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Your comment asserts that corporate tax has zero impact on corporate profit. If you don't fully agree with that statement, you may want to consider whether you

Your comment asserts that corporate tax has zero impact on corporate profit. If you don't fully agree with that statement, you may want to consider whether you fully agree with everything you wrote.

libertyEQ 9y ago
>Your comment asserts that corporate tax has zero impact on corporate profit. I didn't intend to "assert" that, and I think it's fair to ask you to elaborate, as I believe there are assumptions embedded in your interpretation of what I wrote. edit: Grammar. edit1: Do you think Apple incorporates the cost of the tax burden into the price of an iPhone? I think it really comes down to whether you think Apple would reduce their unit price if it would ultimately result in gross profit increases. It's like taking VC financing, "Do you want to own 100% of a $500K/yr revenue company or 49% of a $3M/yr revenue company?"
- dangerlibrary 9y ago
  Imagine a world where there is no corporate tax. Apple does a price analysis and decides the profix maximizing sales point of a phone is $1,000. They price the phone at $1,000. Then, a 10% corporate income tax rate is put in place. Does Apple raise the price of the phone to $1,100? Is that now the profit maximizing decision? According to your claim "Ultimately, only people pay taxes," the answer is yes - Apple would immediately raise the price of the iPhone to offset the loss incurred by the new tax. Except that then, fewer people would buy iPhones. We already know that $1,100 is not the profit maximizing price point for a phone. So, the amount Apple would increase its price is a function of the price sensitivity of iPhone buyers. This is a little tricky to explain, but khan academy has a video that explains it quite well. https://www.khanacademy.org/economics-finance-domain/microeconomics/consumer-producer-surplus/deadweight-loss-tutorial/v/taxes-and-perfectly-inelastic-demand https://www.khanacademy.org/economics-finance-domain/microec...
  - Scea91 9y ago
    > We already know that $1,100 is not the profit maximizing price point for a phone. $1,000 is a profit maximizing price point with 0 % taxes. With 10 % taxes it would be different.
    - dangerlibrary 9y ago
      Correct. Was that not clear?

Your comment asserts that corporate tax has zero impact on corporate profit. If you don't fully agree with that statement, you may want to consider whether you fully agree with everything you wrote.

libertyEQ 9y ago

>Your comment asserts that corporate tax has zero impact on corporate profit. I didn't intend to "assert" that, and I think it's fair to ask you to elaborate, as I believe there are assumptions embedded in your interpretation of what I wrote. edit: Grammar. edit1: Do you think Apple incorporates the cost of the tax burden into the price of an iPhone? I think it really comes down to whether you think Apple would reduce their unit price if it would ultimately result in gross profit increases. It's like taking VC financing, "Do you want to own 100% of a $500K/yr revenue company or 49% of a $3M/yr revenue company?"

dangerlibrary 9y ago
Imagine a world where there is no corporate tax. Apple does a price analysis and decides the profix maximizing sales point of a phone is $1,000. They price the phone at $1,000. Then, a 10% corporate income tax rate is put in place. Does Apple raise the price of the phone to $1,100? Is that now the profit maximizing decision? According to your claim "Ultimately, only people pay taxes," the answer is yes - Apple would immediately raise the price of the iPhone to offset the loss incurred by the new tax. Except that then, fewer people would buy iPhones. We already know that $1,100 is not the profit maximizing price point for a phone. So, the amount Apple would increase its price is a function of the price sensitivity of iPhone buyers. This is a little tricky to explain, but khan academy has a video that explains it quite well. https://www.khanacademy.org/economics-finance-domain/microeconomics/consumer-producer-surplus/deadweight-loss-tutorial/v/taxes-and-perfectly-inelastic-demand https://www.khanacademy.org/economics-finance-domain/microec...
- Scea91 9y ago
  > We already know that $1,100 is not the profit maximizing price point for a phone. $1,000 is a profit maximizing price point with 0 % taxes. With 10 % taxes it would be different.
  - dangerlibrary 9y ago
    Correct. Was that not clear?