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This is not true, and increase in corporate tax would not represent an increase in the cost of doing business. The corporate tax would reduce the amount of after-tax profit, whether the business had the ability to increase pieces would depend entirely on the supply/demand characteristics of the market.
Err, yes and no. In economics, this is called a dead weight loss to supply. The price is increased, and this is noted as a leftward shift of the supply curve. It results in a lower QUANTITY demanded with an overall supply curve (which corresponds to marginal revenue curves and cost curves), at all quantities, with higher prices, while the same demand curve is in place. Now, the mathematical functions used to determine the new price isn't so linear (such as there is an increase of X, so we'll divide X by the amount we sell and increase prices that much) because the functions return new functions. Depending on the scale of the company and the tax, it can range from pennies to "a lot." The functions used to determine new price all depends on the new marginal revenue curves and where profit will be maximized.
The price is increased, and this is noted as a leftward shift of the supply curve.
There is nothing that necessitates an increase in prices, increases in corporate taxes are not like an increase in say raw material costs. In the latter case a business may have no choice but to raise prices, but in the former it would just reduce after-tax profit.
You just made no sense. You will not be paying the same amount of taxes either way.
A shift from income to property taxes does not mean there will be an aggregate increase in taxes. Certainly for some individuals it may increase their taxes, but as a whole its just a shift of tax source rather than tax amount.
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Originally Posted by hskrfan2187
Did you not see my analogy, the gov't can bankrupt you and steal (aka a form of theft) your possessions if you don't pay taxes on a piece of property THAT YOU OWN!
You do realize that the government can already put on lien on your home for unpaid income taxes right? Nothing would change, in both cases if you don't pay your taxes you lose your possessions.
Quote:
Originally Posted by hskrfan2187
Land OWNERSHIP, is where you make a transaction with somebody else, pay cash and both parties willingly split ways.
Yes....and who gave the land to the person you purchased it from? At some point the land was stolen, usually from people that allowed everyone to benefit equally from the land.
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Originally Posted by hskrfan2187
It's not like you have to pay me because I own a piece of land that you don't own.
Except when I need to sleep on it, I need grow food on it, etc. Land ownership allows systematic theft from the producing class, you can't produce anything without using land.
Anyhow, what I'm talking about is not some idea I came up with by myself. The idea of land-value tax has been around for a long time, here is what Adam Smith says about it:
"Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground....."
Anyhow, there is a lot written about this, try reading "Progress and Property". No point in further debating this on this thread.
There is nothing that necessitates an increase in prices, increases in corporate taxes are not like an increase in say raw material costs. In the latter case a business may have no choice but to raise prices, but in the former it would just reduce after-tax profit.
The tax externality shifts the supply curve in a competitive market leftward, raising the price. There IS reason for an increase in prices as this is the new maximum profit price. This is basic Microeconomics.
The tax externality shifts the supply curve in a competitive market leftward, raising the price. There IS reason for an increase in prices as this is the new maximum profit price.
Perhaps you just like talking about terms, but you are not responding to what I'm actually saying. No where did I suggest that an increase in corporate tax would never cause an increase in prices. Rather, that it would depend on the market, in particular the elasticity of the supply and demand for the product/service in question.
A deadweight loss does not necessitate an increase in prices, but it does represent a "cost" in a more general sense and that is exactly why I prefer land-value taxes.
Perhaps you just like talking about terms, but you are not responding to what I'm actually saying. No where did I suggest that an increase in corporate tax would never cause an increase in prices. Rather, that it would depend on the market, in particular the elasticity of the supply and demand for the product/service in question.
A deadweight loss does not necessitate an increase in prices, but it does represent a "cost" in a more general sense and that is exactly why I prefer land-value taxes.
Yes, I am addressing your point. An increase in taxes changes the actual function of profit since profit is dependent on marginal revenue curves (which are dependent on supply curves for the market) and supply curves shift.
I'm not just talking about terms, I actually have an MA in Economics and know what I'm talking about.
Companies are all about maximizing profit. Since the function of profit changes, so will the maximum profit possible and thus price. This isn't debatable, it is based on economic research and theory.
No you're not, again my point is that nothing necessitates an increase in price. The toy models you are appealing to don't show that an increase in corporate tax will always result in an increase in product price. My only claim here is that the general claim is not accurate, the reality is more nuanced.
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Originally Posted by runningncircles1
I actually have an MA in Economics and know what I'm talking about.
I really don't care about your degree, in the case of economics its usually just a representation of indoctrination. I'm not trying to suggest you don't know what you are talking about, rather that you are not addressing my particular claim. You are referring to toy models that rely on so called "competitive markets" needless to say reality often does not work that way.
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Originally Posted by runningncircles1
Companies are all about maximizing profit.
Not all companies care about (or even understand) profit maximization. Furthermore, even if you do care about it that does not mean you're going to be able to figure out a realistic profit function to maximize.
I really have no idea why you are talking about micro here in the first place though, after all its not like the taxes go into some void they will be distributed via government spending which will effect aggregate supply/demand.
A shift from income to property taxes does not mean there will be an aggregate increase in taxes. Certainly for some individuals it may increase their taxes, but as a whole its just a shift of tax source rather than tax amount.
You do realize that the government can already put on lien on your home for unpaid income taxes right? Nothing would change, in both cases if you don't pay your taxes you lose your possessions.
Yes....and who gave the land to the person you purchased it from? At some point the land was stolen, usually from people that allowed everyone to benefit equally from the land.
Except when I need to sleep on it, I need grow food on it, etc. Land ownership allows systematic theft from the producing class, you can't produce anything without using land.
Anyhow, what I'm talking about is not some idea I came up with by myself. The idea of land-value tax has been around for a long time, here is what Adam Smith says about it:
"Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground....."
Anyhow, there is a lot written about this, try reading "Progress and Property". No point in further debating this on this thread.
You're right, there's no reason to further debate about the land ownership. I will say I do understand where you're coming from with that debate, but I choose to view things how they are and figure out how I can become successful within our current economic system. What you are talking about is an economic system that does not exist, it is a system that did exist at one point in the history of humanity (much like how the Indians viewed land) but it's not reality anymore. So again, I understand that concept but it won't change the fact that things aren't operated that way today so my arguments are based on how things are currently operated.
I do want to say, that yes I know the gov't can put a lien on your house if you don't pay your income taxes, but to go back to my original point, your income taxes are a percentage of what you make. So either you have maximum taxes taken out of each paycheck, or you set a certain percentage aside from each check...either way you have the money. With an income tax (assume Im in a 30% tax bracket and make 100,000/yr) I still walk away with 70,000 that I didn't have before that. You don't make money from your primary home. Property taxes aren't coming from income, they are coming from savings or some other source because it isn't a function of what you earn but what you already own and what you have already paid for using post tax dollars.
My basic point behind this argument is that it makes it harder for a person to become financially independent with a property tax. And in our society I believe financial independence is the greatest freedom a person can have, because it's the only way to escape oppression. See without a property tax somebody can have passive income (from dividends, interest, etc) of lets say $2,000/month. Under this scenario, you pay the taxes for that $2,000 and you have whatever else to survive off of, and if you have your house paid off and there are no property taxes you have security. You know that you will always have that house and land, because you worked hard and paid for it, thus you won't have to worry about what the future holds. As soon as you implement that property tax (lets assume its 12,000/yr) and you account for the taxes on that 2,000/month you now have most of your passive income (that you could have used to live off of) going to your property taxes, and if you're lucky you come out even.
Now most people don't have passive income because the average American spends what they make instead of investing/saving a substantial amount. In this case they set aside a set amount of money in their 401k, or whatever retirement instrument they use, and that's all the money they have to live off of. Now, 12,000/yr will be drained from their retirement before any of it is even touched for their own personal use. Assume they live for 20 years in their retirement years, they now must pay $240,000 just for property taxes, on a piece of property they already paid IN FULL with post tax dollars. See when you quit working you don't pay income taxes, so it's not a drain on your savings...but property taxes are.
Also, in reference to this statement, "who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground," Once you increase property taxes in an area, rents also go up. Property taxes, mortgage payment, insurance, and upkeep are all factored into buying costs to determine what percent return the land owner can get for renting a piece of property (or apartments, duplexes, etc). So once one of those costs increase, that cost will also be felt by the renter. I mention this because that statement (if I read it correctly) seems to be in favor of a property tax to, in some way, punish the land owner for renting his property for profit.
So again, I understand that concept but it won't change the fact that things aren't operated that way today so my arguments are based on how things are currently operated.
That is the point of a land-value tax it allows the current legal notion of land ownership while reducing its negative effects on society as a whole.
Quote:
Originally Posted by hskrfan2187
Property taxes aren't coming from income, they are coming from savings or some other source because it isn't a function of what you earn but what you already own
Sure, property taxes and land taxes are not a function of what you earn, but that is precisely the point. Property/land taxes function like a rent, instead of the rent going to yourself or to your landlord its going to the government. The average working person is not going to notice any real difference, they will be able the same amount in taxes each year.
Quote:
Originally Posted by hskrfan2187
My basic point behind this argument is that it makes it harder for a person to become financially independent with a property tax.
Yep and again that is the point. Taxing income instead of land allows landowners to extract wealth from those actually producing it, if we just taxed land all that would end. Your wealth would depend on your actual contribution to production...and yes for some that is a big fear!
I realize that this is unlikely to happen, but that does not change the fact that our current tax system allows landowners and to a lesser degree capital owners to extract wealth from the producers.
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