In a competitive free market, there is no guarantee of either sales or profit. Thus there is no guarantee that there will be a Corporate Income Tax obligation to "pass along" to the consumer.
NRST advocates who insist that corporate income taxes are "embedded" in the sales price of a product are just plain wrong. This assumes that companies can dictate market price in order to cover any costs that they incur when price is actually determined by supply and demand in a competitive market. Any attempt to raise the product price to accomodate the income tax would have to overcome lower priced product from competitors who did not incompetently attempt to incorporate such "costs" in their pricing strategy. The result would be that the company that attempted to "pass along" the tax would actually lose sales volume, possibly even to the point of losing profitablility. Conversely, the lower priced competitors who did not attempt to "pass along" the tax would gain sales volume and enhance their profitability.
The skewed logic utilized by NRST advocates to claim that corporate income tax is paid by the consumer is completely bogus. To accept their convoluted logic is to deny how businesses actually operate in a competitive market. Further evidence of corporations' inability to "pass along" their income tax obligation is published every day in the business section of our nation's newspapers: "ABC Corporation fails to meet 3rd quarter expectations" or "XYZ Inc. incurs 2nd quarter loss". Once again, with future sales and tax obligations (if any) being unknown, it is IMPOSSIBLE for companies to "pass along" their income tax obligation to the consumer.
The Ivory Tower "experts" who concoct this theory are in denial of how business actually operate in a competitive free market. Their fundamental assumption that companies can dictate the market price of their product to accomodate income tax liability is fallacious and reflective of marxist influence.
Fallacy: The cost of taxes cannot be reflected in the price of goods and services because competitors don't have the same costs.
Fact: Those competitors also have to pay taxes and pay other complaince costs -- they cannot undercut prices and still make a profit.
Fallacy: Because of anecdotal evidence that some companies, especially those in volatile or high-risk industries, do not accurately estimate their earnings every quarter means that it is impossible for any company to predict its future earnings with any accuracy.
Fact: These reports generally show outlier data, usually based on exceptional or otherwise unforseen circumstances. While their numbers for a particular quarter, or even fiscal year, may have been off, they still have a larger historical picture to use when forecasting. Estimation can be very accurate (multiple data points, averaged out, show pretty much the correct value) without being precise (each data point matching exactly the expectation).
Fallacy: Companies blindly chug along, not having any idea of whether they will ever turn a profit or a loss.
Fact: As with any other investment, there is an expected return on investment (ROI) over some period of time. The ROI for the investors must be enough, after tax, to make it worth the investors' whiles. The business would never even be started if they could not anticapte making the proper return. Compare to bond investments: a tax-free bond, all other things being equal, clocks in at about 25% lower yield than a taxable bond -- because the latter has the cost of taxes paid on the return built into it, and the market stabilizes around the value where the two investments are basically equal post-tax returns (otherwise one would be in higher demand than the other).
Fallacy: Actual income taxes paid by the company are the only thing that could increase cost.
Fact: Complaince costs have to be considered for both the company and its competitors. Even if the company pays no income taxes, there are costs associated with doing the tax complaince that have to be paid regardless. Any interest the company pays on loans is inflated by income taxes (see the bond discussion above). The company may make otherwise poor or inefficient financial decisions strictly for tax purposes, again increasing costs even if no taxes are paid.
Fallacy: NRST advocates suffer from "marxist influence".
Fact: NRST economic projections are firmly rooted in free-market analysis. The costs of taxes embedded into the prices of products are backed up by the hundreds, if not thousands, of AFFT/NRSTA members who own and/or operate their own businesses. Wille Green's analysis is backed up only by Willie Green -- a person who apparently feels, from his incessant layoff watch, that every American worker is absolutely entitled to keep his or her job, regardless of the real financial situation and the employer's ability to stay in business.
As someone who has actually set prices for a business, I can tell you without hesitation that taxes are taken into account when setting prices. Taxes, like any other potential expense, can be estimated.
Heating your building is a cost of doing business. You don't know exactly what your heating bill will be for the winter, but you can make a pretty good estimate. You use that estimate when setting prices.
The same is true for taxes. You may not know exactly what your taxes will be, but you can make a pretty good estimate. If that estimate says you're going to lose money and you won't owe any taxes, that is still taken into account when you set prices.
Just because taxes occur in the future doesn't mean you can't make an estimate of what they will be, and include that in you pricing structure.
Think of your own paycheck. When you do your household budget, is it based upon your total pay, or your take home pay? Your take home pay, of course. You won't know until the end of the year exactly what you will owe in taxes (if any), but the government has taken out an estimate of what you will owe from your paycheck. And it is usually pretty close.
For a business to not include potential taxes in their pricing is to leave themselves open to a huge risk. Not having enough money to pay their taxes. They really have no choice but to take their potential taxes into account when setting prices.
Do you own a buisness?.....I do....and i say you don't know what your talking about....TAXES are a consideration and do get figured into the sales price.