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Now that the rich are used to lower taxes, if the government raises them won't the extra costs they incur just end up being passed down to the consumer via high

Now that the rich are used to lower taxes, if the government raises them won't the extra costs they incur just end up being passed down to the consumer via higher cost of goods/services from the businesses owned by said rich people?

aaomidi 6y ago
This is a good thing. In fact if this reduces consumption because higher priced we've won a major battle. However wages have stagnated, which means whatever we've done so far hasn't helped consumers at the end. So at this point I'd take lower consumption as a win.
baron_harkonnen 6y ago
Assuming that simple model was correct, wouldn't that then mean that in order for the consumer to be able to afford such goods and services the would, in turn, have to be paid more? It's not like the American consumer is a tremendous store of surplus value, especially given that they have effectively no saving on average and rising debt. If the wealthy conspire to charge more because of income lost to taxes, then the labor class will simply have to consume less or somehow make more. As far as the former goes, historically capitalism doesn't do great when it decreases the material conditions of workers (which is what forcing decreased consumption leads to).
standardUser 6y ago
You can't just charge more because you're mad and want more money, at least not if you expect to continue to be competitive.
- bearjaws 6y ago
  Good point. The teaching of supply vs demand vs cost of production has really let our society down recently. Very few people seem to be aware that non-essential items are priced based upon what people are WILLING to pay for it, not what it costs to produce. This results in comments like "well the price for XYZ will just go up!", when in reality its much more complicated.
belltaco 6y ago
What's stopping them from doing that right now and pocketing the extra money? They're not in it for charity, if they think they'd make more money, they'd do it already. It's the supply demand curve they're trying to optimize for.
jacques_chester 6y ago
This problem is called "the incidence of taxation" and it is well-studied. A great deal of debate about tradeoffs between various sorts of tax rest on how they distribute the incidence of taxation. The larger point is: sometimes a tax increase gets passed on, sometimes it isn't.

aaomidi 6y ago

This is a good thing. In fact if this reduces consumption because higher priced we've won a major battle. However wages have stagnated, which means whatever we've done so far hasn't helped consumers at the end. So at this point I'd take lower consumption as a win.

baron_harkonnen 6y ago

Assuming that simple model was correct, wouldn't that then mean that in order for the consumer to be able to afford such goods and services the would, in turn, have to be paid more? It's not like the American consumer is a tremendous store of surplus value, especially given that they have effectively no saving on average and rising debt. If the wealthy conspire to charge more because of income lost to taxes, then the labor class will simply have to consume less or somehow make more. As far as the former goes, historically capitalism doesn't do great when it decreases the material conditions of workers (which is what forcing decreased consumption leads to).

standardUser 6y ago

You can't just charge more because you're mad and want more money, at least not if you expect to continue to be competitive.

bearjaws 6y ago
Good point. The teaching of supply vs demand vs cost of production has really let our society down recently. Very few people seem to be aware that non-essential items are priced based upon what people are WILLING to pay for it, not what it costs to produce. This results in comments like "well the price for XYZ will just go up!", when in reality its much more complicated.

belltaco 6y ago

What's stopping them from doing that right now and pocketing the extra money? They're not in it for charity, if they think they'd make more money, they'd do it already. It's the supply demand curve they're trying to optimize for.

jacques_chester 6y ago

This problem is called "the incidence of taxation" and it is well-studied. A great deal of debate about tradeoffs between various sorts of tax rest on how they distribute the incidence of taxation. The larger point is: sometimes a tax increase gets passed on, sometimes it isn't.