Companies do not pay taxes

Discussion in 'Economy' started by akelch, Dec 11, 2012.

  1. akelch
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    akelch Senior Member

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    I here a lot of talk about how companies and the rich should pay more in taxes. What many fail to understand is that all taxes are paid by the consumer. Any time taxes are raised on corporations they raise their prices or lay people off to compensate.
    The same is true with income taxes. You raise the rich's income tax....they don't take this laying down. They make changes to their companies and portfolio which cost money to the companies thus they make changes to save money or they raise their prices.

    So please stop debating about the income tax rates, capital gains tax, and payroll taxes, and start debating on how to get rid of them and put something else in its place that makes sense. Like a consumption tax.

    Stepping off soap box......
     
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  2. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    well, a consumption tax reduces consumption and is regressive so its no good either. The ultimate solution is, as our Founders said, the smallest government possible.
     
  3. Mr. H.
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    Mr. H. Diamond Member

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    There are many businesses that do not have the means to pass along costs of any kind to the consumer.
     
  4. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    and?????????????
     
  5. akelch
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    akelch Senior Member

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    Like Sylondra?
     
  6. oldfart
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    oldfart Older than dirt

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    Your position would be correct in a perfectly competitive market. Firms would pass on all costs to consumers through higher prices in the long run. But markets are not perfectly competitive. You ignore over a hundred years of economic literature on monopoly, monopsony, and oligopoly, as well as assymetrical power and information. Increases in taxes will definitely cause a firm to alter its operations in most cases, but how much of the increase is passed on depends on a lot of variables.
     
  7. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    not really, a pin costs a lot less than a Rolls Royce because it costs a lot less to make. 99.9% of relative prices reflect the relative cost of making the goods, indicating that virtually all costs are passed on and that we can expect that in the future.
     
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  8. oldfart
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    oldfart Older than dirt

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    Ed, this is what happens when you get your economic theory from a Cracker Jack box. Go to any basic economic text and look up "monopoly pricing". A monopolist generally has the same demand curve as the industry, downward sloping, and therefore a marginal revenue curve lying below the demand curve. The traditional marginal cost curve is U-shaped. The intersection of the marginal revenue and marginal cost curves determines output. That quatintity on the demand curve represents the market price. Explain to me, if you are capable, how a tax increase shifts the cost curves so that price must go up.
     
  9. Toro
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    Toro Diamond Member

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    Company taxes are solely paid by consumers only when the product is perfectly price inelastic. Anything less than perfect price inelasticity and the tax is paid by a combination of consumers and shareholders, with shareholders paying more of the burden and consumers less the more elastic the price.
     
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  10. Politico
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    Politico Gold Member

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    Of course companiess pay taxes.
     

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