Corporate Tax Little More Than Another Expense
June 26th, 2008 | by Matthew Kowal Published in Economics, Oil
Sadly, it seems more and more people I know are becoming Obama supporters. His plan to heavily tax oil companies seems like a great way to take revenge on the “evil corporations” of the world. As a former accounting major I can tell you that taxes appear as little more than a footnote on the income statement. They are not figured into expenses or overhead because they are not directly related to production, so the GAAP (Generally Accepted Accounting Principles) just requires that you post your taxes paid after Operating Income. Now any good accountant will tell you that when expenses rise, they are passed directly on to the consumer in the form of higher prices. Taxes are no different. If Obama were to increase taxes by 10%, you can expect gas prices by more than 10%. It’s another common sense conservatism, and if you still don’t believe me ask yourself what would you do if you ran a business and your taxes just went up?
