I expect them to take steps that are in the best interest of their shareholders, the only group that really matters. Cutting prices doesn't do that. Increasing margin, paying down debt, raising stock prices, increasing dividends do. The fact is that none - none - of the cost savings corporations have employed so far has been used to reduce prices. Why should lower taxes be any different?
A corporation cannot stay alive without earnings. And it can’t keep investors without earnings, either. So its bias will always be toward increasing earnings (sales) if that is lagging.
And what better way to improve earnings than to cut costs and increase margins? In your world, the corporation will cut prices and pass all savings on to the customers, thus reducing gross earnings and leaving profits flat. That will cause a nosedive in stock prices. And won't that make the shareholders happy?
Also, putting costs savings toward investors still helps the economy. Investors are also consumers.
True. But the argument is that cutting taxes will result in lower prices thus offsetting the increase in taxes for the lower income people. Putting cost savings towards investors, as history has shown they will do, does not accomplish that. So it further weakens Cain's claims.
Way to go with the strawman.
Why in the world would I argue that corporations would pass on all savings to the customers at the expense of reducing gross earnings and leaving profits flat?
That's just stupid, and I never said it and never would.
What I said was it is equally stupid to argue, as you have, that corporations would pass NONE of the cost savings on to customers.
Of course they would pass some of those savings on -- and they would pass more on the more they are pressured by pricing dynamics from competitors.
Please. Where do "gross earnings" and "profits" come from? Ultimately, sales. Sales are driven by price. Price and profits margins are always in tension and, the corporation hopes, in balance: the price is at a point where it drives maximum sales while at the same time the margin is at a point where it delivers maximum profit.
In a market where sales are flat, and where pricing might affect that, corporations will use pricing to drive sales to the extent that that positively (or at least doesn't negatively) affect profits.
This process of rebalancing sales (pricing dynamics) and profits (margins) occurs all the time! Every day there are things affecting profit margins (such as commodity prices) and things affecting pricing (competition, external upward/downward pressure on demand). This just doesn't happen in the environment when corporate tax rates are cut. The process views that as simply another factor that affects costs, and which then must be factored in to pricing AND desired profit margins.
Point being: every day the market provides evidence that lower costs can and do affect pricing.
And it's simply wrong to argue that because there is no absolute passing on of ALL savings that there is no, and no possibility of, passing on of some savings.