In the theater of modern politics, few villains are cast as reliably as the corporation.  From campaign podiums to primetime news, politicians decry the greed of big business, accusing companies of exploiting loopholes, dodging taxes, and shirking their civic duty.  The solution, they say, is simple: Raise corporate taxes.  Make them pay.  But this narrative, though emotionally satisfying, is built on a dangerous illusion, one that obscures the true cost of corporate taxation and who ultimately bears its burden.

Let us begin with a fundamental truth: Corporations do not pay taxes.  They never have.  They never will.  A corporation is not a person.  It does not eat, sleep, or feel pain.  It is a legal construct, a balance sheet, an income statement, a profit engine.  Its sole purpose is to generate returns for its shareholders.  When a government imposes a tax on a corporation, the company does not absorb the cost.  It responds.  And in responding, it passes that cost on to the very people politicians claim to protect.

This is not a matter of opinion or ideology.  It is economic reality.  When corporate taxes rise, companies have three primary levers: Raise prices, reduce labor costs, or cut shareholder returns.  Each of these levers affects real people.  Consumers pay more at the grocery store, the gas pump, and the pharmacy.  Workers face wage stagnation, layoffs, or reduced benefits.  Shareholders — many of whom are ordinary Americans with 401(k)s, pensions, and mutual funds — see diminished returns and slower growth in their retirement savings.  The American taxpayer absorbs the tax increase.

In this way, corporate taxation becomes a hidden tax on the entire economic body.  It is not the corporation that suffers, but the people who buy its products, work for its payroll, and invest in its future.  Every person who contributes to GDP, who earns, saves, or spends, is touched by this invisible hand.  The tax is not eliminated; it is redistributed.  And the burden falls not on the faceless entity, but on everyday Americans.

Yet the illusion persists.  Why?  Because it is politically convenient.  Governments understand that transparency in taxation breeds accountability.  So they avoid it.  They tax the corporation, then vilify it.  They manufacture class warfare, casting wealthy companies as villains and themselves as champions of the working class.  But the truth is simpler, and darker.

Ronald Reagan understood this with piercing clarity.  In his 1981 inaugural address, he declared, ”Government is not the solution to our problem; government is the problem.”   These words were not a slogan, but a diagnosis.  Reagan saw that government, when unchecked, becomes a self-serving institution that expands its power by creating dependency and disguising its costs.  His warning was not against governance itself, but against the illusion that government can rise above human nature to serve the common good without consequence.

In a 1979 interview with talk show host Phil Donahue, economist Milton Friedman responded to Donahue’s concerns about greed in capitalism by challenging the notion that society could be organized by morally perfect leaders.  Friedman said, “Just tell me where in the world you find these angels who are going to organize society for us.”  His point was simple and profound: Government is made up of people, and people respond to incentives.  Power corrupts.  And the idea that government can transcend self-interest to become a benevolent steward is dangerous.

This is why corporate taxation is so attractive to politicians.  It allows them to raise revenue without appearing to tax the public.  It allows them to posture as defenders of the poor while quietly taxing their groceries, gas, and retirement accounts.  It allows them to create enemies — “the rich,” “big business,” “greedy corporations” — and then promise to defeat them.  But the enemy is not the corporation.  The enemy is the illusion.

The mistake the public makes is trust.  Trust in government.  Trust in politicians.  Trust in the idea that those in power are working for the common good.  But history teaches otherwise.  The incentive of every politician is to get into office, stay in office, and expand the reach of government.  The people become pawns in a game they don’t even know is being played.

To see clearly, one must read between the lines.  One must think through the lens of common sense and logic.  When a politician says, “We’re going to make corporations pay,” ask: Who buys from those corporations?  Who works for them?  Who invests in them?  The answer is always the same: the people.  The tax may be levied on the company, but the cost is paid by the mother feeding her children, the student commuting to class, the senior managing a fixed income.

This rhetorical sleight of hand is aided by the academic class, which often cloaks economic truths in layers of jargon and statistical ambiguity.  Terms like “tax incidence,” “progressivity,” and “effective marginal rates” are deployed to confuse rather than clarify.  But the reality is not complicated.  Strip away the language, and the outcome is the same: The corporation, as a non-sentient entity, cannot bear the burden of taxation.  It must pass it on.  And it does — efficiently, quietly, and without apology.

Consider the shareholder. The popular image is of a wealthy tycoon sipping champagne on a yacht.  But in truth, the vast majority of shareholders are ordinary people.  They are retirees living off dividends.  They are young families investing in mutual funds.  They are workers contributing to employer-sponsored retirement plans.  When corporate taxes rise, these Americans pay.  Their portfolios shrink.  Their futures dim.

Even workers are not spared.  Companies facing higher tax burdens may freeze hiring, reduce hours, or outsource jobs.  They may delay raises or cut benefits.  The labor force becomes the buffer between government policy and corporate survival.  And once again, it is the people — not the corporation — who pay.

This is the great deception.  The government creates the illusion of justice while enacting policies that harm the very people it claims to protect.  It raises taxes in ways that are politically safe but economically destructive.  It manufactures class conflict to distract from its own failures.  And it expands its power under the guise of reform.

If we are to reclaim civic clarity, we must reject the illusion.  We must see government not as a benevolent force, but as a self-interested actor.  We must scrutinize every policy, every tax, every promise — not through the lens of emotion, but through the lens of consequences.  We must ask not what sounds good, but what actually happens.

In the end, the truth is simple: The government does not pay.  The corporation does not pay.  We pay.  Until we understand that, we will continue to cheer for our own decline.

In an age of political theater and economic illusion, truth is an act of stewardship.  It is a legacy we owe to our children and grandchildren.  We must teach them not only how to spot the lie, but how to trace its consequences.  We must show them that justice is found not in punishing abstractions, but in protecting people.  And we must remind them that every dollar taxed from a corporation is a dollar extracted from the lives of those who buy, build, and believe in the American economy.

Let us not be fooled.  The company does not pay.  The government does not protect.  The burden falls on us, and it is time we saw it clearly.

Image via Pixabay. Pixabay License.