3 ms·
Not always true. It depends on the price demand elasticity curve and margins. Imagine Acme Inc selling Widgets at $100. If taxes go up, the company's first in
by belltaco 7y ago
Not always true. It depends on the price demand elasticity curve and margins.
Imagine Acme Inc selling Widgets at $100.
If taxes go up, the company's first instinct would be to increase the price. This works for some markets and products. However, if the customers and market are sensitive to price, they will lower or stop their consumption from Acme Inc. or move to competitors or substitute products e.g cooking at home instead of restaurants. In that case, Acme Inc has to pay the taxes out of their profits, assuming their profit was high enough, which results in lower profits, or takes losses and go out of business eventually.
- TheRealDunkirk 7y agoOh, I get it, and I've argued that companies like Amazon should be taxed heavily, for these very reasons. It would slow them down, and put them on more equal footing with the other companies they're putting out of business. But every time I bring it up, I get that quip, so I figured I'd start there for a change. ;-)
- emeraldx 7y agoYes, but to make up those lower profits Acme Inc. could just reduce compensation for its employees. And I think that is what TheRealDunkirk was trying to say. That when corporate taxes are levied, eventually it is the employees who end up taking the burden.