The average person doesn't understand that corporations do not pay income taxes. Their customers pay those taxes as part of the goods and services they purchase from that company. On every profit and loss statement there's a line at the bottom titled "Provision for Income Tax".
There's still a competitive advantage for companies in low tax states, such as Texas. Blue states such as NY & IL blithely dismiss these facts, but they will eventually pay for their policies.
“The average person doesn’t understand that corporations do not pay income taxes. Their customers pay those taxes as part of the goods and services they purchase from that company.”
Imagine Company A has a profit margin of 12% and company B has a profit margin of 4%.
If a federal corporate income tax rate rise causes Company B to raise its price by $2/widget, Company A will get to raise its prices by about $2/widget.
However, the tax rate increase will fall harder on Company A because its profit margin is larger. Its shareholders will eat about two-thirds of the tax rate increase.
“low tax states, such as Texas. Blue states such as NY & IL”
Mr. Worker needed and got $200 of medical care.
That $200 might be paid by Mr. Worker, his employer (from the proceeds from Mr. Worker’s work), or by both via taxation.
Now if NY plucked $500 both to pay for Mr. Lazy Import’s care, then neither Mr. Worker nor his employer got the benefit of the $500.
It’s not only the tax rates, but also the use of the tax money.
Excellent observations.