Originally posted by Kunsoo In other words, prices are driven by what the market will bear, and if we increase taxes, for the most part the industries will have to eat it rather than pass it on to consumers.
This is what liberal economists have argued for years, as well as numerous studies. We just have the clear proof now.
Not the first time actually. But a profound one, hopefully with everybody watching.
Originally posted by Kunsoo In other words, prices are driven by what the market will bear, and if we increase taxes, for the most part the industries will have to eat it rather than pass it on to consumers.
This is what liberal economists have argued for years, as well as numerous studies. We just have the clear proof now.
Not the first time actually. But a profound one, hopefully with everybody watching.
Originally posted by Wajoma At any one moment there are millions of prospective projects being planned, from the largest corporation planning a mine site, refinery or airline start-up all the way down to the individual planning to renovate the kitchen. Eveyone has a line they draw, above the line the benefits of the new kitchen out weigh the extra overtime needed to be worked to pay fo ffect and the cost will just be borne is naive' beyond belief, but then it is a kunsoo post.
It's basically correct, unless you're talking about something very extreme.
Companies charge the most they can to maximize profits. They look for the sweet spot where profit per item x volume = the most amount of money. Charge too much and you make greater margin, but that's more than offset by lower sales. A nominal tax increase isn't going to make companies decide to miss the sweet spot.
Originally posted by Wajoma I agree that half of the equation is "Charge em what they will pay." but it is only half the equation, to say hiking taxes has no effect and the cost will just be borne is naive' beyond belief, but then it is a kunsoo post.
Originally posted by Kunsoo Remember the theory that prices are set by supply and demand? I remember William Buckley being asked "what regulates greed?" His response was that prices are set by market forces, and competition ensures that prices to not excessively exceed overhead. If the overhead decreases, competition will drive prices downward.
So you have Eric Cantor explaining ...[text shortened]... s-does?via=blog_1
So apparently there is no competition. Done dare say "collusion."
Responses to market forces aren't always instant. If a business continually loses sales because of prices that are too high, it will either adjust or fail.
If I have to explain this, it probably isn't going to sink in. But think about it, if greed were unrestricted, why do prices ever come down? For example gasoline prices in the US went over $4 per gallon in 2006. By the fall of that year prices had receded to near $1.50 per gallon.
Where "now that taxes aren't being paid" comes from I don't know. Did a tax reduction happen and I didn't hear about it?
Originally posted by Kunsoo In other words, prices are driven by what the market will bear, and if we increase taxes, for the most part the industries will have to eat it rather than pass it on to consumers.
This is what liberal economists have argued for years, as well as numerous studies. We just have the clear proof now.
Not the first time actually. But a profound one, hopefully with everybody watching.
"What the market will bear" changes all the time. It depends on the available alternatives (competition), marketing strategy such as adding of reducing service, quantity or quality. Nobody in business is free to raise prices without concern. How about government? Are they bound by supply and demand, and where is their competition?
Originally posted by USArmyParatrooper Right on the money. No pun intended.
That is voodoo economics. The premise would have to be that businesses large and small have huge cash reserves with which to pay added taxes. That is fantacy land stuff.
In the long run, most of the time in the short run taxing business is taxing the consumer, because all costs including taxes are part of GOGS. Business may swallow small tax increases for a while, or keep the reductions, but in the end profits are the difference between COGS and sales revenues.
Originally posted by Kunsoo All evidence to the contrary
I suppose that's why American car companies have been giving thousands of dollars in rebates, not to sell more cars. And the government is paying consumers about $8,000 to induce them to buy Chevy Volts, and they are still moving like Ice Cream in Antarctica.
I guess the reason that you can buy laptop computers for under $400 is because computer makers just aren't greedy. I bought a laptop in 1989 for $3,000+. Guess they were greedy back then, but now they're nice guys from China.
Originally posted by Wajoma Wadda laff, you two think you've got some ideas on the intricacies and complexities of running an airline.
You're free to start one if you think they're charging too much, then you can undercut them and still voluntarily pay extra tax, a win all round.
Those kinds of arguments come from people who haven't run a paper route. And we are wasting effort to convince otherwise. Those belief systems are what Rand called "concrete bound".
Originally posted by USArmyParatrooper It's basically correct, unless you're talking about something very extreme.
Companies charge the most they can to maximize profits. They look for the sweet spot where profit per item x volume = the most amount of money. Charge too much and you make greater margin, but that's more than offset by lower sales. A nominal tax increase isn't going to make companies decide to miss the sweet spot.
And if the company has already found the "sweet spot"?
Originally posted by normbenign That is voodoo economics. The premise would have to be that businesses large and small have huge cash reserves with which to pay added taxes. That is fantacy land stuff.
In the long run, most of the time in the short run taxing business is taxing the consumer, because all costs including taxes are part of GOGS. Business may swallow small tax increas ...[text shortened]... keep the reductions, but in the end profits are the difference between COGS and sales revenues.
That's a bit of a facile look at economics. It makes common sense, but the point is that you can only push costs on the consumer if the consumer is willing to pay them. When California passed its first cigarette tax by ballot, which was a quarter, everyone assumed it would be passed on to the consumer. Turns out, that the increase in price led to a decline in consumption, and the industry was only able to pass 10 to 15 cents of it on to the consumer.
Why do you think corporations oppose taxes so vehemently? Because they care so much about their consumers?
Originally posted by Wajoma At any one moment there are millions of prospective projects being planned, from the largest corporation planning a mine site, refinery or airline start-up all the way down to the individual planning to renovate the kitchen. Eveyone has a line they draw, above the line the benefits of the new kitchen out weigh the extra overtime needed to be worked to pay fo ...[text shortened]... ffect and the cost will just be borne is naive' beyond belief, but then it is a kunsoo post.
Not with airlines however. The prices fluctuate on a dime. That's why this example is so pertinent.
Originally posted by Kunsoo Not with airlines however. The prices fluctuate on a dime. That's why this example is so pertinent.
Prices fluctuate on a dime, so if airlines are taxed more the price won't change i.e. they will no longer fluctuate on a dime? So higher taxes will stop prices fluctuating on a dime because without higher tax prices fluctuate on a dime?
Passenger airlines is a collusive (yet still non-profitable oligopoly) with extrordinarily high fixed costs that they never seem to be able to cover. To say all businesses are like the airline industry is definitely a strawman argument.
I do not see how this disproves supply and demand. If people feel they are getting ripped off and they stop buying tickets the policy will change; if not it won't.
04 Aug '11 23:351 edit
"That's what business does"
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