Posted on 10/06/2010 11:20:25 PM PDT by george76
One of President Obama's campaign promises was not to raise taxes on middle-class Americans. So here's my question: If there's a corporate tax increase either in the form of "cap and trade" or income tax, does it turn out to be a middle-class tax increase? Most people would say no but let's look at it.
There's a whole subject area in economics known as tax incidence -- namely, who bears the burden of a tax? The first thing that should be recognized is that the burden of a tax is not necessarily borne by the party upon whom it is levied. That is, for example, if a sales tax is levied on gasoline retailers, they don't bear the full burden of the tax. Part of it is shifted to customers in the form of higher gasoline prices.
What about the politician who tells us that he's not going to raise taxes on the middle class; instead, he's going to raise corporate income taxes as means to get rich corporations to pay their rightful share of government? If a tax is levied on a corporation, and if it is to survive, it will have one of three responses, or some combination thereof. One response is to raise the price of its product, so who bears the burden? Another response is to lower dividends; again, who bears the burden? Yet another response is to lay off workers. In each case, it is people, not some legal fiction called a corporation, who bear the burden of the tax.
(Excerpt) Read more at townhall.com ...
The worst part is that the MSM has abandoned any semblance of independent reporting/analysis.
instead, he's going to raise corporate income taxes as means to get rich corporations to pay their rightful share of government? If a tax is levied on a corporation, and if it is to survive, it will have one of three responses, or some combination thereof. One response is to raise the price of its product, so who bears the burden?
No, no, no, no, NO Walter...
What kind of pinhead "economist" are you anyway?
Raising price is NOT an option...
In a competitive marketplace, price is determined strictly by supply and demand.
If they were capable of raising the price of their product in the marketplace, they should've been doing it anyway, regardless of the tax rate, to maximize shareholder profit.
Another response is to lower dividends; again, who bears the burden?
Well a corporate income tax is a confiscation of a portion of corporate profits, so it makes sense that they might lower the dividend. Of course the shareholders could always vote that they maintain the dividend and lower "retained earnings" instead, so that's no problem.
Yet another response is to lay off workers.
They always pick that one because the CEOs never cut their own salaries. But they're the ones who are overpaid and overrated. The stockholders should put the squeeze on those doubletalking conartists instead of the workers.
Changes in a supplier's cost structure can shift the entire supply curve, raising prices that way. Same thing holds for your other points.
Yes, however a corp is only going to be motivated to produce its products in exchange for a certain profit level. Hence, if taxes go up, prices go up (or products stop disappearing from the market).
I am no economist, but if you raise taxes on an entire sector, the prices charged by that sector will reflect the cost increase.
It isn't a question of just competition in the marketplace if all the vendors are similarly affected.
Yes, however a corp is only going to be motivated to produce its products in exchange for a certain profit level. Hence, if taxes go up, prices go up (or products stop disappearing from the market).
So marginal products with the least demand get squeezed out of the market...
So what???
That's how the market works anyway...
Let the losers go bellyup. No sense subsidizing them with a tax break.
“Let the losers go bellyup. No sense subsidizing them with a tax break.”
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I hear that Blue is running a sale on clues Willie, BUY ONE, PLEASE!
Yes, Tim is right. A Tax shifts the cost curve UP, and Price increases.
Willie, you are also right - Price does rise - but then Quantity demanded falls.
That is why you ‘can’ raise price in a competitive market... you’ll lose sales (Qd).
:(
“Thanks, Government”
They EXPLOIT IGNORANCE and keep the sheeple IGNORANT.
Our PUBLIC schools and most of academia also keeps attendees IGNORANT. If you were allowed to have FACTS and KNOWLEDGE we wouldn't be in the condition we are in today. It's an accumulation of godless liberalism being indoctrinated and promoted that keeps them in any sort of position of power.
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