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In reply to the discussion: Graphic: Who Pays Taxes [View all]

DirkGently

(12,151 posts)
44. Well, your "central thrust" is rejected by all economists.
Sat Dec 19, 2015, 02:22 PM
Dec 2015

Economists -- even conservative ones -- who have studied how corporations handle taxes have disproven it.

The whole canard rests on very silly oversimplifications. To paraphrase,

"Everyone who makes widgets has to pay more tax, so widget prices go up."

But what if one company cuts stock dividends instead of raising prices? What if another company cuts executive pay? Or finds a more efficient technology? Or sources materials differently? Or falls into a different category of taxation?

It's a gross oversimplification that appeals to "common sense" that just isn't supported by reality. It survives like a lot of fallacies because corporations REALLY don't want to pay taxes, and repeat these false rationalizations endlessly.

Which raises the question of why, if it's all a wash anyway, corporations spend billions trying to avoid paying taxes in the first place, eh?

The fact is that corporations do not treat taxes like a fixed cost like labor. They can't, for a number of reasons. Profits are uncertain. Not all competitors pay the same taxes in the same way. Just tacking on extra costs to consumers to cover "taxes" is literally impossible and is never done.

If you had a completely inelastic demand, and a completely identical set of producers operating under completely identical conditions -- a virtual or literal monopoly -- you could theorize that taxes could be handled that way, but those conditions don't generally exist, which is why all the data shows things don't work out that way.

And the solution there would not be to lower corporate taxes, but to break up the monopoly. If for example all oil companies are so in-sync that any increase in their taxes raises costs in a 1:1 fashion, they are either colluding, or there are too few of them.

"Taxes are just passed to consumers" is not an economic theorem. It's a political fallacy used as a pretext for the most politically powerful entities to pay less of their share of the tax burden.

It's not the only one. Raising the minimum wage does not effect a 1:1 increase in consumer costs, either, not only because in a competitive market, companies can choose to deal with increased costs in a number of ways, but because higher wages decrease turnover and improve employee performance.

And then there was the grandaddy -- the "Laffer curve" -- the silly proposal that "tax cuts pay for themselves," long discredited but still used as a pretext by Republicans. That at least had a small basis in reality, which is that you can theorize that an extreme level of taxation would lower productivity, but it never purported that any reduction in taxes would automatically magically increase tax revenues, as Republicans routinely argue.

There is a whole catechism of irrational economic talk, created expressly by and for wealthy interests, that somehow has been swallowed by large numbers of people as reality. But it doesn't come from economists or from empirical study, but from political pundits and the monied interests they represent.

I think it's no coincidence that the same people claim that scientists, teachers and journalists all have "liberal bias." They know that their appeals to magical thinking and oversimplification simply aren't borne out by facts and reality.

Graphic: Who Pays Taxes [View all] grahamhgreen Dec 2015 OP
Not completely correct TampaAnimusVortex Dec 2015 #1
Exactly why we should eliminate all worker income tax. grahamhgreen Dec 2015 #2
Certainly an option. TampaAnimusVortex Dec 2015 #3
It's cheaper and easier for the govt to police a few corporations instead of millions of Americans. grahamhgreen Dec 2015 #6
It reduces the number of stakeholders. Igel Dec 2015 #28
You'd like the people who get millions in salaries to get it tax free? muriel_volestrangler Dec 2015 #15
id rather have the corporations collect them cause then if i decide not to buy their product saturnsring Dec 2015 #5
Not sure I understand... TampaAnimusVortex Dec 2015 #8
if their tax rate was 20% and no one bought anythng they had to sell who would pay their 20% saturnsring Dec 2015 #13
Another corporation that I woul buy from instead. Jim Beard Dec 2015 #16
Still not clear? TampaAnimusVortex Dec 2015 #17
there are a lot of products that i dont buy from any company but ... saturnsring Dec 2015 #18
But your paying it anyways. TampaAnimusVortex Dec 2015 #20
Both are taxed a dollar Jim Beard Dec 2015 #21
Yes, and... TampaAnimusVortex Dec 2015 #30
That's not really correct. Companies generally don't keep prices "low" out of the goodness of their MillennialDem Dec 2015 #33
Except for one thing TampaAnimusVortex Dec 2015 #36
That only applies in a cartel or monopoly scenario, and in the cartel scenario it only MillennialDem Dec 2015 #37
Not true TampaAnimusVortex Dec 2015 #38
Yeah it is but you're a true believer and no amount of evidence will change your view MillennialDem Dec 2015 #39
If your going to quote a site, you should at least note that... TampaAnimusVortex Dec 2015 #41
Its like anyother tax Jim Beard Dec 2015 #22
If no one bought anything they would owe no taxes. former9thward Dec 2015 #50
The only way to avoid it... meaculpa2011 Dec 2015 #10
Absolutely. Agree! TampaAnimusVortex Dec 2015 #11
Hmm. But taxes on people work differently? DirkGently Dec 2015 #56
Nope. Corporations do not just "pass on" all the taxes they pay. They can't. DirkGently Dec 2015 #19
Thank you, Thank you, Thank you, Thank you Jim Beard Dec 2015 #23
I have never met you Dirk but I do admire George Gentley Jim Beard Dec 2015 #24
Ha! Different British pop culture reference. DirkGently Dec 2015 #25
Thank you. -none Dec 2015 #27
I suggest you read up on Tax Incidence TampaAnimusVortex Dec 2015 #42
Well, your "central thrust" is rejected by all economists. DirkGently Dec 2015 #44
Nope TampaAnimusVortex Dec 2015 #45
Please cite an economist who supports this idea? DirkGently Dec 2015 #49
I'm not even sure that warrents being called a straw man... TampaAnimusVortex Dec 2015 #53
So you agree no economists think corporate taxes are "generally" passed on to consumers. DirkGently Dec 2015 #54
You reference debunks itself TampaAnimusVortex Dec 2015 #57
Yes, your argument has about zero economists behind it. DirkGently Dec 2015 #58
Can you back up your statements? TampaAnimusVortex Dec 2015 #59
Which of the five studies did you not see? DirkGently Dec 2015 #60
Wrong topic TampaAnimusVortex Dec 2015 #65
Should be easy to show it's the "minority" view then, eh? DirkGently Dec 2015 #69
I didn't make the statement that all economists believed it. TampaAnimusVortex Dec 2015 #70
No name-calling here! If anything you are valiant in defeat. DirkGently Dec 2015 #71
As I predicted... distraction. TampaAnimusVortex Dec 2015 #72
Economists establishing corporate taxes aren't passed to consumers was probably "the best." DirkGently Dec 2015 #73
I assume the material in this post was written by an academic "economist". former9thward Dec 2015 #51
The U. of Chicago study concluding the same thing was by DirkGently Dec 2015 #55
Passing on costs to consumers depends if demand is elastic or inelastic hollowdweller Dec 2015 #34
Which indicates some fraction will get passed. TampaAnimusVortex Dec 2015 #43
If you look closely, you can just barely make out the system "fix" that Bill Clinton made Bucky Dec 2015 #4
Nice catch:) grahamhgreen Dec 2015 #7
Please consider the source....nt clarice Dec 2015 #9
welcome back ghg Doctor_J Dec 2015 #12
Thanks! grahamhgreen Dec 2015 #14
I would agree to eliminating all corp. taxes in exchange for no corporate campaign contributions Yavin4 Dec 2015 #26
Not sure I understand the logic there... grahamhgreen Dec 2015 #29
All this talk about corporations passing on the expense any taxes they pay.... Bigmack Dec 2015 #31
Your not understanding this. TampaAnimusVortex Dec 2015 #40
Your (sic) not understand this... Bigmack Dec 2015 #47
I agree somewhat TampaAnimusVortex Dec 2015 #48
You mean like these companies..? Bigmack Dec 2015 #62
Those "market forces" are working well for the corporations...for us, not so much... Bigmack Dec 2015 #64
Clarify TampaAnimusVortex Dec 2015 #66
You said... Bigmack Dec 2015 #67
That wasn't the question. TampaAnimusVortex Dec 2015 #68
Yeah, but it's us individuals who get all the government benefits ... Scuba Dec 2015 #32
They'll just whine that the $4,000 per year is letting them keep their own hard earned money - which MillennialDem Dec 2015 #35
Do the corporations get tax breaks for expense of lobbyists and politicians on the payroll? Tierra_y_Libertad Dec 2015 #46
For lobbying, yes, I believe they can. grahamhgreen Dec 2015 #52
We are near some semblance of a happy medium bhikkhu Dec 2015 #61
Pretty shameful graphic...thanks for that. EndElectoral Dec 2015 #63
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