Shift of Taxation Away from Corporations

Over the last couple of decades there has been
a definite shift of the tax burden away from
Corporations and onto the individual tax payer.

There has been a recent spate of letters to the
editor in the Oregonian newspaper suggesting
that we arrest that shift.

I wrote the following letter in defense of the
return to a more balanced tax allocation. For
those not privy to local politics, PGE and
PacifiCorp are regulated utilities that are
allowed to increase their rates to collect the
expense of taxes which they end up evading.

To The Editor:

With all the letters that you have published
calling for increased corporate taxes, I
thought I would write this preemptive defense
letter.

Someone is surely penning a letter right now
claiming that corporations don't pay taxes. The
letter writer will claim that companies just pass
the taxes on to their customers.

There is no law of economics that says that a
company has to increase prices for each new
cost of doing business. A corporation could cut
excessive executive pay instead of passing on
the cost to the consumer. This is just one of the
ways that a company could avoid passing on a
tax increase to its customers.

If a company chooses to lower executive pay
in order to prevent an increase in prices they
will surely get more customers than the
company that raises prices to maintain the
executive compensation structure.

My comments do not cover regulated
monopolies like PGE and PacifiCorp that can
pass on to customers taxes that the companies
do not even pay.

/Steven Greenberg

United Airlines: Avoid Liquidation or Honor a Contract

I can imagine the bankruptcy Judge in the United Airlines case asking himself if it would be better to let the airline go out of business or let it shirk its pension obligations. In fact, I believe that it would have been better had he decided to let United Airlines be liquidated. Some assets could have gone to funding the pension obligations. Liquidation would also have cleared away some of the competition from airlines that feel obligated to honor all their contracts.

The judge's decision has ramifications far beyond United Airlines. Now airlines that honor all their obligations are operating at a disadvantage. Though they may have the strongest desire to keep faith with their commitment to their employees, they may find that they too will have to dump their pensions in order to compete. Will the U.S. government's Pension Benefit Guaranty Corporation be able to handle the stampede?

Is this anyway to have to run an airline, let alone a country? The credit card companies can get legislation for strict bankruptcy rules to be imposed on their debtors. Why cannot pension holders get equally strict rules imposed?

If it's any consolation, at least we didn't have our Social Security private accounts invested in United Airlines pension funds.