Marcellus Shale natural gas and the corporate tax myth

As Milton Friedman clearly explained corporations do not pay taxes.  Buildings do not pay taxes, trucks do not pay taxes, natural gas at the well head cannot pay taxes, no inanimate objects pay taxes.  People pay taxes.  This endless rubbish about how much money any of the companies that successfully drill for and extract natural gas make and should be taxed is utter economic nonsense.  Passing a piece of legislation to tax natural gas when extracted from a Marcellus Shale deposits in Pennsylvania and claiming that it’s OK because it’s a tax on a company is cowardly governance and demagoguery of the highest order.  

Once again, let’s get this straight.  Companies do not pay taxes.  People pay taxes.  Those dollars that are used to pay “business” or “corporate” taxes come out of the pockets of the owners, partners, shareholders, and/or employees.  If it’s a publicly traded American business the shareholders could be just about anyone.

Any member of the Pennsylvania legislature who votes to impose a severance tax on Marcellus Shale natural gas needs to look voters in the eye and say the following:

Any member of the Pennsylvania legislature who votes to impose a severance tax on Marcellus Shale natural gas should come completely clean with voters and include the following in their statement:

The pockets that are being picked when money is confiscated in the form of taxes from a publicly traded business can be property (money) belonging to anyone who owns any of the stock or mutual funds directly or by way of some sort of retirement account (IRA, 401K, or other type of account) that includes stocks or mutual funds.  The person that writes the check to pay the “corporate” tax bill may or may not have skin in the game and is not writing a personnel check. 

If this is still not clear, see Milton Friedman – The Free Lunch Myth[1].  It’s only seven minutes.  Surely, even the most important legislators in Pennsylvania can find seven minutes to watch a video that explains this business of taxes and where the money really comes from.  Hint: Santa Claus, Tooth Fairy, and Easter Bunny are NOT among the sources of tax dollars.  After an investment in this video of just seven lousy little minutes even the thickest Pennsylvania legislator should be able to understand why the voters will be coming for them with pitchforks and tar if they don’t stop raising taxes and start reducing the size and scope of government.   

Here are some final thoughts for those demagogues that enjoy standing in front of the camera and railing against companies that spend money on efforts to convince elected officials that it’s a bad deal for everyone when additional taxes are imposed.  Remember that money belongs to the owners of that company and it’s their choice to as to how to spend it.  While you’re in front of the camera explain why it’s OK for public employee unions and teacher unions to contribute to your election/reelection fund and/or pay for advertisements to argue for or against legislation when.  The funds those unions are spending on those activities come from taxes collected by the government (other people’s money).  Explain why it’s OK for public employee unions and teachers unions to spend “other people’s money” for these activities while it’s not OK for other people to spend “their own money” to do the same thing. 

Property

This term in its particular application means “that dominion which one man claims and exercises over the external things of the world, in exclusion of every other individual.”

In its larger and juster meaning, it embraces every thing to which a man may attach a value and have a right; and which leaves to every one else the like advantage.

Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.

Excerpt – James Madison – Property[2], 1792

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[2] http://www.ourfounderscompass.com/archives/537