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The tax incidence of profit taxes falls pretty much entirely on the shareholders. The consumer is unaffected. Companies that have their profits taxed at higher

The tax incidence of profit taxes falls pretty much entirely on the shareholders. The consumer is unaffected. Companies that have their profits taxed at higher rates would sure LOVE to raise their prices to compensate for lost profits, but a little thing called competition prevents them from doing so. >People really need to understand just how much they are truly taxed Indeed. The level of tax literacy and misunderstanding among the general population appalls me sometimes. I can think of at least one example right now...

mike_hearn 12y ago
> The tax incidence of profit taxes falls pretty much entirely on the shareholders. The consumer is unaffected. Well, only if you believe profits aren't used for anything except dividends. The "consumer" can be affected when they don't get new products, or existing products are worse, or when they fail to be hired as an employee, etc.
- crdoconnor 12y ago
  Theoretically if the profit tax approaches 100% then nobody will form companies because what's the point? Rest assured, though, the levels we are discussing here will have zero effect on Starbucks' ability or desire to bring us new pumpkin vanilla spice lattes every winter season.
benmmurphy 12y ago
If the incidence of the tax doesn't fall on consumers it doesn't necessarily fall entirely on shareholders. You would expect the incidence to be shared between workers and shareholders.
- crdoconnor 12y ago
  Incorrect. It's just shareholders. The market value of labor is unaffected by the level of profit tax.
  - xaqfox 12y ago
    <quote>The market value of labor is unaffected by the level of profit tax.</quote> Only if you can guarantee that changing levels of profit tax would not cause any wide scale lay-off or hiring sprees that would certainly effect labor market saturation and thereby the market value of labor.
    - crdoconnor 12y ago
      I guarantee that Starbucks and Google will not be pulling out of the UK if they do raise these rates to the proposed levels (or even higher). It would be cutting off their nose to spite their face.

mike_hearn 12y ago

> The tax incidence of profit taxes falls pretty much entirely on the shareholders. The consumer is unaffected. Well, only if you believe profits aren't used for anything except dividends. The "consumer" can be affected when they don't get new products, or existing products are worse, or when they fail to be hired as an employee, etc.

crdoconnor 12y ago
Theoretically if the profit tax approaches 100% then nobody will form companies because what's the point? Rest assured, though, the levels we are discussing here will have zero effect on Starbucks' ability or desire to bring us new pumpkin vanilla spice lattes every winter season.

benmmurphy 12y ago

If the incidence of the tax doesn't fall on consumers it doesn't necessarily fall entirely on shareholders. You would expect the incidence to be shared between workers and shareholders.

crdoconnor 12y ago
Incorrect. It's just shareholders. The market value of labor is unaffected by the level of profit tax.
- xaqfox 12y ago
  <quote>The market value of labor is unaffected by the level of profit tax.</quote> Only if you can guarantee that changing levels of profit tax would not cause any wide scale lay-off or hiring sprees that would certainly effect labor market saturation and thereby the market value of labor.
  - crdoconnor 12y ago
    I guarantee that Starbucks and Google will not be pulling out of the UK if they do raise these rates to the proposed levels (or even higher). It would be cutting off their nose to spite their face.