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Don't you think that a company might just raise their prices to pay for those taxes?
by colpabar 7y ago
Don't you think that a company might just raise their prices to pay for those taxes?
- avip 7y agoCompanies raise prices based on demand curve, not cost.
- mc32 7y agoThat’s not what they say when the subject of tariffs comes up. “We’ll have to pass it on to consumers”.
- zaroth 7y agoBut in reality, a share of the tariff is paid by the supplier and a share is paid by the consumer. And if I remember my classic macroeconomics class correctly, that share depends precisely on the elasticity of demand (slope of the demand curve).
- seirl 7y agoThis is correct.
- dredmorbius 7y agoEconomic facts pay little heed to economic rhetoric.
- FranzFerdiNaN 7y agoCompanies only ever tell the truth of course.
- nybble41 7y agoAn individual company sets its prices to optimize revenues. That depends only on the demand curve and is independent of costs. However, it's a rare market where even the most marginal suppliers earn enough producer surplus to make up for significant increases in production expenses. If the optimal revenue isn't enough to turn a profit then the business will close. That decrease in supply with no change in demand allows the remaining suppliers to raise their prices—though not necessarily by the full amount of the increase in cost, because only part of the decrease in supply manifests as an increase in price. The rest manifests as potential consumers doing without the good altogether, perhaps turning to lower-priced (but less satisfactory) substitutes.
- AimForTheBushes 7y agoThis is unequivocally false. A 3% increase could make their costs higher than revenue. They would increase their prices or go out of business.
- toyg 7y ago> A 3% increase could make their costs higher than revenue. This might be true for many businesses but likely not the large digital ones, which enjoy ungodly margins (hence why they grow so much and so quickly). A unicorn's back is strong enough to carry quite a few saddles.
- baby 7y agoIt's up to them to figure out where's the right trade off to maximize their gains.
- colpabar 7y agoSure, but assume they somehow pass the tax 100% onto the customer. So now French citizens are the ones paying for the "right to the free market" of their own country. Does that seem fair?
- deleted 7y ago[deleted]
- kds3 7y agoYes, otherwise why should citizens pay more for local services? Or should we just remove all local taxes instead to make companies even? Currently local businesses pay for the "right to the free French market", but remote businesses don't.
- fzeroracer 7y agoThis typically doesn't happen. Companies don't pass the increases in taxes 100% to the consumer. By that argument all taxes would be immoral since they directly increase the prices consumers pay. Now we can argue as to how much said tax is passed onto the consumer and whether or not the additional tax revenue towards various social services offsets the hit. Which is an important distinction to make when choosing what to tax, since some consumers (namely the poorer ones) have less in the way of dealing with modest price increases. It also could be argued that companies are stealing money from nations they reside in by taking advantage of tax havens or various loopholes to reduce their tax burden. At that point companies starve the various social services and results in consumers being unfairly affected.
- labster 7y ago> By that argument all taxes would be immoral since they directly increase the prices consumers pay. I'm not following this chain of logic. How is increasing the consumer price immoral? Regressive tax structure or something?
- Sharlin 7y agoWhich makes local businesses better able to compete. Win-win.
- colpabar 7y agoI'm not so sure a French citizen would see it that way.
- forty 7y ago(replying to sibling) Some do. Source: I'm French and I do :)
- colpabar 7y agoOut of curiosity, would you say most French people think the same way? I ask because I'm American and we really hate taxes here.
- smolder 7y agoI'm American and I support the French doing this. Some Americans "hate taxes", but I have enough money. What I don't have is enough control in a country ruled by oligarchs and corporate fiefdoms. Governance is all about fostering a healthy society, by balancing incentives and disincentives. If you don't do that actively and carefully, curbing abuse and exploitation, then they grow to a breaking point.
- leppr 7y agoSo you believe paying more taxes somehow gives the taxpayers more control over their country ? Giving away more money doesn't mean you have more control over how said money is used. The most direct consequence actually goes in the other direction, you have now less agency (=money). There's no obvious mechanism that makes a monopoly (=government) more accountable the more money it's given.
- nicoburns 7y ago
- NeedMoreTea 7y agoand the problem is? A company might raise prices to pay for an increased dividend. Companies have threatened the very existence of the company, or made a loss to pay increasing dividend.
- deleted 7y ago[deleted]
- FranzFerdiNaN 7y agoClearly the solution is no taxes and all the things the government does will just automatically exist out of thin air.
- de_watcher 7y ago> a company might just raise their prices to pay for those taxes Amazon will rise prices? That will be just wealth redistribution from rich through Amazon and taxes to poor who are going to buy local potatoes.