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To: justshutupandtakeit
Do income taxes increase the cost of a good?

Yes.

If I buy my goods to produce from someone else, their price to me includes all of their costs, including taxes and tax costs.

Taxes and tax costs increase the price to the consumer and producer prices too.

176 posted on 12/22/2005 8:53:24 AM PST by Principled
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To: Principled

Goods you purchase are priced whether or not the company made a profit or not. They include all actual expenses: payroll taxes, cost of production, cost of distribution etc. If you buy a widget in January the seller will not even know if he will make a profit to pay a tax on until December. His price is set to maximize his profit and thus maximize the amount he pays as income tax. Ironically you and the IRS have the same goal for you: it wants you to make as much profit as possible which will give it the most tax possible.

No business can say "We want to make $100,000 after taxes hence our price is ....." They do not have such power. All they can do is compare the actual costs of producing and TRY to obtain a price sufficient to cover those costs. But their success in doing so is determined by market conditions and often they fail. Even the largest and most powerful companies cannot guarantee positive results. Look at GM.


178 posted on 12/22/2005 9:07:00 AM PST by justshutupandtakeit (Public Enemy #1, the RATmedia.)
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