Dear R.S.
I want to take issue with you about something you said several days ago in a post. You gave out an amazing list of ideas that would help the country.
That was good, far better than I’m used to.
But one of them was to raise taxes on corporations.
The idea is, of course, that if corporations pay more, the govt will have more and America will be better off.
Sounds sweet, but not true.
In reality, corporations don’t pay taxes.
This is exactly like prices appearing to go up when the fact is that the worth of the dollar is going down (inflation).
What happens is that the corporations add on the taxes “paid” as an expense of doing business, thereby raising the price of their product to cover the additional cost.
They only pay the taxes on paper. In reality the cost is moved down the chain, trickled down so to speak, to the consumer.
An increase in corporate taxes will cause increased prices, or poorer product quality.
Please get over this warm fuzzy idea that the evil corporations must be taxed more to punish them. You are too smart for such indulgences.
Grimmy
Two interesting ways to solve this, guys…
Price, but no wage, freeze targeted at the largest and most profitable, corporations… especially companies like Shell… some who have made the largest profit in the history of humanity but still have the balls to claim that our current prices are market driven. Exactly wghere we draw the line is open for discussion. Plus, stop corporate welfare… period.
Interesting, but actually not Scribe’s first choice. Tax the churches. They’re businesses. Perhaps a few, very limited, special breaks could be made for some charity work, but when the Catholic Church alone has billions in taxable property… hell they could cut all our taxes, wipe out the national debt…
Oh, and those who make over a certain amount should be topped out with SS. That combined with the other should do nicely, thank you.
Will any of that happen? Hell, no, we’ll just keep borrowing from the Chinese and others until…
Comment by Ye Olde Scribe — February 4, 2008 @ 5:39 pm
Glad you found that Yip Harburg lyric, Scribe: it’s as appropriate these days as it was when it was written in the ’30s.
Grim, I’ll answer your post in more detail soon, but what you’re saying denies the conservative argument that market forces control prices — the notorious ‘invisible hand.’
If corporations, operating in a free competitive environment, raise prices too much to compensate for tax increases, or for any other reason, then consumers will buy the same product or service from another company willing to take less profit to lower prices. At least, that’s the capitalist theory as espoused by Adam Smith.
Of course, if we are talking about a monopoly, or a collection of corporations that act in tandem as a monopoly to set prices higher to offset tax increases or control the market, then I’m sure you’d agree that sort of consortium should be regulated by the government in the interest of protecting its citizens from price gouging and unfair trade.
Comment by RS Janes — February 5, 2008 @ 8:15 am
RS, I really like “free markets” of course, but govt is supposed to set the rules to play the game, than get the hell out of the way. That isn’t happening.
An increase in taxes will cause an increase in prices. I don’t see how that is arguable. It’s true that competition will keep down prices temporarily, but as you know if you’ve had acquaintance with small business owners especially, they are constantly looking at each other to see what’s going on. Jones will raise a little to meet these new tax obligations, then Smith will do the same. Brown, across town, sees this. He’d like to keep his prices low to attract business, but it simply isn’t worth it to him, so he follows suit. Pretty easy stuff.
The Scribe is wrong. Oil prices are market driven – by the price fixing of the Saudis, the needs of the Chinese, the govt quietly buying for the strategic oil reserve, and increasing world wide demand.
Scribe needs to be involved with pushing for alternatives: such as oil from algae (very exciting stuff); drilling in ANWR in an environmentally reasonable way; drilling off our coast, where the Chinese and Cubans already drill but we are not allowed to; greater savings through hybrid auto technology; and so on.
The fact is the oil companies make about 5% – 6% profit. It is so huge because oil prices are so high. Scribe will, of course, with this enlightening info, now fall in love with the oil companies, realizing his hatred was misdirected. Gringold
Comment by grimgold — February 5, 2008 @ 12:25 pm