industry is simply protecting ourselves.”
[RWC] Marcellus Shale companies pay taxes just as any other business. On top of that, House Bill 1950 allows counties to assess fees/taxes on “unconventional gas wells.” “Unconventional gas wells” is HB 1950’s terminology for Marcellus Shale gas wells.
For the sake of argument, let’s say the Commonwealth levied a tax on Marcellus Shale gas to “repair our scarred landscape, replenish our air and water, give our residents jobs and heathcare [sic] for their long-term health problems.” Remember what happened to the mythical Medicare and Socialist Security “trust funds?” The feds spent those tax revenues on other stuff a long time ago, leaving the equivalent of IOUs from an organization over $15.4 trillion in debt and running deficits in excess of $1.3 trillion per year. You should not be surprised to learn HB 1950 already takes some of the aforementioned fees/taxes to spend on stuff unrelated to potential effects of Marcellus operations.
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