Thread: US to have highest corporate tax rate in the world in 30 days

Originally Posted by BobL

As I said, corporate taxes are equivelent to sales taxes paid by consumers. Yes, all taxes help citizens to some degree, but much tax money is spend foolishly or ineffeiciently or to benefit selected segments of society (selected by politicians, generally to buy votes). The money would be better spent by consumers directly in the marketplace who would pick the best way to spend it without an agenda to get reelected.

You're wrong over the equivalence. A sales tax can be passed on to the consumer (the level dependent on demand elasticity). We can't say the same with corporation tax

Originally Posted by Reiver

You're wrong over the equivalence. A sales tax can be passed on to the consumer (the level dependent on demand elasticity). We can't say the same with corporation tax

I respectfully disagree. All business costs, including taxes, are passed along to consumers. Sales taxes are very visible. Other costs such as rent, property taxes, unempolyment insurance, labor and material costs (and income taxes), are all part of the price of the product of service sold. Just because a cost is not itemized on the invoice does not mean it was not built inot the price.

I stand by my original statement.

Originally Posted by BobL

I respectfully disagree.

It doesn't matter what you think on this one; by definition they cannot be equivalent. A sales tax can be understood within a supply and demand framework, with the sharing of burden dependent on the firm's demand schedule (as it becomes more inelastic it can pass on more of the tax to the consumer). Such analysis cannot be used for taxes on profit. Its no longer about a shift in marginal costs. There's no debate in it

Originally Posted by BobL

I respectfully disagree. All business costs, including taxes, are passed along to consumers. Sales taxes are very visible. Other costs such as rent, property taxes, unempolyment insurance, labor and material costs (and income taxes), are all part of the price of the product of service sold. Just because a cost is not itemized on the invoice does not mean it was not built inot the price.

I stand by my original statement.

For the most part this is true. It is still supply and demand that has the strongest influence on prices though. A corporation can build the costs into their pricing as much as they want, they will still lose sales if their price is not at equilibrium.

There are many ways to generate revenue through taxes, the issue is who is affected and importantly what behaviour does it affect and how.


Corproate taxes affect people inside the united states, but they are different from a host of other taxes in that they also serve as a tax on money leaving the country and going to foreign investors.

Thus they have an effect on foreign investment.

Too little in corporate taxes and you can be "exploited" and could get something akin to a trade deficit where more dollars of corporate profit are leaving the country to foriegn investors than are coming into the country to US nationals that have invested in foreign countries.

Too much however and you drive away foriegn investment at the least, and quite possibly one drives away jobs as well, though that would be dependent on a host of other factors.

Since unemployment seems to be considered to be a contender for the greatest problem in the united states at the moment, a high corporate tax rate would seem bad.

A very high corporate tax rate combined with a host of loopholes via croney capitalism is just all around a bad situation.

Originally Posted by BobL

I respectfully disagree. All business costs, including taxes, are passed along to consumers.

The fact that a businesses's profit is being taxed does not fundamentally change the price elasticity of the products it is selling. In other words, the market won't bear higher prices just because the business is paying more taxes. Unless, of course, you assume that businesses are not using market-determined pricing and just use cost plus pricing instead--which has its own troublesome implications.

Originally Posted by Reiver

A sales tax can be passed on to the consumer (the level dependent on demand elasticity). We can't say the same with corporation tax

I stand by my statement that corporate taxes aer passed on to consumers. Product/service prices (over the long term) cannot be less than business costs plus a reasonble after tax profit. Figure it out.

Originally Posted by Someone

The fact that a businesses's profit is being taxed does not fundamentally change the price elasticity of the products it is selling. In other words, the market won't bear higher prices just because the business is paying more taxes. Unless, of course, you assume that businesses are not using market-determined pricing and just use cost plus pricing instead--which has its own troublesome implications.

Maybe not immediately but it will eventually as all costs are passed on. At some point the market is saturated and all costs will go up as business as a whole tries to regain it's margin.

Originally Posted by BobL

I stand by my statement that corporate taxes aer passed on to consumers. Product/service prices (over the long term) cannot be less than business costs plus a reasonble after tax profit. Figure it out.

You can repeat basic errors to the cow comes home, but it won't impact on the fact that you are completely wrong. We can refer to burden sharing with sales tax because it effectively refers to a supply curve shift (with the price change dependent on the nature of the demand curve). A profit tax does not directly impact on the profit maximising decision and therefore the chosen price. Bit obvious really!

Originally Posted by Hoosier8

Maybe not immediately but it will eventually as all costs are passed on.

Unlikely. There will always be someone willing to accept paying 33% of his profits in taxes rather than 27%; that competition will force a business from being able to pass on the cost of taxes on profits.