I see

[kierthos]

One of the common responses from Republicans, when the idea of raising corporate taxes is brought up, is that the corporations would just increase prices and pass the costs on to consumers so that they can maintain their profit margins.

That is a valid concern. And thus, the Republican response is "hey, if we lower corporate taxes, they would cut costs, and things would be cheaper, so it would help the economy."

Unfortunately, that doesn't always happen. US Airways and American Airways have raised prices to offset the tax savings from expiring taxes. Yes, you read that correctly. Certain taxes expired, and these two airlines (among others) decided to keep ticket prices at the same level to increase their profits. (Mind you, not all airlines are being douchebags about this, but some are.)

So, dear Republicans, please take what happens in real life in consideration the next time you think that lowering corporate taxes will automagically help lower prices. IT DOESN'T ALWAYS WORK LIKE THAT. (Of course, pretty much any politician at the federal level is bought and paid for by corporate interests, so to fuckery with the little guy, right?)

Comments

[thedeadcat]

My parents are in the camp that doing away with minimum wage would be JUST DANDY, because OBVIOUSLY all businesses are ethical and no one would be paid less than what they're worth! I mean, all that child labor and employee extortion that pre-dated the minimum wage laws would NEVAR HAPPEN AGAIN.

[matgb]

Different argument and taxes though.

The Incidence on Corporation Taxes (ie taxes on corporate profits) is overwhelmingly consumer and employee, with a side order of shareholder. But a tax that raises the price of something, as these expired taxes do, affect the perceived market price of a product. Objective of a company is to sell at the best price they can get, always (that won't always be the highest, but it frequently will be), if the consumer is used to paying high price X, then until and unless a competitor reduces prices, there's no pressure on them to do so.

I'm finding that figuring out this sort of thing can be very useful to actually win arguments with the no-tax/low-tax crowd, as it forces you onto actually valid arguments instead of conflations.

There are some idiots that shout loud in the 'low tax always' camp who simply don't understand the arguments being put, but that doesn't mean the actual workign economists who try to figure this stuff out aren't frequently looking at real data, that the GOP and others then mirepresent.

[herlander_refugee]

The logical response is "If you raise prices, you are technically making more money and we will tax you MOAR!"