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So if I am already running on slim margins, and I get taxed at a higher rate (or minimum wage increases), what do you think will happen? It's quite simple, the prices the consumer will pay will increase.
Same goes for small biz and health insurance. If I'm an employer, and I can stay under 50 employees so that I won't be required to pay 50% of the premium for all of my employees, then I'm going to do that.
If you plan on running a business, I'd suggest you learn basic accounting first. Taxes and expenses are treated differently. Discussing them together like that is just not valid.
Never trust a corporate guy to tell a poor guy what is in his interest. OR VICE VERSA.
If it was 100% paid for by consumers, corporate people would not care.
Every single dollar a business receives comes from its customers.
Taxes are just another cost. There's nothing special or magical about them. Rent costs money. Insurance costs money. Taxes cost money.
All those costs are factored in when determining wages and setting prices.
If you don't think that business taxes are paid by the customers of that business, you really don't understand how any of it works. That they're not the ones signing the check to the IRS has no bearing. The money is just being passed through the business on its way to the government.
I *rarely* agree with the OP but they are 100% correct, the consumer will in the long run pay that tax. Not commenting on some of their other conclusions about where the money would allegedly go but the rest of their claims look extremely shakey at best.
The corporations care because their competition may not have the same level of taxes or that their products may have substitutes taxed at lower rates or certain price points (demand curves) that could be exceeded or subject to other laws.
Consider these examples:
1. Domestic orange grower vs. orange grower (foreign) with lower taxes.
2. US company that makes beef jerky, price goes up 10% due to tax change now people buy another snack made elsewhere or less of the jerky so that net sales decrease.
3. Insurance company, tax rate causes auto insurance to go up 10%. California doesn't want their consumers to see an increase because it's an election year and refuse the request to increase rates.
4. You make solar panels, company in malaysia makes wind power mills...your prices just got a 10% tax bump and now the wind mills are more attractive options.
I'm sure there are a million loopholes and exceptions due to the use of shell companies and various laws etc. etc. etc. but yeah, the corporate taxes get passed along and the resistance to it is for a variety of reasons like the couple I listed.
your assessment is correct.
But it's all about the competition, and what rate they are taxed at (or the cost of their inputs).
Also, I think it requires consideration - "if taxes rise, then prices must rise" is true, then why wouldn't the converse naturally be true - "if taxes go down, then prices go down".
Did we see lower prices from the 2017 corporate tax cut?
Ask who provides the free stuff the government hands out!
the taxpayers!
Ask who the provides the money the government loses to fraud which they consider an acceptable loss.
The taxpayers!
Ask who provides the money the government uses to disperse illegal alien infected with covid across the country and who provides the free edu, healthcare, housing and legal representation for illegal aliens
The taxpayers!
Ask why Biden needs more taxpayer dollars.... because his spending is out of control.
We've argued this one before. One of the few areas we disagree strongly. Part of the corp tax rate is paid by share holders. We can argue all day long. It might be 1%. It might be 99%. People making studies are almost all biased to one side or the other and I do not trust pretty much any of them. My gut has a number, but it is worth as much as those studies. NOTHING.
I think our difference is that you're talking more short term and I'm talking more long term equilibrium, both being correct.
The capital markets want a certain return on their investment.
Let's say it's a $10 dividend.
They don't give a poop if that was $20 pre-tax x 50% tax rate = $10 or some untaxed industry.
If they cannot get their $10 dividend at a recently increased 50% tax rate as in your scenario, then perhaps the new dividend that is expected is $7.
Where you're right is that the existing stock holder will suffer inadequate returns and will essentially pay some of that tax in the short run with lower returns and a falling stock price.
Longer term, the stock price will fall such that $7 is the satisfactory return and at that point the consumer is paying the tax and not the current stock holders.
Every single dollar a business receives comes from its customers.
Taxes are just another cost. There's nothing special or magical about them. Rent costs money. Insurance costs money. Taxes cost money.
All those costs are factored in when determining wages and setting prices.
If you don't think that business taxes are paid by the customers of that business, you really don't understand how any of it works. That they're not the ones signing the check to the IRS has no bearing. The money is just being passed through the business on its way to the government.
the purchaser of the private business' product always pays 100% of the business' revenues. And the business pays 100% of their inputs (COGS and OpExp) from those revenues. And then, they pay income taxes on what remains.
the only relevances I see with what an income tax does are these:
1. What does the business' competitors pay in income taxes
2. Is it a small (enough) business where the owner's personal income is diminished by higher income taxes on the business
But it's all about the competition, and what rate they are taxed at (or the cost of their inputs).
Also, I think it requires consideration - "if taxes rise, then prices must rise" is true, then why wouldn't the converse naturally be true - "if taxes go down, then prices go down".
Did we see lower prices from the 2017 corporate tax cut?
The part that definitely muddies the waters is inflation. If a company got a 5% benefit they may not pass that along immediately due to a host of factors including existing contracts etc. but instead just not take any inflationary increases for 2 years.
Again, long term vs. short term and of course this all assumes a competitive market.
My favorite quote from the article:
Everyone who has ever ran a business knows that if taxes get raised, your employees will be the first to get punished, and then your customers.
In other breaking news: Water Is Wet.
There will be folks responding to this thread with all kinds of malarkey like "It's illegal for corporations to tax customers" and other myopic nonsense. Taxes are just another operating expense. Like any other operating expense, it will eventually be passed along to the consumer. Sure, some companies may choose to pass some of the increased tax expense to the owner or shareholders, but in the end, it's always paid by a real live human being. Advocates of increasing corporate taxes as a means to lessen the tax burden on individual taxpayers are simply in denial. Plus, it's easy to complain about big, bad, corporations.
The cost of income taxes comes AFTER all other costs. It's not a tax on revenues, which would affect the cost of production (including labor).
You're missing the point. Corporate taxes ARE paid out of revenues. That's the only source they can come from. When corporate taxes increase, revenues have to increase to pay the additional cost. The way corporations increase revenue is by increasing prices on their products (or reducing the quantity/volume sold at the same price) and/or reducing employees wages, cutting jobs and/or work hours, and/or cutting/reducing employee benefits.
Raising corporate taxes is a big F-U to consumers and the working class.
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