Psaki: ‘Unfair and Absurd’ To Say Companies Would Raise Prices in Response to Tax Increases

[Mac1958]

Mac1958
Well Mac you are wrong this time. Imagine that. Any company will raise prices when taxes and labor costs go up. Guess you aren't as smart as you think you are.
Congrats.

That is, simply, wrong. There are far too many variables to make such a simplistic statement.

But then, you're a Trumpster, so it's not exactly a surprise.

 

[Claudette]

Mac1958
Not wrong at all. Its common sense which you seem to have none of.

 

[struth]

Heck why not increase tariffs based on that so-called logic and figure importers won't pass along that cost either.

of course they will and did

 

[Mac1958]

Mac1958
Not wrong at all. Its common sense which you seem to have none of.

Okay. I can't help myself. I know better, but have to do this.

Let's say a business has total revenues of $1,000,000. The corporate tax rate goes from 21% to 28%. How will that company's net effective tax exposure be changed? You must know, right?

Tell me. Give me a full, educated answer. This is my freaking profession, so you won't be speaking over my head. I promise.

There is only one (1) way to properly answer that question. Lay it out for me. Reason through it for me. Demonstrate your expertise for me.

Go.

 

[Smokin' OP]

She said it's "absurd" to suggest that businesses would raise prices in response to increased tax liability because "the American people would not stand for it."

Was she living under a rock before she had this job? Businesses have ALWAYS adjusted pricing to account for increased expenses. These lifetime government employees who have never owned or managed a business in the private sector are convinced that all private companies are raking in profits of 50% or more. In reality the vast majority of businesses operate on razor thin margins. For example, big bad mega-corporation Walmart's profit margin is less than 2%. Since most successful American businesses have profit margins similar that, any material upward change to the liabilities side of the balance sheet is going to require an equal adjustment to the other side in order to avoid operating in the red, which is accomplished by increasing their prices of goods/services. It doesn't matter whether increased business expenses are the result of a tax increase, or increased costs from suppliers/shippers/fuel. If it affects operating margins, it will be accounted for by price adjustments. Same goes for material decreases in business expenses, which are often passed down to consumers by lowering prices.

This is macro economics 101. Yet our entire economy is now at the complete mercy of morons who don't have the first clue how the economy actually functions in this country from a macroeconomic or a microeconomic perspective.

You are SO FOS.
"the American people would not stand for it." is right.
Raise your prices too much and companies will lose business, no customers, no business.
This is macro economics 101.

Do companies raise prices when they expand?
Do companies raise prices when they buy new vehicles?
What about when they open up a a new location?
Do companies raise prices when they hire new employees?
Do companies raise prices when they give out bonuses?
What about thanksgiving or christmas turkey's/ham?

 

[Claudette]

Mac1958
Its just common sense. If their prices go up. Consumer prices go up. Its easy. Just to easy for you to see. LOL

 

[Mac1958]

Mac1958
Its just common sense. If their prices go up. Consumer prices go up. Its easy. Just to easy for you to see. LOL

That's it? That's your answer to the freaking question?

Arrogant ignorance. The absolute foundation of Trumpism.

Correct answer: That's not nearly enough information to know for sure. JUST for STARTERS, I would NEED to know:

1. How is the company formed? Sole Prop? C? S? LLC?
2. If they're a C Corp, can any dividends be safely reduced or their growth slowed?
3. If they're not a C Corp, what personal flow-through tax strategies can they use?
4. What was their net profit for last year, and how much of the increased taxes can be absorbed?
5. Can changing their structure/formation make a difference?
6. What available credits are they taking advantage of and/or maxing out?
7. What available deductions are they not taking full advantage of?
8. How is their executive/ownership compensation handled? Are they doing the right things to decrease corporate taxes?
9. What assets do they own? How are they handling depreciation? Should they be accelerating depreciation on those assets? Which assets? By how much? For how long?
10. Can expansion and/or selling of certain assets over time at a loss mitigate taxes?
11. Are there deductible capital expenditures that can be made that can increase internal cost efficiencies?
12. What internal costs can be changed, decreased, or mitigated?

Off the top of my head. Not to mention many more, once we dig in. It's quite possible that increased taxes can be mitigated without going NEAR end-user prices.

You are ignorant, pretending to be knowledgeable based on what Hannity, Tucker and Breitbart have told you. A typical Trumpster.

 

[LeftofLeft]

No, taxes do not create jobs

An expanded market for your goods or services will create jobs
If you could sell more product, you already would

You are correct yet you can’t see how the role tax increases passed on to the consumer impacts the market and ability to create and meet demand.

An increase in demand AND purchasing capability will create jobs. A market can have a high demand for a goods and services but limited or reduced purchasing capability; that is, a limited budget due to low cash and debt restrictions. If more of your cash is going towards taxes -including, increase taxes paid on other goods and services - then the market for goods and services that you provide will be reduced.

You people really need to stop relying on Paul Krugman for your economic knowledge.

 

[rightwinger]

that is, a limited budget due to low cash and debt restrictions. If more of your cash is going towards taxes -including, increase taxes paid on other goods and services

The increased taxes will only be paid on PROFIT from increased production
So the incentive is to expand production if there is a market for it

 

[jbrownson0831]

Did they lower the price of goods when their taxes were reduced by 40% -45% in their last mega corporate tax cut?

NO!

So why would the price of goods go up, with a 10% - 20% tax hike???

Hmmmmm some more Dim logic at work.....

 

[LeftofLeft]

The increased taxes will only be paid on PROFIT from increased production
So the incentive is to expand production if there is a market for it

Agreed. But the other part of that equation is that companies will pass anticipated taxes on profit onto the consumer in advance. This will be reflected in their pricing which means higher prices.

 

[Blues Man]

That's it? That's your answer to the freaking question?

Arrogant ignorance. The absolute foundation of Trumpism.

Correct answer: That's not nearly enough information to know for sure. JUST for STARTERS, I would NEED to know:

1. How is the company formed? Sole Prop? C? S? LLC?
2. If they're a C Corp, can any dividends be safely reduced or their growth slowed?
3. If they're not a C Corp, what personal flow-through tax strategies can they use?
4. What was their net profit for last year, and how much of the increased taxes can be absorbed?
5. Can changing their structure/formation make a difference?
6. What available credits are they taking advantage of and/or maxing out?
7. What available deductions are they not taking full advantage of?
8. How is their executive/ownership compensation handled? Are they doing the right things to decrease corporate taxes?
9. What assets do they own? How are they handling depreciation? Should they be accelerating depreciation on those assets? Which assets? By how much? For how long?
10. Can expansion and/or selling of certain assets over time at a loss mitigate taxes?
11. Are there deductible capital expenditures that can be made that can increase internal cost efficiencies?
12. What internal costs can be changed, decreased, or mitigated?

Off the top of my head. Not to mention many more, once we dig in. It's quite possible that increased taxes can be mitigated without going NEAR end-user prices.

You are ignorant, pretending to be knowledgeable based on what Hannity, Tucker and Breitbart have told you. A typical Trumpster.

Corporate tax rates only apply to C corporations.

S corps and LLCs get different tax treatment and Sole Proprietors get the worst tax treatment of all.

 

[Mac1958]

Corporate tax rates only apply to C corporations.

S corps and LLCs get different tax treatment and Sole Proprietors get the worst tax treatment of all.

Correct. Pass through, as I pointed out, so they must be handled differently.

There are many variables to this, and Claudette is absolutely clueless about that.

 

[Claudette]

Mac1958
Clueless my ass. Its common sense. If stores and those providing services have higher costs. They pass those costs on to the consumer.

 

[Mac1958]

Mac1958
Clueless my ass. Its common sense. If stores and those providing services have higher costs. They pass those costs on to the consumer.

I just completely eviscerated your ignorant argument, in great detail, and you keep going.

Arrogant ignorance: The Trumpster way.

 

[rightwinger]

Agreed. But the other part of that equation is that companies will pass anticipated taxes on profit onto the consumer in advance. This will be reflected in their pricing which means higher prices.

It is strictly a case of how much loss of profit they are willing to eat.

I find it hypocritical that when corporate taxes were cut 40 percent they were unwilling to pass the extra profit on to the consumer
Yet, when you take those cuts back and return to previous rates, they demand the consumers make up for lost profits

 

[Blues Man]

Correct. Pass through, as I pointed out, so they must be handled differently.

There are many variables to this, and Claudette is absolutely clueless about that.

Mac1958
Clueless my ass. Its common sense. If stores and those providing services have higher costs. They pass those costs on to the consumer.

The point is that most small business will not be affected by the new corporate tax rates

 

[hadit]

No, higher taxes are passed on to the consumer. Period.

You are economically illiterate.

What so many fail to realize is taxes are costs that reduce profit. Therefore, to claim that companies will NOT pass on higher taxes (costs) in the form of higher prices is economic illiteracy. Would a company raise prices if one of their suppliers raised his prices? Yes. Would it raise prices if leased building space costs went up? Yes. In fact, we have to consider the entire chain, because EVERY supplier along the route faces higher costs because of higher taxes. The company at the end that faces the customer is only the last one in a long line.

 

[Mac1958]

The point is that most small business will not be affected by the new corporate tax rates

She won't admit to anything, even when it's shoved down her throat.

 

[Blues Man]

It is strictly a case of how much loss of profit they are willing to eat.

I find it hypocritical that when corporate taxes were cut 40 percent they were unwilling to pass the extra profit on to the consumer
Yet, when you take those cuts back and return to previous rates, they demand the consumers make up for lost profits

No business is going to lower prices if the market will bear the higher ones