THE CONSUMER ALWAYS PAYS FOR EVERYTHING – TAXES – NaBloPoMo 2016 – 15 of 30

When I was a senior in High School I had a really good Economics teacher. Wow, that was back in the academic year 1962-3 and we had Economics with a college level text (Samuelson) and it wasn’t even an AP class. Of course, we learned about Supply and Demand curves, Central Banks and money supply, and a quick, basic section on Statistics, but there was one idea that our teacher, Mr. Rommel, drummed into our brains at every chance. The consumer always pays for everything.

It really is a simple idea. If a business of whatever size from a kid’s lemonade stand to a multi-national mega corporation does not pass along to the ultimate buyers of its product every penny of every cost of doing business and producing its product and getting it to the customer, it goes broke. That means everything, raw materials, labor (including benefits and any training), rents, mortgages, electricity, heat, furniture, shipping, packaging, etc., and, taxes. If it sells below cost at times, then the owner(s) make less money. That could be an individual owner of a small business, or the share holders of a corporation, who are also consumers. If it is going to be profitable for the owner(s) over time, then all of every cost has to go into the price of the product, including taxes. When you buy any product as the consumer at the end of the supply chain, you are paying a share of all the taxes of every business in that supply chain. You don’t notice that your are paying those taxes, but they are included in the price.

I offer this now because we are going to be hearing a huge amount of talk about taxes in the coming months, more than usual. There will be talk of who and what entities should pay how much. All sorts of numbers and claims of what is fair, or will grow the economy, or create jobs, or accomplish other things. Much as I like Bernie Sanders, for example, when he talks about corporations paying their fair share, at the real level, that is slight of hand, because corporations will pass their tax costs on to consumers. Wealthy individuals are another matter. They are consumers too and may or may not be paying their fair share. But businesses have to pass the tax along.

In the face of all the competing proposals and theories and calculations in the political talk of taxes, if we are to have any chance of thinking at all clearly, we have to remember that whenever a business seems to be writing a check to any level of government, it is we, the consumers, who will actually pay the bill. We may or may not prefer to have that hidden or in the open, but we will be paying it either way. That fact is non-partisan and independent of whether one believes in Supply Side (Trickle Down) economic theory, or Demand Side, or some other model of the system. It is our government and we, the consumers pay for all of it, directly or indirectly, and nobody else.

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