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To: Principled

I accept your correction regarding equilibrium prices. Thanks.


321 posted on 12/23/2005 9:18:12 AM PST by justshutupandtakeit (Public Enemy #1, the RATmedia.)
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To: justshutupandtakeit
I accept your correction regarding equilibrium prices.

One of the reasons it's important is that a company has a certain degree of freedom it may enjoy in pricing near the equilibrium price. One of the things that affects that decision is the desired return. Return is affected by all expenses, even anticipated income taxes. Hence it is the case that anticipated income tax costs are considered in pricing.

From there, it is trivial that prices include a component representing anticipated income tax costs.

That being said, the overall cost of our tax system in prices has business income taxes as only one component - not even the largest.

Payroll taxes, compliance costs, and decisions that reduce production based on tax consequences cost far, far more.

Much of the literature says that our tax system adds +/- 28% to prices of goods, and adds 33% to service prices.

When the existing tax costs are eliminated and the 30% nrst is added at retail, prices remain stable.

326 posted on 12/23/2005 9:30:37 AM PST by Principled
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