Elections must be near, because I'm hearing a lot of rhetoric regarding taxes. Such talk is always interesting to me since taxes - both direct and indirect - have an enormous impact on new business formation and entrepreneurs in particular.

A few numbers and studies might be enlightening.

Based on IRS statistics, the top 20 percent of U.S. taxpayers make a little more than 50 percent of all income and pay about 80 percent of all taxes. Imagine a tax cut proposal in which politicians are screaming that the top 20 percent of taxpayers receive 60 percent of all tax cuts. How wildly unfair that 20 percent of the taxpayers would receive 60 percent of the benefit!

But do the math and you will find that the net effect is to shift more of the tax onto the top 20 percent of taxpayers. Another way to think of it is that the 80 percent of taxpayers who pay only 20 percent of all taxes receive 40 percent of the savings.

Clearly, fairness is in the eye of the beholder.

Another key political issue is corporate taxes. There are few taxes politicians like more. But who pays corporate taxes? Recent studies offer enlightening evidence.

Remember that corporations don't pay taxes; people do. When corporate taxes are raised, who are the people who get less? There are several possibilities.

All corporate revenues are used somewhere - to pay management, to pay employees, to pay suppliers, to pay taxes, to invest in new plants and equipment, to pay interest and dividends, etc. When corporate taxes are raised, which of these entities gets less?

It is clear that management salaries are not cut when corporate taxes are raised, so management does not pay corporate taxes.

If the price of the product is raised to provide the money for the higher taxes then, effectively, consumers pay corporate taxes. When cigarette taxes were raised dramatically a few years ago as a result of cancer litigation, it was clear that almost all of the money to pay the tax was raised through higher prices for a pack of cigarettes. In New York, the combined city, state and federal taxes amount to more than $3 per pack - more than $1,000 a year for a pack-a-day smoker. Several studies indicated that most of this tax fell on people in the lowest income brackets, since they are more likely to smoke than higher-income people.

Maybe shareholders get hurt. But in today's world, the majority of shares are held by pension funds and other mutual funds overseeing money for future retirees. So if shareholders are hurt, that means that future retirees are going to have less money with which to retire. Still, there is little evidence to suggest that share prices fall much as a result of higher corporate taxes.

It is clear that employee salaries are not cut when corporate taxes are raised, but employees may still be hurt if the higher corporate tax causes production to be cut and jobs to be eliminated. There is some evidence to suggest that less money is spent on research and development as well as new plants and equipment when corporate taxes are raised.

A recent study by the American Enterprise Institute examined the relationship between corporate taxes and wages for manufacturing workers in 72 countries during 22 years. On average, a 1 percent increase in the corporate tax rate is associated with an 0.8 percent drop in wages during the next five years.

Globalization intensifies the effect because money and investment can now easily move from high-tax to low-tax countries. Jobs move when money and investment moves.

There has always been a lot of yelling and screaming about taxes. But good decisions are based on facts - especially the most bottom-line fact of all: Who ends up paying the bill?