Thursday, June 4, 2009

Corporate Greed...What's The Problem?

So for the last year or so we've been hearing that the economy is in such peril that we've just got to do something about health care, and this, that, and the other to fix all of our problems. Here's the fundamental problem I have. People (not everyone) site corporate greed as huge problem and the solution is to tax them out the wazoo to "teach them" or "punish them" for being so greedy. So to these people it seems illogical to lower the corporate tax rate to "fix things" because that teach corporations to stop being so greedy. The U.S. already has the 2nd highest corporate tax rate in the world and yet we are still in this mess. I know I've touched on this before, but I'm going to approach it from a different perspective hopefully.

Let's start with the recent news from Wal-Mart since they are one of the most popular demonized corporations outside of "big oil." Wal-mart is going to add 22,000 jobs domestically this year.
Before you guys bitch and moan saying they are crappy low paying jobs, "the retailer said the new hires will fill positions across its business units, including cashiers and sales associates, as well as pharmacists, human resource managers and customer service associates."

"The discounter said benefits, including health plans that offer customized health coverage options, will be offered to its full and part-time workers."

"Wal-Mart is the largest private-sector employer in the United States with a workforce of 1.45 million. Its total worldwide workforce is more than 2 million."

Like it or not, Wal-Mart is good for everyone in an economy like this. Not only are they providing all kinds of jobs, but they drive the competitive forces in that industry which keep prices low for all of us that are pinching our pennies in said economy that "is the worst since the great depression." Perspective people, we aren't standing in soup lines as a country. None-the-less, Wal-Mart is helping us stretch our dollars, even if you don't shop there. For that I am very thankful.

Onto the next point about corporations. Everyday people like you and me own these greedy corporations in the form of retirement portfolios, personal investment portfolios, etc. We want them to find ways to make more money because that drives up the stock price, which increases the value of our 401k which drives our ability to retire when we want to, along with the amount we save.

Not only does making more money lead to increased stock price, but it comes as a result of growth. What happens when a corporation grows? They add jobs to help keep up with demand for their product or service. So what if the founding and primary stock holder and possibly the CEO, is greedy. His or her greed ultimately leads to meeting the needs and desires of others in the form of increased stock value, or jobs. Does this make them evil? Does this warrant increasing the tax rate on a corporation?

Let's take a look at what happens when you raise the taxes on a corporation. In order to do this, we must ponder who pays these taxes? It's publicly owned. Say you own shares of stock. You pay taxes on any capital gains. Don't tell me you bought that stock with the intention of losing money. You wanted to make money. By logic being discussed, doesn't that make you greedy? So you pay taxes, but you aren't the only one. There are income taxes, but you probably don't think they count since we all have to pay income taxes as a reward for working!!! So I'll move on to payroll taxes as a result of employing people to pay for such things as social security and medicare, etc. Remember all employment costs get calculated into the cost of goods sold. So employing that knowledge, (don't believe me, ask a business owner) in order to make money, (which is the ultimate goal of any business, even nonprofits) they must account for income tax in the price of their goods. Now I know that the value of a good or service is what the market is willing to pay for it, but if they aren't making money after taxes, they aren't going to stay in business long because it won't be worth their time and effort. In all actuality the corporation is collecting taxes from you the consumer to pass along to the government. So you are the one getting taxed out the wazoo not the corporation. Corporation is a word, it's not a living breathing being able to make money and pay taxes. It is a word that is made up of people that have ownership interest in a group of people doing work for another group of people who pay for that work, and all 3 groups are the ones paying the taxes. So if you raise taxes on corporations you hurt all 3 groups of people.

So am I to assume that hurting people is the solution to the problem? Cutting spending sounds more logical to me.

On a side note, I'd like to see a copy of the cleared check to the IRS that person, who voted in my poll on the left, obviously must have sent to the IRS in addition to his/her current tax bill. Odd thing is, is that someone actually made that statement to me that they were willing to pay more taxes, and so I said fine you can pay ours.

Am I greedy? If wanting to keep my hard earned money to provide a reasonable life for my family without relying on the government to take care of me is greedy, then damn right I'm greedy!!! And I make no apologies for it. But I define greedy differently. I think greed is wanting what isn't yours for nothing. For example, if I want someone else's money, without providing them something in exchange for that money, that's greedy. It's also damn lazy. Business works by an owner paying his/her employees money in exchange for work they do for them. In corporations if you think the leadership is too greedy and not worth the money they are paid, then you have the right to vote at the annual shareholders meeting. So do it.

Who do I think is greedy? The government and the politicians sick with power running it. They take money from us all the time and provide us with practically nothing in return. They use our tax dollars to buy our votes. And we continue to let them. Why is this so difficult to understand for some people? I'm not saying that there shouldn't be a certain amount of taxes collected for infrastructure and military purposes. I'm even ok with some limited temporary assistance programs. But it's a way over-bloated system. With the Fair Tax, anyone receiving assistance is still paying taxes to help pay for these programs. I'm not going to go into the fair tax but look in my previous posts and you'll find a post on it if you're interested. Or just check out the website.

That's all for this rant. What do you think? Is corporate greed a problem?


cube said...

I don't care what the liberals think... I shop at WalMart. Look at what they've done for prescriptions for the poor and/or elderly.

Lola said...

Exactly...but they are sooooo EVIL!!! I guess old the poor and elderly are 2nd class citizens...or they(liberals) would rather take money from the rest of us and give it to them rather than let businesses find a free market solution. And look how many pharmacies have followed the WalMart model for prescriptions now...

Jay said...

There is nothing wrong with a business that wants to make money...that's what a business is in business to do. The problem occurs when that business wishes to be exempt from paying taxes, citing that they create jobs, and suck up billions in tax dollars to stay afloat, citing the same job thing.

I have no problem with WalMart. I shop there regularly myself. Are they a greedy corporation. Yep...and a successful one too. I'm not reading anything about having to bail out WalMart.

Lola said...

WalMart most certainly shouldn't get a bail out..hadn't heard anything about that...did i miss something??? i don't believe any corporation should get any kind of government bailout....all of the hostile take overs...i mean bail outs, are really chapping my hide...because we taxpayers won't see a penny of that if and when it's paid back...Capitalism is and should be about the government staying out of the free market, letting businesses succeed or fail without their intervention...which is long gone but getting worse in the last year...

Anonymous said...

Hate to tell you. But capitalism is over and done with. A few relatively affluent Americans living in bubbles just might be the last to get the memo.

octobia said...

You comment in your post that we're not standing line for the soup kitchen. One reason is government programs. Food Stamps, Social Security, Unemployment -- all those "unnecessary" entitlement programs we pay taxes to support -- were implemented in response to the Great Depression. And they, along with the ever unpopular regulation of the banking industry, have worked. The economy is battered but standing.

Corporations and individuals regularly get government bailouts in the form of tax deductions, through which we shape a great deal of our social policy. Mortgage interest deductible -- a tax break to encourage homeownership, etc.

It's really all about which programs one agrees with -- those are the ones we consider good spending.

Lola said...

I agree it is about which programs we agree with or not...but here's the thing there are people on food stamps and other forms of government handouts that can somehow afford their cigarretes, cable tv, cell phones etc. Is that right? are they "owed" those luxuries. When times are tough at my house, we cut back on luxuries before and as such never went to the government for a handout. However the point of this post was about the popular demonization of "greedy corporations" (none of whom should ever get a bail out from the government in my opinion - if a business can't figure out how to make money, they shouldn't be in business)...the greedy Wal-mart helps people stretch their dollars in times of difficulty whether someone is on food stamps etc or not.

By the way under the current tax system, people recieving government handouts don't pay taxes or very few. The fair tax elimatates any loop holes and deductions while expanding the tax base and funding all of those entitlement programs that we have become dependant on regardless of opinion of them (by the way i'm ok with temporary assistance to the average everyday family that has been paying taxes - and to certain identified disabled groups (not everyone identified as disabled belongs in that group)). People receiving government assitance would still be paying taxes under the fair tax if they are making purchases beyond their needs. People here illegally would be paying taxes everytime they make a purchase. People paid in cash now,that don't report their income would be paying taxes. But it seems that people aren't interested in a truly fair tax, they want just want to tax the rich to make them pay for everything.

oh and to anonymous. yes parts of capitalism are dead, but not all of it. We still operate in the free market for most things. And while we may not get back to the free market for everything, we can aspire to not loose capitalism and fight back to keep the government out of business by paying attention to our politicians and voting them out of office for making votes that jeopardize capitalism. But we all have to commit to paying attention and caring about it.

cristal said...

Someone mentioned pharmacies and since I'm a pharm tech this is my soap box about our government...Medicaid will cover 3 prescriptions a month unless the person is qualified to be unlimited. However they will NOT cover birth control pills. Period. So in other words, we, the tax payers, are paying for these people to be on medicaid and food stamps and whatever else they might be on as they continue to get pregnant which furthers their need for such programs. It's insane to think that we are paying thousands upon thousands of dollars for their doctor visits, delivery of the baby, hospital stay, AND for yet another person (that baby) for X number of years when we could be paying a couple of dollars a month on prevention. To me that's just insane. And all it does is further the cycle.

I had never thought of raising taxes on corporations as raising taxes on us before. Very good point.

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