Why do people keep saying that? Their taxes are a cost. Does Mercedes buy parts?

Makes them feel all warm and fuzzy to believe that they pay it.;)

It's kind of simple really. Let's say you have a snowcone stand and you charge $0.75 for a snowcone on which you make 50% profit. The city fathers of your community ask you to pay 5% tax on your income from your snowcone stand. Are you going to decrease your profit by $0.04 to pay the tax or are you going to add a nickel to the cost of your snowcone, raising it to $.80?

If possible, most snowcone stand owners will pass that burden on to the consumer. So who pays that tax?

B

Ask the airlines how that worked out for them.

Check out "price elasticity" and you might find some interesting reading.

Setting aside for the moment that I would relocate the HQ to Antigua so I didn't have to pay the taxes and then raise prices to .80 if enough of my competitors didn't also move, would you say I don't buy paper cones? That I don't pay for energy to keep my ice icy? That in essence, I have no costs, only profit?

One thing is for sure, if my market didn't support .80 snowcones, I eat the .04. Another thing that's for sure, if I did raise my prices to .80 and people still bought snowcones, I would not go back to .75 if the tax was repealed. And I'd congratulate myself on my lobbying efforts.

.........price elasticity governs your success or lack thereof.

Good point about moving your snowcone stand.

If your profit margin is too small to maintain your lifestyle, you are in a snowcone pickle. If you raise prices other folks with lower overhead will undercut your business (they use ice from a different source, perhaps or maybe they are owned by a privileged minority class of some sort and thus, get a break to be 'fair" and address past grievances). So you can either close your stand or you can move to another location that isn't subject to that local tax or offers incentives to induce your move. So you lay-off your employee and move.

Sometimes taxation (and regulatory burdens) become so burdensome or onerous that a business may close or move it's facilities so as to avoid taxes. This shrinks the local tax revenues through direct loss of your business tax and indirectly, by putting your employee on the dole which further increases the burden on local services even while it shrinks the tax base.



B

Screw that, I'm going into the oil business.

Sometimes my employee's health care costs become so burdensome I have to close, making me wish the government would take care of some of that health care burden so that my tax burden isn't so bad. Turn 90% of that health care burden into tax burden and I still save 10%. Sometimes my location is a poor choice for my industry. And sometimes regulatory burdens ensure I don't poison people.


EDIT: Also, I didn't move my stand, just it's HQ. I'll still earn money off the community, just not pay their taxes.

No doubt our All Knowing Sage from that moderately benighted city of Atlanta will be able to enlighten us as to why it is just right and good that a company or corporation, should not EVER have to effectively, or actually, pay ANY TAXES whatsoever, yet while still taking advantage of the democracy that allows them to do business in this country.:rolleyes:

Perhaps in his infinite wisdom he may deign to remind us that "Starvation is God's Way of Punishing Those Who Have No Faith in Capitalism".

Or something.:confused:

Agreed......much better than an airline or a lemonade stand.

Corportations are owned and staffed by people. When corporations pay taxes, either the owners, or the employees, or the customers end up paying. If you shift the tax burden to be directly on individuals and only individuals, the same taxes still get paid-ie revenue stays the same. The main difference is that when only individuals are taxed, they realize how much the government is taking from them.

You do not understand that corporations do not pay taxes. They pass the cost on to the consumer. Until you grasp this concept it is not worth having this debate.

All true to varying degrees. Regardless, the bottom line is the bottom line.

Every imposed burden hurts the bottom line unless you raise prices.

B

Every imposed burden + costs subtracted from gross income defines the bottom line. I can choose to eat the .04 tax increase and be satisfied with a 96% markup instead of 100%. Or determine that the 96% is best for my business. I can also choose to speed up production to make up that 4 cents through efficiency changes.

Point is, tax is a cost :D.