Is Stanley Unpatriotic?

June 16, 2002

by Charles E. Perry

Stanley Tools has caused quite a stir. People are up in arms. Congress is up in arms. Some are even claiming the company is being unpatriotic at a time when we must all pull together. And what, you might ask, has Stanley done that is so terrible? The company announced plans to reincorporate in Bermuda. Not that this means a loss of jobs, mind you. The physical plant will stay right where it is in Connecticut, but it will be a foreign company operating in the United States. And why, you might ask, will they do this? To avoid our large corporate taxes. Bermuda, it seems, is tax friendly by comparison.

Congressmen see those tax dollars they so love to spend going away, and there are ominous rumbles on Capitol Hill. There is talk of making what the company wants to do illegal, if not ungodly and immoral. Now that would be a really wise move. If they did that, that would just create an incentive to move the physical plant too, and we’d lose not only the jobs the plant provides, but the taxes those workers pay. Let’s face it, Congress is full of boneheads, and from time to time I have to explain certain things to them. I see it’s time to do it again, but this time guys, listen.

Corporations are not taxpayers. It looks to you boneheads in Congress like they are, but they’re not. You can pass all the laws you want saying they are, but they still won’t be. Corporations are unpaid tax collectors. Pay attention now, I’m going to tell you why that’s true, and you’ve missed it the last fifty times I told you.

Corporations are tax collectors because those sneaky accountants they employ treat taxes as just another cost of doing business. The taxes they pay are added into the price the consumer pays for the product. So when you tax a corporation, you’re really taxing the people who buy their products. Corporations have a bottom line. They need to make a certain amount of profit on their investment, or they’re going to go out of business. So, and this is for the real taxpayers out there, when some Congressman starts blathering on about taxing those evil corporations, start throwing things at him, because he’s really talking about reaching into your pocket.

Now, corporations are subject to the law of supply and demand. If the government sets taxes on them so high that it would drive the price of their product beyond what the consumer is willing to pay, they have to cut costs somehow. With taxes, the easiest thing for a corporation to do is find a more tax friendly environment. That’s why states who tax business heavily find those business moving to other states that give them tax breaks, and the same holds true for nations. That’s one of the reasons so many of our corporations have moved overseas.

That’s not the only reason, of course. Sometimes labor prices itself out of the market as well. This next bit is for the boneheads who run unions. Labor is also subject to the law of supply and demand. When you demand more in wages and benefits than an employer can pay, he is going to start looking around for a cheaper labor supply. He has to if he wants to stay in business. Corporations do not exist to provide jobs, although that is one of the benefits of having them around. Nor do they exist to provide cash cows for the government. They exist to make a profit for the bottom line.

Now, if we could just get the boneheads in Congress and the unions to realize these truths, we could make some real progress. I don’t hold out much hope for that, but I keep trying to educate them anyhow.

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Charles E. Perry is a freelance writer living in Michigan. He has done a variety of things in his life, including Ward Supervisor at the State of Michigan's Maximum Security Mental Facility. His degree is in accounting, but he discovered writing and now spends his time hunched over a keyboard, hollow-eyed, looking for just the right word. Perry is the author of "How Government Should Work: A Look at the Federalist Papers and the Constitution of the United States," currently pending publication.

Send the author an E mail at Perry@ConservativeTruth.org.

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