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Thank you for replying instead of simply downvoting. That isn't true. If the assertion is that if Apple has to pay $10B/year more in taxes, than they will rai

Thank you for replying instead of simply downvoting. That isn't true. If the assertion is that if Apple has to pay $10B/year more in taxes, than they will raise the price of their products $10B/year and keep a fixed profit, that assumes there is complete price elasticity. In reality, they might raise the price of their products some, but that is fine -- the people who use the products and benefit from the government's expenditures to promote Apple's business interests are exactly who should be paying for them. I don't buy Apple products, so I shouldn't be subsidizing their products via taxes. As for calling it a regressive tax, the costs of production of the product should be built into the product price. If it is abnormally low because Apple isn't paying their share of taxes, that is a market distortion. It is regressive if you only stop at first order thinking. Apple's prices would go up, which hurts some consumers, but they would also be paying significantly more in taxes, which helps consumers. Let's pick another example. Would it be OK with you if the government decided to donate $5B/year of crude oil to Exxon? Hey, it would make Exxon's bottom line look great. I don't think anyone (except Exxon) thinks that would be right, yet that is exactly what is being done in kind: Exxon not paying much/anything in taxes, and $B spent every year globally to keep the supply of oil flowing. (As for $5B, I just picked a number out the air).

nybble41 7y ago
> If the assertion is that if Apple has to pay $10B/year more in taxes, than they will raise the price of their products $10B/year and keep a fixed profit, that assumes there is complete price elasticity. No, I'm not assuming that. The quantity sold will decrease, of course, if the price increases. That is a hidden cost paid by prospective buyers who must now do without the good, complementing the more visible cost paid by those who continue to purchase the good at the higher price. A company's profitability (ROI), on the other hand, is relatively fixed—in the end all investments tend toward zero economic profit, or equivalently a level of accounting profit equal to the opportunity cost of the investment, assuming even a moderately competitive market. Higher-than-average profitability invites competition, while on the opposite side if profitability is low then investors put their money elsewhere and the business closes. There is some variation due to factors like brand recognition, other natural or artificial monopolies, and risk, but generally speaking a corporate tax won't be paid from the company's bottom line as most people imagine. There just isn't much flexibility in that area to begin with. > Exxon not paying much/anything in taxes, and $B spent every year globally to keep the supply of oil flowing. This is not a subsidy to Exxon, it's a subsidy to the people consuming oil-based products. If you want to stop subsidizing oil, fine; but that is a completely separate policy decision from where to levy the tax. Anyway it's not like you're proposing to tax Exxon specifically for the cost of keeping the oil flowing, which would defeat the point of the subsidy. A corporate income tax would spread that cost across all products, even ones that have nothing to do with oil, and be paid primarily by people who spend most of their earnings on corporate-produced goods (i.e. not the rich, who tend to spend a larger share on investments).
- tasty_freeze 7y ago
  On the first point, the company I have worked for for the past 15 years has had wildly different ROIs during different phases of its life. Assuming that ROI is a fixed quantity will lead to a wrong conclusion. On the second point, yes, free oil to Exxon will lower the price of gas, and that is a benefit to the consumer. But you assume 100% of that benefit is given to the consumer. In reality, corporations keep as much of the profit as they can and either keep it in their war chest, acquire assets, or distribute it to shareholders.
  - nybble41 7y ago
    I did say that there is short-term variation in ROI, in particular based on risk. However all economic ventures in a competitive market do tend toward zero expected economic return, i.e. an expected ROI (including factors like risk) commiserate with their opportunity cost. Corporations obviously try to maximize their profits but they don't operate in a vacuum. If they consistently earn higher-than-normal profits then that will attract competition, pushing prices (and profits) back down toward the margin.

nybble41 7y ago

> If the assertion is that if Apple has to pay $10B/year more in taxes, than they will raise the price of their products $10B/year and keep a fixed profit, that assumes there is complete price elasticity. No, I'm not assuming that. The quantity sold will decrease, of course, if the price increases. That is a hidden cost paid by prospective buyers who must now do without the good, complementing the more visible cost paid by those who continue to purchase the good at the higher price. A company's profitability (ROI), on the other hand, is relatively fixed—in the end all investments tend toward zero economic profit, or equivalently a level of accounting profit equal to the opportunity cost of the investment, assuming even a moderately competitive market. Higher-than-average profitability invites competition, while on the opposite side if profitability is low then investors put their money elsewhere and the business closes. There is some variation due to factors like brand recognition, other natural or artificial monopolies, and risk, but generally speaking a corporate tax won't be paid from the company's bottom line as most people imagine. There just isn't much flexibility in that area to begin with. > Exxon not paying much/anything in taxes, and $B spent every year globally to keep the supply of oil flowing. This is not a subsidy to Exxon, it's a subsidy to the people consuming oil-based products. If you want to stop subsidizing oil, fine; but that is a completely separate policy decision from where to levy the tax. Anyway it's not like you're proposing to tax Exxon specifically for the cost of keeping the oil flowing, which would defeat the point of the subsidy. A corporate income tax would spread that cost across all products, even ones that have nothing to do with oil, and be paid primarily by people who spend most of their earnings on corporate-produced goods (i.e. not the rich, who tend to spend a larger share on investments).

tasty_freeze 7y ago
On the first point, the company I have worked for for the past 15 years has had wildly different ROIs during different phases of its life. Assuming that ROI is a fixed quantity will lead to a wrong conclusion. On the second point, yes, free oil to Exxon will lower the price of gas, and that is a benefit to the consumer. But you assume 100% of that benefit is given to the consumer. In reality, corporations keep as much of the profit as they can and either keep it in their war chest, acquire assets, or distribute it to shareholders.
- nybble41 7y ago
  I did say that there is short-term variation in ROI, in particular based on risk. However all economic ventures in a competitive market do tend toward zero expected economic return, i.e. an expected ROI (including factors like risk) commiserate with their opportunity cost. Corporations obviously try to maximize their profits but they don't operate in a vacuum. If they consistently earn higher-than-normal profits then that will attract competition, pushing prices (and profits) back down toward the margin.