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?
One cannot - nobody ever said that. Besides, business wants to maximize profits. Maximum price does not fetch maximum profit.
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?
In my response to you at 228 I answered the same basic premise that you again put forth. in post 223. Which I note you chose not to acknowledge with a reply.. I repost it below.
justshutupandtakeit: 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.223
To: justshutupandtakeit
We (other people on these threads) have gone over this before. You are comparing apples to oranges.
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. 228