4 ms·

a 20% tax on revenue would put them out of business, because it's greater than their net margins. Revenue, not profit.

• Marsymars 2y ago
  I wouldn't expect many of them to go out of business - they'd just all raise prices by 20%, and profit would remain largely similar as before, notwithstanding supply/demand elasticity of a 20% price increase.
  • missedthecue 2y ago
    So... not a tax on corporations then but a tax on middle-class consumers. Why not just raise the income tax?
    • Marsymars 2y ago
      Well... that depends on supply/demand elasticity. A tax on revenue relatively disadvantages companies that both sell goods that consumers aren't willing to pay more for, and that don't have the margins to support keeping prices to whatever consumers are willing to pay for. So in some senses it's a consumer win - they lose out on the goods with the least marginal benefit to them, and margins get squeezed into public/consumer coffers for other goods. Conversely, raising the income tax relatively disadvantages companies in a different way, depending on which way you raise the income tax. Who pays taxes is always based on supply/demand elasticity. There are various reasons that some tax or some combination of taxes might be preferable to some different combination of taxes that don't have to do with "who pays". Taxes are largely zero-sum-or-less in the effect collection/application effect, so the winners/losers aren't e.g. consumer vs corporations, but rather corporation A vs corporation B or consumer A vs consumer B.