Philadelphia\u2019s most famous son, Benjamin Franklin, popularized the expression that \u201cnothing can be said to be certain, except death and taxes.\u201d To that list you can add a third certainty: politicians will consistently misunderstand or misrepresent how taxes actually work. Look no further than Philadelphia Mayor Jim Kenney\u2019s misguided soda tax for proof.<\/p>\n
Like most politicians, Kenney looks at taxes the way a barfly looks at an ATM near closing time: he thinks he can simply draw money out of the economy whenever he wants without consequence. As any Economics 101 textbook would have explained, had he picked one up, the soda tax was destined to lead to higher soda prices. Instead of looking in the mirror, though, he blames the very merchants on whom he foisted the tax in the first place. \u201cThey are,\u201d he said, \u201cgouging their customers.\u201d The implication? Mayor Kenney believes that \u201cbusiness,\u201d not customers, should pay the tax.<\/p>\n
Taxes in Reality<\/strong><\/p>\n In pushing for more taxes, politicians either don\u2019t understand or won\u2019t admit that every tax \u2015 no matter on whom it is levied \u2015 is ultimately paid by people. Every tax on \u201cbusiness\u201d gets passed on in the form of higher prices, lower wages, or lower investment return. Businesses don\u2019t pay taxes to the government; they collect taxes for the government. One way or another, people pay.<\/p>\n The mayor needn\u2019t look outside the Commonwealth for proof. Beginning in 2013, the legislature increased state gasoline taxes, which currently add 58 cents to the price of each gallon of gas sold in Pennsylvania. Proponents of the gas tax hikes argued that the taxes would be levied on oil companies and wholesalers, not consumers. It apparently never occurred to the legislature that the oil companies and wholesalers would pass the tax along to the people.<\/p>\n