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Old 12-20-2011, 11:58 AM  
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Are Most Corporate Tax Hikes Passed on to Consumers?

When taxes cannot be passed on corporations just move offshore and we are the ultimate losers. This article is from:Are Most Corporate Tax Hikes Passed on to Consumers? - Financial Web
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All United States corporations pay a corporate tax of one type or another, and sometimes they many different types of corporate taxes depending on sales revenues and even the area in which the Corporation is located. There are many types of corporate taxes that every corporation must pay, and some corporate taxes are more of a burden for a company than others. However, there are times when corporate taxes affect a corporation's ability to produce goods and services and maintain current levels of pricing for consumers and customers.

Furthermore, there are many times when a tax hike increases costs for the corporation and those higher costs are passed along to the consumer ? in the form of higher prices for products and services.

Corporate Taxes and the Effect on Consumer Prices

Most corporations spend a lot of time in determining sufficient pricing levels for their products and services. Furthermore, there are many factors and variables that must be considered when a company prices its products or services. Generally speaking all of the costs incurred by a company to offer a product or service are included in the pricing of a company's products or services.

If costs remain relatively stable for a company, most corporations will generally try to avoid increasing price levels as increasing prices tends to anger customers and potentially drive them to other competitors or other sources for their products and services. However, there are times when a corporation is left with little choice but to increase prices, and one of the reasons a corporation may consider increasing prices is whenever government entities impose higher tax rates or tax percentages on the corporation and its revenues. This is because a corporation needs to maintain profits to ensure returns for investors and shareholders as well as meet obligations of the corporation. When taxes impact profits, prices are usually raised to help offset the additional costs of doing business, and the consumer pays a higher price for goods and services at the cash register.

Why Corporate Taxes Are Passed on to Consumers

Whenever a corporation is assessed with a higher tax rate or a new type of corporate tax, a corporation may not have another option to increasing prices. Corporations need to earn profits in order to meet obligations, perform research and development as well as expand their businesses and potentially employ more people. However, whenever government agencies increase the amount of taxes to be paid by a corporation, most companies will try to maintain current profit margins by increasing the price charged to the consumer.

There are many Americans that believe United States corporations pay too little income tax and often escape liability from paying their fair share of taxes. On the other hand, there are just as many Americans that claim the tax burden on United States corporations is too much already. Regardless of your viewpoint on this particular issue, it is reasonable to believe that tax increases imposed on United States corporations will almost always result in higher pricing for the average consumer to some degree.

There are many common examples of corporate taxes that increase consumer pricing. For example, the United States government earns a lot of revenue from taxes imposed on oil producing companies, alcoholic beverage companies and tobacco companies; in fact, these types of industries have incurred many tax hikes in recent years. Therefore, in response to tax hikes many of these companies have increased prices to consumers. If you are a smoker or enjoy the occasional alcoholic beverage, you are probably aware that prices for these types of items have increased two or threefold in recent years. While many price increases may not be attributed to a corporate tax hike, whenever corporate taxes are increased - you will usually pay higher prices.
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Old 12-20-2011, 12:12 PM  
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I agree completely. Any time the cost of doing business increases whether it is the cost of gas or the cost of taxes it ends up increasing the price of the good or service. Look at all the stuff right now that is increasing in cost to the consumer due to higher gas prices. Why would higher taxes be any different?
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Old 12-22-2011, 08:04 PM  
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Originally Posted by YelloJeep View Post
I agree completely. Any time the cost of doing business increases whether it is the cost of gas or the cost of taxes it ends up increasing the price of the good or service. Look at all the stuff right now that is increasing in cost to the consumer due to higher gas prices. Why would higher taxes be any different?
failure to understand the difference between "gross" and "net" costs.......

everytime taxes come up do I really have to explain the difference? I guess so.

taxes do not increase the cost of the materials, corporations are tax only on their profit, so only if you argue that a corporation is entitled to make the same profit does your argument succeed, however if taxes go up then a company can either reinvest in itself and not pay taxes on that money or it can hoard the money and pay taxes. a low tax rate encourages harding money and not reinvestment.

it is a balancing act to keep it reasonable so you don't scare away businesses but also you want to encourage them to reinvest in themselves (and even more importantly having something to pay for all the government services those corporations benefit from) , but most republican agendas of 10% IS NOT THAT LEVEL, should exxon pay a smaller percentage in taxes then you do? (a single person making about $30k a year pays about 10% effective rate.
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Old 12-23-2011, 12:00 AM  
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Originally Posted by RedJeepXJ View Post
failure to understand the difference between "gross" and "net" costs.......

everytime taxes come up do I really have to explain the difference? I guess so.
Maybe you're the one that fails to understand.
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Old 12-24-2011, 12:00 PM  
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Originally Posted by Eddie_T View Post
Maybe you're the one that fails to understand.
again a short post from you, making an accusation but no real information..... surprise there.....

I think it's obvious who does not understand gross verse net costs here. You are an addict to the right wing agenda but seem to have no real understanding of any economic principles or ideas. You just repeat whatever the current republican or tea party talking point is.
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Old 12-24-2011, 03:20 PM  
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I'll repeat a line from above that explains it for you:
Quote:
Most corporations spend a lot of time in determining sufficient pricing levels for their products and services. Furthermore, there are many factors and variables that must be considered when a company prices its products or services. Generally speaking all of the costs incurred by a company to offer a product or service are included in the pricing of a company's products or services.
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Old 12-24-2011, 03:25 PM  
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Reading the back and forth comments between you two is like watching a never-ending tennis match.

I hope you both have Happy Holidays and understand that some of us just need to agree to disagree!
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Old 12-24-2011, 03:29 PM  
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Big corporation profits result in money back to the investors, without profits the boards will start to fire people. Since the tax rates are the same and they all include it in their prices, increases can be passed on to consumers without loss of sales as people just pay more for things. At some point people stop buying as much, a current example being gas prices dropping, forced by less driving and people buying more efficient cars. Here it's come down from $3.99 to $3.45 since Thanksgiving.
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Old 12-24-2011, 11:39 PM  
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Originally Posted by bisjoe View Post
Big corporation profits result in money back to the investors, without profits the boards will start to fire people. Since the tax rates are the same and they all include it in their prices, increases can be passed on to consumers without loss of sales as people just pay more for things. At some point people stop buying as much, a current example being gas prices dropping, forced by less driving and people buying more efficient cars. Here it's come down from $3.99 to $3.45 since Thanksgiving.
:brick wall:

seriously? do you really not get this or are you just trying to get me riled up.....


If a company just has people sitting on the payroll not helping the company they should fire them regardless of tax rates.... a company that does that with needed personel is just shooting themselves in the foot
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Old 12-25-2011, 07:56 AM  
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Originally Posted by RedJeepXJ View Post


:brick wall:

seriously? do you really not get this or are you just trying to get me riled up.....


If a company just has people sitting on the payroll not helping the company they should fire them regardless of tax rates.... a company that does that with needed personel is just shooting themselves in the foot
FYI. Companies do that sometimes anyway. I currently work somewhere that is allowing our department to thin out due to low sales. The workload in our department has not gottn smaller though. Pretty much means that some stuff just doesn't get done, and there is more overtime. I just have to wait and see how bad it will get.
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