California moves to tax services

http://http://www.nytimes.com/aponline/2009/01/27/us/AP-Meltdown-Service-Taxes.html

SACRAMENTO, Calif. (AP) -- Golf course owners and some of their customers are teed off at Gov. Arnold Schwarzenegger. So are veterinarians, auto mechanics and amusement park operators.

Their anger is directed at the Republican governor's proposal to extend the state sales tax to cover more services, an idea that has surfaced in other states as they race to plug crippling budget deficits. The Center on Budget and Policy Priorities, a research clearinghouse, predicts such deficits nationwide could reach $350 billion by 2011.

Weber: I really see no difference between taxing goods and taxing services. To create a level playing (or maybe I should say "paying") field, of course services should be taxed.

What it is interesting is that the folks quoted in this article immediately understand that the taxes (which are actually paid / collected by the providers of these services) fully understand that the cost of these taxes will be passed on to them in the form of a higher price for these services.

How many of these same folks understand that the corporate income tax is exactly the same as a sales tax? In other words, corporations do not actually PAY taxes...they COLLECT taxes on behalf of the government. The cost of these taxes is passed onto the consumer in the form of higher prices and /or reduced dividends.

How may of these consumers would favor lowering corporate tax rates?....in California, I would guess, not too many. (Which is why California is the top five for states considered undesirable places to start or relocate a business.)