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To: stevio

Your post implies that companies should not care, a mistaken belief about corporate taxes. Companies are rational in their preference for lower corporate taxes. In the long run, a company must pass on costs to consumers to remain viable. In the short run, a company may not be able to pass on all costs due to competition and other factors. Even in the long run, a company may have lower profits because of reduced sales due to onerous corporate taxes. Thus, companies are rational in their opposition to high corporate taxes.


48 posted on 05/04/2009 11:08:49 AM PDT by businessprofessor
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To: businessprofessor

I don’t think that’s quite true. This is oversimplifying, but let’s assume that companies are profit-maximizing and are in a perfect market. Even if we start taking some portion of their money away from them, it doesn’t change what price will maximize the remaining portion of the profit. If a company raised its prices, it would lower its total profit, regardless of the portion of that profit we are taking away.

I would be far more worried about companies leaving the US, losing investors, or facing competition from smaller companies that are in lower marginal corporate tax brackets but are not necessarily more efficient. In other words, it is an issue of the long term viability of American industry, not directly of consumer prices.

However, if we levied a per-unit sales tax on these companies I would agree with you.


54 posted on 05/04/2009 11:21:55 AM PDT by pleasenoobama (Liberals lied, small government died)
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To: businessprofessor

I agree with what you write (who am I to argue with a “businessprofessor”). Basically wrote it to people who think this is a great way to get back at evil businesses. Not that there’s anyone here who thinks that, maybe a DUmmie might wonder in.


89 posted on 05/04/2009 1:12:21 PM PDT by stevio (Crunchy Con - God, guns, guts, and organically grown crunchy nuts.)
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