The letter written by Robert W. English (Forum, April 24) caught my attention. His statement suggesting they eliminate corporation taxes is naive. His next suggestion that removing taxes would result in lower-cost products to the consumer was a real surprise. Today's corporate world has only one goal and that is to maximize profits, not lower prices.
As I recall my basic economic classes, there are three general ways to do business. First, personal ownership, where a person who goes into business is responsible for all the company's operations and is rewarded with all its income or pays for any losses out of his pocket. He also pays taxes on the income.Second, partnerships of various types that are like the first except larger amounts of capital can be raised by two or more people. The partnership gets all the profit to divide but also is responsible for any loss incurred by the company. The partners pay taxes on the company, which is their income.
Third, corporations where an organization is created by law to act as a real person in all dealings with money, property and personnel. The advantage is stockholders are not held responsible for any of the bad actions or liabilities of the company. They are sheltered from any action against the company. The stockholders' income comes from the profit after the company has paid its taxes on income, just as other companies and individuals do.
The stockholders give up part of the income in exchange for the safety of the corporation, which like any other individual is required to pay income taxes.
Most corporations are controlled by a few people, who set the wages and policies for the management team, which are more often than not on the payroll. The votes of the outside stockholders have very little influence on corporate operations, or salaries and perks paid to top managements. Corporate losses rarely result in pay cuts for management.
Corporations, with all of their tax write-offs, do not pay their share of taxes. The company's top management could take reductions in pay, which would mean real savings and would reduce costs.
This nation requires taxes to run on. By eliminating corporate taxes, someone else would have to make up the shortfall. I wonder if Mr. English has figured out whom that might be.
Gerald Durtschi
Bountiful