Question for those who believe profits should be shared because of roads, etc.

[roysoldboy]

Originally Posted by freightshaker

SamBarrow, you are a much more patient man than I....

Ain't that the truth. Way too much patience being exhibited here concerning how much good it will do.

[EddieB.Good]

Originally Posted by SamBarrow

Actually, I never said that. And again, it's irrelevant. These variables would be present no matter the corporate tax rate. So if you want to discuss corporate tax rates, discuss corporate tax rates, not irrelevant what-ifs that are not inherently related to corporate tax rates.

The only reason we're focusing on corporate tax rate is b/c you pegged that to prices. I've pointed out repeatedly through real world examples & simple equations how that's not true. You even admit that taxes are a PART of overhead and it's overhead that determines prices. What you don't seem to grasp is that you can change the OTHER parts of overhead to offset an increase in a certain expense. What is there to dispute about that?

And if you do have a company, why in the hell would you have a B C and D lying around that you could easily cut to a. save you money or b. lower prices while retaining the same margins and simultaneously gaining an edge on your competitors. Answer? You wouldn't, because that would make you an idiot, and if you're that financially clueless, you don't actually run a business, you work at McDonalds, and this was all a dream.

Lol... you've never heard of companies cutting their advertising budget? Scaling back on trade shows? Reducing profit-sharing bonuses? None of that makes sense to you as something that a company would cut back on in lean times? LOL!

Questions:

1. Do lower expenses make room for more competitive pricing?
2. Do the vast majority of companies compete on pricing?

Now, you see the obvious conclusion here. If room is made for more competitive pricing, and companies do in fact compete on pricing, well, I don't think I have to explain to you what will happen next.

I really want to hear you say no to one or both of these questions, because these questions are all that is relevant.

Of course lower expenses make room for competitive pricing. Where do I say anything that disputes that? What part of "overhead" are you missing? Now answer me why you believe expenses can only rise and not be cut by businesses since that's the only argument you're providing.

Assumptions: Company A has expenses that can easily be cut, but they haven't cut these expenses. Why? No reason. But of course, if taxes rise, they will cut those expenses. Why? No reason. And if overhead is lowered on both Company A and Company B, they won't compete with each other. They'll just leave their prices the same. And these assumptions are based on...

I'll give you an example from my own work experience. I used to work for a company and we saw a trend of lower sales, so we planned out cuts from the 1st half of the year. How did we do that? Cut down tradeshows from 6 to 4, downgraded our sponsorship from a massive booth to a smaller booth, and downgraded the hotel the reps & boss stayed in. Result? $6K saved over 6 months. That's how you adjust expenses to offset changes in revenue or profit.

Anecdotes: Apple and GM.

You're not talking economics or even logic here, you're talking anecdotes. Typical around here unfortunately, but it makes for poor debate.

Wow... so real world examples are trumped by theory? Whatever... I don't care. If you want to offer nothing to refute the real world other than dismissing them b/c they don't line up w/ your econ graphs, have at it. One of us is arguing from reality, the other is arguing from theory.

Do you have any idea why the recent debit card fees were enacted?

Banks have been competing for years. A decade ago free checking was not widely available, and 3-5% cash back just for using a freaking credit/debit card? Ha.

Granted personal banking is not the most competitive industry, but competition exists even there.

What you're describing is price fixing, and I'm not going to sit here and justify a position with the prerequisite that said position would have the same effect even within a system plagued by illegal collusion between a large number of companies. That's ridiculous.

Companies don't just keep prices as high as they want and not compete for the hell of it, that's not how the market works for 99% of businesses.

No what I'm describing is an imperfect economic system w/ too few major players. I didn't say collusion or price fixing. I said nudge-nudge wink-wink. You don't need secret meetings and handshakes for companies to understand what your competitors are going to do. Banks barely compete w/ each other. They just offer something that's good enough to not **** you off b/c they know you're not taking your banking elsewhere over a $5 difference in monthly maintenance fees, or a $1 difference in ATM surcharges.

Jesus... Banks have been recording more & more profits every year for decades (minus the housing hiccup), yet they're still adding more & more fees w/ less & less benefits. How does that jibe w/ you understanding of "competition"...

Originally Posted by freightshaker

SamBarrow, you are a much more patient man than I....

Eeek... It's getting sad watching you cheerlead someone b/c you couldn't make your argument w/o defeating your own point.

[rw47]

Originally Posted by EddieB.Good

The only reason we're focusing on corporate tax rate is b/c you pegged that to prices.

Yes, I have, and I'm right.

Come to think of it, even if the raising of the corporate tax rate leads to pay/benefit cuts, that's just as bad. So even if I'm wrong, I'm still right.

Originally Posted by EddieB.Good

I've pointed out repeatedly through real world examples & simple equations how that's not true.

You've posted examples, but not equations. This is economic theory, and anecdotes have no place here. I'll take statistics, so if you have statistics showing that lower overhead does not generally lead to lower prices, feel free to post them.

Originally Posted by EddieB.Good

You even admit that taxes are a PART of overhead and it's overhead that determines prices. What you don't seem to grasp is that you can change the OTHER parts of overhead to offset an increase in a certain expense. What is there to dispute about that?

I never said you couldn't.

Again, those other things could be cut at any time. We're talking about baseline overhead. This is not complicated stuff here.

Please, read my posts.

Originally Posted by EddieB.Good

Lol... you've never heard of companies cutting their advertising budget? Scaling back on trade shows? Reducing profit-sharing bonuses? None of that makes sense to you as something that a company would cut back on in lean times? LOL!

My god... you really don't get it do you?

Originally Posted by EddieB.Good

Of course lower expenses make room for competitive pricing.

Okay then. And companies do in fact compete on pricing.

Ergo, if room is made, it will happen. Do you wish to dispute this? Or at least answer question number 2?

Originally Posted by EddieB.Good

Where do I say anything that disputes that? What part of "overhead" are you missing? Now answer me why you believe expenses can only rise and not be cut by businesses since that's the only argument you're providing.

Another fundamental misunderstanding of my point. Ignored.

Originally Posted by EddieB.Good

I'll give you an example from my own work experience. I used to work for a company and we saw a trend of lower sales, so we planned out cuts from the 1st half of the year. How did we do that? Cut down tradeshows from 6 to 4, downgraded our sponsorship from a massive booth to a smaller booth, and downgraded the hotel the reps & boss stayed in. Result? $6K saved over 6 months. That's how you adjust expenses to offset changes in revenue or profit.

Okay...

I never said that expenses could not be cut. I said that these cuts are not inherently related to corporate tax rates, and therefore irrelevant.

If you average everything out, lower operating costs generally lead to lower prices. This is simple undisputable fact, no matter how many anecdotes you throw at it. Am I wrong? Do lower operating costs not generally lead to lower prices?

Originally Posted by EddieB.Good

Wow... so real world examples are trumped by theory? Whatever... I don't care. If you want to offer nothing to refute the real world other than dismissing them b/c they don't line up w/ your econ graphs, have at it. One of us is arguing from reality, the other is arguing from theory.

Theory and logic is vastly superior to anecdotes in a debate. So that works for me.

Originally Posted by EddieB.Good

No what I'm describing is an imperfect economic system w/ too few major players. I didn't say collusion or price fixing. I said nudge-nudge wink-wink. You don't need secret meetings and handshakes for companies to understand what your competitors are going to do. Banks barely compete w/ each other. They just offer something that's good enough to not **** you off b/c they know you're not taking your banking elsewhere over a $5 difference in monthly maintenance fees, or a $1 difference in ATM surcharges.

And if you raise their overhead (which did happen, and since you like examples, please look into the whole thing with the debit card fees), this will continue to happen. Therefore the logical conclusion to reach is that if you lower their prices, the opposite will happen. Competition exists, no matter how many times you try to say it doesn't.

Originally Posted by EddieB.Good

Jesus... Banks have been recording more & more profits every year for decades (minus the housing hiccup), yet they're still adding more & more fees w/ less & less benefits. How does that jibe w/ you understanding of "competition"...

I don't know how many times I have to say this. Banking is not as competitive as some industries, and not every single one of the examples will fit the theory. Economics is not a hard subject like math.

[rw47]

Someone please point out the economic fallacy in my stupid widget example

There are 2 businesses. Each has overhead of $1000 per month in taxes and sells approximately 100 widgets per month.

You cut 20% off of the overhead, prices will go down. These businesses can both lower their prices by $2 per widget and make the exact same amount of profit as they were before. And they both surely will - that's called competition.

-

Sure, the owner of company A could decide to buy himself a solid gold toilet with the extra profit, but in the vast majority of cases, his competitors would seize this opportunity to undercut his prices, increasing their market share and retaining the same profit margins as before the overhead was lowered. This is how it works for the vast majority of businesses, because they are not Apple.

Even in an industry with very little competition this will hold true, so long as there is no collusion. You're just looking at a different baseline profit margin which could still be retained while obtaining an increase in market share, in the same way as explained above.

[EddieB.Good]

Originally Posted by SamBarrow

Yes, I have, and I'm right.

Come to think of it, even if the raising of the corporate tax rate leads to pay/benefit cuts, that's just as bad. So even if I'm wrong, I'm still right.

It's becoming clear that you don't understand what "pegged to" means.

You've posted examples, but not equations. This is economic theory, and anecdotes have no place here. I'll take statistics, so if you have statistics showing that lower overhead does not generally lead to lower prices, feel free to post them.

I never said you couldn't.

So you want me to list an equation that quantifies... greed? Corporate mandates? Duties to shareholders? B/c all those things are factored into real world economics.

Again, those other things could be cut at any time. We're talking about baseline overhead. This is not complicated stuff here.

Please, read my posts.

Who says we're talking about baseline overhead? How many companies are running at baseline overhead? Is your company spending the exact minimum amount to run that any change in expenses necessitates a price hike?

Jesus Christ.... When you want to discuss the real world, which is what this discussion is pertaining to, let me know. I don't have the patience to discuss real world ramifications of real world policies w/ someone that just wants to limit it to half-assed economic theory.

Okay then. And companies do in fact compete on pricing.

Ergo, if room is made, it will happen. Do you wish to dispute this? Or at least answer question number 2?

Again the difference between someone arguing from the real world and someone arguing from a textbook. Should prices drop when there's less overhead? Yes. Do prices drop when there's less overhead? No. Up to now I've shown you that with: Apple, GE, the banking industry, b-but we're talking theory, so that's not enough...

Or you can prove your point... Why don't you choose a company that lowered its overhead and passed that savings on to the customers...

Another fundamental misunderstanding of my point. Ignored.

Okay...

I never said that expenses could not be cut. I said that these cuts are not inherently related to corporate tax rates, and therefore irrelevant.

Your words, which only makes sense if you're saying that taxes are the ONLY overhead.

Originally Posted by SamBarrow

Direct tax on business is simply overhead. Those costs are passed down to consumers.

So either you don't understand what overhead is or you're being purposefully dense. You can't just decide that taxes are the ONLY expense that affects price.

If you average everything out, lower operating costs generally lead to lower prices. This is simple undisputable fact, no matter how many anecdotes you throw at it. Am I wrong? Do lower operating costs not generally lead to lower prices?

Theory and logic is vastly superior to anecdotes in a debate. So that works for me.

How many times do I have to say "no they don't?" They generally lead to higher profits.

But too bad you're only using one of the two to support your argument.

And if you raise their overhead (which did happen, and since you like examples, please look into the whole thing with the debit card fees), this will continue to happen. Therefore the logical conclusion to reach is that if you lower their prices, the opposite will happen. Competition exists, no matter how many times you try to say it doesn't.

Except for the part where that doesn't happen. When you lower overhead, your choice ranges from passing all the savings to your customer as a reduced price to keeping all the saving internal as increased profit. Most companies keep that difference in overhead on the books as profit, not discounts.

I don't know how many times I have to say this. Banking is not as competitive as some industries, and not every single one of the examples will fit the theory. Economics is not a hard subject like math.

You're almost there. The sooner you understand that more companies do run like these banks than don't, the sooner you'll see why you're wrong.