Will taxing businesses affect us all?

Of course being election year many discussions revolve around the two candidates' tax plans. I have no interest in pitching one tax plan over the other, both have their merits, and both their weaknesses. Nor do I support either candidate (see my previous blog "Why, McCain, Why?" for details).

I'm only here to dispel one myth; the notion that raising taxes for big businesses does not affect us, the little people.

This belief, that we're somehow insulated from the effects of taxing big business, is flawed and very dangerous. It's unfortunate but business expenses, unlike wealth, do trickle-down to us, the everyday people.


So how will raising taxes for big businesses affect us?

Simply put; increased business expenses and taxes, raise the cost of goods and can lower wages.

Increased expenses and taxes cut-into profits and can cause businesses to operate at a loss. Obviously businesses will combat this. Not only is operating at a loss not sustainable, but during times of hardship businesses need to work even harder to protect their profits - to keeps us employed and paid, and keep delivering products to us, the consumers.

To compensate for increased expenses and taxes businesses generally:

• Increase the price of goods (increases the profit margin, presumably to near or at the previous level)
• Reduce wages (for part time or hourly workers this can mean reduced $/hour and/or hours, for all of us it means no increase in wages or bonuses)
• Reduce work force (laying off full timers and eliminating part timers)

Streamlining business operations outside of those listed above are also an option, however this often takes both money and time to pull off, two things businesses are short of during hard times. Where as cutting wages, hours, and jobs is much easier and has immediate results.


How bad will it get?

At best we will get hit with much higher prices on the things we buy; groceries, clothing, electronics, cars, ..., in fact we're already seeing this as energy costs rises. And with increased taxes thrown in these prices will rise even faster and further than they are now.

In a way the price increases are like being indirectly taxed. The everyday people and small businesses who are not directly taxed, are indirectly paying for the tax hike by paying more for the things they need.

More than likely we'll also be hit in some way by reduced wages, job losses, or, at the very least, no increase in our wages. And right when we need money the most, as we face higher prices on the things we buy.


So who's really getting taxed?

With most of the tax burden and increased expenses passed off onto us, the consumer and employees, who is really getting taxed, the big businesses or us?