That is right, and the assumption is that about half is in practice. It is driven by the elasticity of the cost of capital actually. The higher the elasticity, the more of the corporate tax will be passed on in the form of higher prices pursuant to market mechanisms.
Anti flat tax bump. :)
"That is right, and the assumption is that about half is in practice. It is driven by the elasticity of the cost of capital actually. The higher the elasticity, the more of the corporate tax will be passed on in the form of higher prices pursuant to market mechanisms."
The elasticity of the cost of capital is base on interest rates, the state of the equity markets, a company's credit rating and outlook etc. The cost of capital, like the cost of taxes has nothing to do with what a company is able to charge for its goods and services.