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Do you really believe that your landlord or the oil company is going to pass on any tax savings to you? Give you an example. Texas passed a tort reform law that capped punitive damages in medical malpractice claims. In selling the plan to the public, the legistlature said that because the insurance companies would lose less money that the savings would be passed on to the consumer. Guess what. It worked, the Insurance companies paid less and claims, but the insurance amounts never went down, the insurance companies just pocketed the extra profit. What in the world would believe the same thing would not happen. Business is about profit.
You're assuming nothing else caused premiums to increase. I haven't heard of any states in which insurance premiums have stayed the same. Have you?
According to his calculations, companies would lower their prices. Doesn't make any sense. If people are willing to pay me $150 for a product why would I lower it, just because my corporations tax rate is lower? I'd charge as much as people are willing to pay for the product. Any tax savings are going into my pocket or my business, certainly not going to give those away.
Well it isn't because it ASSUMES that the entire corporate tax savings will be remitted to the final consumer, a rather dubious assumption to say the least because it also makes another fatal Econ 101 assumption that there is perfect competition in the market. There isn't. Far too many companies through economies of scale have far greater pricing power than their competitors so they may feel no need to compete based upon price with lessor companies (see Apple) and some companies such as grocery stores in inner city areas face little to no competition which is another reason why this idea is patently regressive for those most vulnerable.
Obviously the calculator is a very simple way of looking at a very complex economy. The assumptions are that the 35% corporate tax becomes 22% of the price of a new good and via linear interpolation, the new 9% corporate tax becomes ~6% of the cost of a new item. What is being ignored is the effect of taxing retail goods at 9%. The cheap crap we import from China will be taxed, but repairing and restoring existing items will not. Look for the automotive and appliance repair fields to boom if this becomes law. Quality and frugality could become part of our vocabulary once again.
According to his calculations, companies would lower their prices. Doesn't make any sense. If people are willing to pay me $150 for a product why would I lower it, just because my corporations tax rate is lower? I'd charge as much as people are willing to pay for the product. Any tax savings are going into my pocket or my business, certainly not going to give those away.
Go ahead, don't lower the prices of your goods and services, but I will, and then I'll take away all your customers. Have fun posting those "Going Out Of Business" signs. LOL
Go ahead, don't lower the prices of your goods and services, but I will, and then I'll take away all your customers. Have fun posting those "Going Out Of Business" signs. LOL
Obviously the calculator is a very simple way of looking at a very complex economy.
Well it is the most sophisticated explanation to come out of the Cain campaign explain the concept to date!
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The assumptions are that the 35% corporate tax becomes 22% of the price of a new good and via linear interpolation, the new 9% corporate tax becomes ~6% of the cost of a new item.
What the frack??
The 35% corporate tax become 22% of the price of a new good???
I am hoping what you meant to say was that currently the 35% corporate tax adds 22% to the price of new goods and that under Cain's proposal that add-on price would be 6%. Is this a correct read of that statement?
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What is being ignored is the effect of taxing retail goods at 9%.
I'm listening...
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The cheap crap we import from China will be taxed, but repairing and restoring existing items will not.
You mean my cheap crap Apple computers that are the backbone of my business, the cheap piece of junk iPhone that I use to connect with clients. My garbage Sony flat screen tv or my junk Shimano fishing reels that I love so dearly. That cheap crap?
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Look for the automotive and appliance repair fields to boom if this becomes law.
Shall we look at all the jobs in shipping and retail that will not? As for automotive repair are we forgetting the price of new parts that our booming repair people will need to fix my auto or appliance, costs that are sometimes higher than actually buying a new car or appliance to begin with? I'm not feeling your optimism.
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Quality and frugality could become part of our vocabulary once again.
If you think that frugality hasn't entered the vocabulary over the last 3 years, I have a news flash for you. My problem is that at the present time frugality is killing this economy.
Last edited by ovcatto; 10-19-2011 at 03:47 PM..
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