Posted on 12/18/2005 4:46:00 PM PST by FairOpinion
YES! 83% (8832 votes) A consumption tax would be great for the American economy. Do away with complicated income taxes!
NO! 17% (1761) A consumption tax would not be fair for low-income households. Keep the current income tax system!
We'll send your vote to your congressional representative and senators.
Prices already include the costs of our income tax system. THose costs (depending on who you ask) come to about 22% of prices - alternatively our income tax system adds 28.2% to prices.
After passing the nrst, unnecessary costs are eliminated due to the drive to maximize profits. So then prices are appx 22% less...then add the nrst and prices are back to where they are today.
Purchasing power remains constant. Even the anti-reformers (the ones who know anything) will tell you that purchasing power will remain constant.
So today, prices are inflated by about 28% tdue to the tax system and its costs. Under the nrst, appx the same inflation occurs. Nobody will be worse off due to price changes or saved money. There will be a windfall for folks who have placed $ in tax deferred accts though.
Kick around here for a bit. Consider the source when evaluating.. but it's a good starting point for investigation.
I also pinged Conservative Goddess who is well informed to help with information on this....
Nobody ever said that taxes were claimed on returns as a cost.
That is simply not the way the world works. Prices are not subject to the wishes of CEOs. And such a theory flies in the face of ALL microeconomic concepts. Prices are set by the market not by tax rates.
But you are claiming that costs include them.
If I have $90 cost then I damn well better price so that my costs are covered - do you deny that too?
Further, I have a threshhold of profits that I require in order to perform (just like any buyer of any investment). That threshhold considers taxes - denying such is purely preposterous. When a buyer of an investment property considers the purchase, does he consider future tax costs? Of course! When a buyer of a bond considers purchasing, does he consider after-tax yield? Of course he does! That you deny this is simply nuts. Does an owner of a business consider future tax liability when he's determining price? Of course!
I have no desire to convince you of anything - I am only replying in amazement as you deny this trivial truth.
Granted - but the plan and everything lines up to try to achieve the desired net profit
Then you have to add 38% onto the profit to make what you want so instead of selling it for $100 you must get $103.80?
38% where'd that come from? In order to give you what I'd try to charge, I'd need to know my marginal tax rate and my desired return.
Apples: If the business foresees that it can't make it's desired after-tax profit it will chose accordingly 1) not go forward into the market or, 2) accept less than the desired profit and enter the market.
Oranges: In either case the business will set their projected after-tax profit by including the projected tax due.
Suppose Wal-Mart -- or any business -- opts to under price competitors and seeks a 5% after-tax profit. It sets it's product prices so that it makes 7% pre-tax profit. The market will allow for higher price, say 10% after-tax profit, but Wal-Mart opts to gain a larger share of the market by setting a lower price. Wal-Mart factored the projected income tax to be paid into the price of its product. The difference 7% - 5% = 2%. That 2% is embedded into the price of the product.
A business wants $100,000 after-tax profit; It must adjust the selling price of the product to bring in more than $100,000 pre-tax profit.I wasn't aware prices were soleley calculated on after tax "wants".
Beside not being aware of much at all, you aren't aware that what you posted wasn't said.
You know very well you are implying an apples to oranges compariosn. In other words, you presented a straw man.
I do not deny that unless you recover your costs you will be in trouble but that is no guarantee that you will do so. Much less another 38% to cover taxes.
Investment decisions within a class of investments are not affected by income tax considerations. You buy the 6% bond rather than the 4% bond though each faces the same percent of tax. You chose a business because it was predicted to be more profitable than another not because of income tax considerations.
If you have such power to decide a price why stop at $100 why not charge $200? Obviously you have no power to do that which theory and practice confirm. This is the same argument against setting a minimum wage why set it at $6.50 and not $15? Market forces restrict both the ability to set prices and wages on a whim.
I have been doing this tax stuff for about 30 years and no one is better predicting what will happen in congress than Kiplingers.
It is dead.
Nor was I but these fellows apparently believe that to be the case.
Alrighty then. Whatever. That is nuts, purely nuts. You're really telling this forum that tax consequences do not affect investment decisions. Wow.
If you have such power to decide a price why stop at $100 why not charge $200?
Because I want to maximize profit. Maximum price will not bring maximum profit. If it did, we'd unbounded price increases.
It's not even gotten started yet.
Thirty eight percent is the business income tax rate.
Still a mystery is why one would ever limit a price if one can just add whatever is desired to the cost to achieve any profit desired?
To me, it seems that you think tax considerations are not considered at all in pricing!
How do we collect 35% of sales from the mom and pop retailers without creating a system where we have complete control over their finances, bank accounts etc?
One cannot - nobody ever said that. Besides, business wants to maximize profits. Maximum price does not fetch maximum profit.
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