Do business owners just pass the cost of the higher taxes on to the consumers in higher prices for

Do business owners just pass the cost of the higher taxes on to the consumers in higher prices for the products ? Im asking this question because some Democrats claim that higher personal income taxes not the corporate income tax because the business owners will for some reason keep their money in their company and invest to avoid higher personal income taxes thank you for your answers ?



Do corporations get a windfall with the abolition of the corporate tax?

Corporations are legal fictions that have not, do not, and never will bear the burden of taxation. Only people pay taxes. Corporations pass on their tax burden in the form of higher prices to consumers, lower wages to workers, and/or lower returns to investors. The idea that taxing a corporation reduces taxes on, say the working poor, is a cruel hoax. A corporate tax only makes what the working poor buy more expensive, costs them jobs, lowers their lifestyle, or delays their retirement. Under the FairTax Plan, money retained in the business and reinvested to create jobs, build factories, or develop new technologies, pays no tax. This is the most honest, fair, productive tax system possible. Free market competition will do the rest.

www.fairtax.org...

reply to post by mikejohnson2006

Under the FairTax Plan, money retained in the business and reinvested to create jobs, build factories, or develop new technologies, pays no tax. This is the most honest, fair, productive tax system possible. Free market competition will do the rest.

Yeah, and how well is that working out for ya right now? Trillions in bailouts to the banks, no manufacturing to speak of, nothing but outsourced off shore jobs, how exactly has the free market done the rest?

not to mention the billion dollar corporations playing that tax code like a harp and pocketing millions of your tax dollars as their returns.

reply to post by mikejohnson2006


Regardless of costs business owners fix the price of their product at what the market for the product will bear.

Nothing else really matters. If they do not see a high net profit margin for THAT product, they will add a necessary attachment, maintenance plan or devise another product and grossly over charge the public THERE to make up the difference.

It does not matter what it cost them to make, nor are taxes as much of a concern as "how high can we price this item so the people will buy it?" A great deal depends on their advertising budget. Like in pharmaceuticals you are not paying pill value, you are paying for research and commercials.

Well, I can tell you right now, I work for one of the few small manufacturing companies that does not outsource to other countries. You know what our tax burden was last year? 43%!!!! The owners of this company are very generous and family oriented and usually give out nice bonuses. Even with this economy, we are keeping our head above water. I would really hate to see even more taxes for a company like ours. I feel very lucky to be working for a company like this. They even pay our healthcare. For now.

We do not, raise our prices due to the taxes. In 4 years, we have had 2 price increase, 5% and 7%, and this was due to raw material price increases, of which we have had 7.

reply to post by chiefsmom

Well, I can tell you right now, I work for one of the few small manufacturing companies that does not outsource to other countries.

and don't you think that huge tax burden is unfair compared to companies making much much more and paying almost nothing? Don't you think it would be better to lower your rate while making those on the tiers above you actually pay? No, not more, just what they should be paying.

Let me put it this way. You are paying that huge tax burder so those above you, making much more money, don't have to pay at all.

That's the entire reason for this OWS.

Amongst other things!!

reply to post by phishyblankwaters


I do absolutely! It really is unfair to companies like ours. Hell, we just found out this year that we can't even write-off a new roof, but these larger companies get all these breaks and loop-holes. My boss has even made cracks about how it's a bad thing these days to be an honest business man. How sad is that?

In short, the answer to your question is yes.
Here in the UK, over the last 12 years, our government declared war on small business. We have so many taxes and regulations to pay and follow, that we have decimated our shops and small companies.
So far in the last few weeks I have dealt with and paid;
corporation tax
PAYE and NICS (payroll tax @11% of peoples salaries)
PRS and PPL licences (to have the radio on)
Business rates (to exist)
Local authority licence (to exist)
Trade waste licence (to throw our 2 bags of rubbish away every week)
Individual therapists licence (to show each of my beauty therapists are trained)
PAT test (to show that for that moment, my electrical equipment works)
Fire regs (to show I can tick boxes on a form)
H&S regs (to show I can tick boxes on a form)
car tax
VAT
COSSH assesment (to show I know what chemicals we use and how to handle them)
Credit card merchant regs

These are for a couple of hair/beauty salons which do no contentious treatments at all, run by someone fully qualified in all aspects of all treatments.

It is almost a full time job keeping up with the burden of legal requairements. My licence to exist has gone up from £130 to £440 this year.
Of course it pushes up prices.

Originally posted by phishyblankwaters
and don't you think that huge tax burden is unfair compared to companies making much much more and paying almost nothing? Don't you think it would be better to lower your rate while making those on the tiers above you actually pay? No, not more, just what they should be paying.

Let me put it this way. You are paying that huge tax burder so those above you, making much more money, don't have to pay at all.

That's the entire reason for this OWS.

Male cow feeces. If that were the case, OWS should be directed against the politicians who write the tax laws that allow these larger corporations to get away with paying no taxes.

If you really want to make things right, then get rid of corporate taxes all together. The first rule of business is that all costs are borne by the consumer. This means that the consumer pays the corporate taxes as a part of the cost of the products that they purchase.

Can I also add that I am trying to keep my employees jobs safe, and enable them to all earn a good living.
I am managing that DESPITE our government and local council.
I have never made anyone redundant, and have myself worked behind the chair for no money simply to be able to pay my staff.
So can we not do boss bashing please? Some of us are doing our best in very difficult circumstances.

reply to post by persianista


I don't think anyone here is boss bashing. Surely wouldn't be me, I feel truly lucky to have both of mine.
Unless you mean "boss" as in the government, then I will bash away!

Originally posted by chiefsmom
reply to post by persianista

 

I don't think anyone here is boss bashing. Surely wouldn't be me, I feel truly lucky to have both of mine.
Unless you mean "boss" as in the government, then I will bash away!

Boss bash away at the government as much as you like!!!

I just notice that most threads on here that debate employers/companies bang on about greedy goodfornothing bosses. I find it a bit one sided most of the time. Some of us in business have integrity and honesty.

back in 2008-2009 when the financial mess got really dicey my boss stopped taking a paycheck for 6 months so he could still make Christmas bonuses.

there are honest businessmen and women out there and this economy is destroying them.

reply to post by mikejohnson2006


With all due respect to the OP... I think you already know the answer to that question.

But I suspect that there is room for a broader perspective on the matter... one that goes beyond the simple "What is a fair tax?" question.

Here in the US, each of our local states tax us to pay for the services and facilities that we use everyday. It pays for the development of policies, the support of town, county, and city operations, and to some degree, the 'investment' into what some call "the public wheel"... (what's good for the citizens.)

Our Federal overlords, however, represent an entirely different class of (so-called) public servant... and the tax they impose is almost anything but "for the common good."

Not one dollar, ....not one penny paid in federal taxes goes anywhere but the Federal Reserve Bank to partially service the interest on the debt burden the federal government has racked up over the last century. Every operating dollar, every cent the federal government 'expends' is borrowed (in our name - and the names of our children and their children) with all the profit interest from said "loans" going to the owners and board of the Federal Reserve Bank and their associates up the chain.

So when the political gamesmen begin to formulate fantasy scenarios regarding wealth trickling down or "corporations" being taxed 'more heavily' (than they were) it presumes the citizens are ignorant enough about the world to think this has anything at all to do with improving the citizens' prosperity.

Taxes, compliance with ordinances, fines, and other such fees are considered - form the corporate perspective - as 'externalities.'... also known as 'the cost of doing business.'' Any successful business strategy includes reducing any such external burdens or mitigating them into oblivion - if possible. That would include any legal method to reduce 'cost' to them in the revenue model. If that means lobbying for tax relief, special concessions, subsidies, tax exemptions, and all manner of other 'vehicles' which politicians "sell" in exchange for political currency (or perhaps just plain currency.)

Yes... they do "pass on" the cost.... and "no" ... you can't trust the financial reporting to reflect the reality behind it - especially since politicians successfully redefined such corporate activity as "free speech."

Our government has deliberately embarked upon the charge of creating a super-citizen in this country. It is called the "corporation" and at it's best, it's a vital component to allowing small businesses to survive in the environment with the big players.... at worst it is a special class of citizen that benefits from special status in our nation, especially since those who adopt 'public service' as their public face are often direct beneficiaries of the larger players' corporate success. There is no "insider trading" law that applies to the politicians in the capital.... that is why our nation was so easily subsumed by profiteering opportunist middlemen, and cabals of 'like-minded' people who feel they are entitled to special status for them and their posterity.

Just my $.02

Originally posted by mikejohnson2006
Do business owners just pass the cost of the higher taxes on to the consumers in higher prices for the products ?

This is actually a thoroughly studied question by both economists and industry. It can be answered with "price elasticity of demand"....how much demand for a product responds to lowering or raising the price.

Ciggerettes are relatively "inelastic" in the sense that an increase in price has a very small impact on demand.

Thus ciggerette manufacturers can pass on most of the tax burden to thier customers.

Increase price = Demand does not change....or changes very little.

Other examples include Healthcare, Energy, Fuel.

Insulin prices? Will a diabetic stop needing the drug when the price spikes? Inelastic.

This is why most states have price controls for energy suppliers...Gas, Electric etc. They have both the advantages of an inelastic product and more or less a monopoly with infrastructure etc. Left on thier own they would jack to the prices up to painful levels.

The vast majority of products do not fall into the catergory of Ciggerettes (brand plus addiction) or energy and in the free market of capitalism with elastic prices related to demand....the consumer determines the price much more so than the manufacturer.

Otherwise people have choices and can shop for the best price with iphone vs. android...HP vs. IBM, Honda vs. Chevy, used vs. new etc. etc. or simply wait until the price falls to a level that they will purchase at.

So the answer to your question depends on the product. Manufacturers will pass on a tax increase to the consumer whenever they can, but they can only do that if the consumer is willing or forced to pay that increase.

If the product in not an absolute neccessity, then the manufacturer does not pass on the tax increase but rather innovates to gain a price advantage over competitors or reduces costs in other ways.

Consumers determine price for most goods and where the consumer (free markets) have little say in price the government typically closely monitors or regulates those products...with the exception of Cigerettes since they don't see that as a neccessity.

The FairTax has nonpartisan support from people in all walks of life. From both major parties and several third parties. Its supporters need only have one common belief: That it is a fairer, simpler, more efficient way to raise federal revenue. The FairTax delivers these benefits to all American people and more. More government accountability for taxpayer dollars, a tax system that is less susceptible to being manipulated by special interests, a tax system that will make it easier -- not harder -- for the average person to get ahead, and perhaps most importantly, a tax system that provides real, honest, and transparent tax relief for those who need it most.

Interesting site, just read the FAQs. Personally, I think this idea deserves some scrutiny and some possible support.

I am no economist, but I manage a balanced budget, and if I had more of the money I earn in my wallet to spend, I would "buy filet mignon instead of hamburger" too! I would NOT, however, buy jewelry, luxury cars, etc. I would fix up my 1976 sailboat so it was in pristine condition. I would keep my '89 car running, maybe have the rust removed and a protective paint job. But those things would happen AFTER I got things up to snuff in terms of MAINTAINing my 75-year-old HOME.

I think this plan is worthwhile. I will have to go back and re-read the FAQs, but at first blush, it makes good sense to me.

EDIT TO ADD: My original thought in wanting to reply to this thread. Under the current system anyone who IS paying income tax, and lives in one of the 45 states that impose sales tax, are being DOUBLE TAXED. I perked up at the triple-tax system that is mentioned in the page as well:

Meanwhile, Social Security/Medicare funds are no longer triple-taxed as under the current system: 1) when payroll taxes are initially withheld; 2) when those withheld payroll taxes are counted as part of the taxable base for income tax purposes; and 3) when the promised benefits are finally received.

Anyone trying to get you to believe that they ARE NOT trying to pass off every single cost to you, the buyer, is a liar.

They are going to make a dollar amount on every single sale, and when something goes on sale, or clearance, they are still making a profit.

Raise the taxes of the business owner? He's going to raise prices. Still paying higher taxes, but who is really paying?

Corporate tax should be ZERO.
Income tax should be ZERO.
Sales Tax should be 5-10% MAX, EVER, for ETERNITY.

ETA - Any other taxation - ie inflation - should be heavily scorned and corrected harshly with penalty to the party responsible on our behalf.

Finally, 5% is really what I would consider excessive. The Average american citizen makes around $41,000 a year.
5% of that = less than $2,100
There are over 300 million US citizens.
That means that $630,000,000,000 of 'revenue' a year will be by force.

Always remember, that is the minimum required (read forcibly demanded) taxes I propose for the US citizenry. Any other tax comes out of the citizens pocket in some form or fashion.

If we had a stable money supply that wasn't being expanded exponentially, this would be enough for the government to function on right now. Lots would have to be cut out of the budget, like useless organizations such as FEMA. A lot of public sector jobs will have to perform with less, like any corporation.

Results will be a measure of worth, and right now, I don't see many results from our beurocracy. Fast and Furious? The only thing that would be akin to that is the resignation letters, and pink slips flying across my desk if I were in charge.