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Apple accused of sidestepping taxes, company counters by touting job creation - Page 6

post #201 of 222

 

Quote:
Originally Posted by Rogifan View Post


Yes build it from the ground up. Get rid of corporate income taxes and personal taxes should migrate to either a flat tax or consumption tax. Ad another thing the US government could do is tie spending to GDP, say, spending can not be more than 18 or 20 percent of GDP. That would help job creation and get our fiscal house in order.

 

Flat tax has arguable benefits, but elimination of the income tax, the IRS and the Federal Reserve should be a first-term priority for the next president.

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post #202 of 222

 

Quote:
Originally Posted by stelligent View Post

 

BTW, to say cost of capital implies returns expected by investors might be the most stupid thing ever written here. 

 

 

 

LOL. If you want to continue to embarrass yourself, go ahead, by all means. There's no law against it.

 

If that is the "most stupid thing ever written here," then the most famous, and widely-used finance textbook in the world -- Brealey and Myers (you can look it up!) -- must be the most stupid thing ever written in finance.

 

Here's a verbatim quote from their introduction to Chapter 8 (p. 238, 9th edition; italics mine): "The company cost of capital is the opportunity cost of capital. It is usually calculated as a weighted average cost of capital, that is, the average rate of return demanded by investors in the company's debt and equity securities."

 

Comprende?

post #203 of 222

 

Quote:
Originally Posted by anantksundaram View Post

 

 

LOL. If you want to continue to embarrass yourself, go ahead, by all means. There's no law against it.

 

If that is the "most stupid thing ever written here," then the most famous, and widely-used finance textbook in the world -- Brealey and Myers (you can look it up!) -- must be the most stupid thing ever written in finance.

 

Here's a verbatim quote from their introduction to Chapter 8 (p. 238, 9th edition; italics mine): "The company cost of capital is the opportunity cost of capital. It is usually calculated as a weighted average cost of capital, that is, the average rate of return demanded by investors in the company's debt and equity securities."

 

Comprende?

 

Embarrassing?


Let me give you a clue. You're mixing up two different contexts of cost of capital in the same phrase. But that happens when you copy and paste in haste.

 

Comprende?

 

Embarrassing indeed. And notice I'm allowing you to sidestep the other embarrassing slip-up.

 

 

post #204 of 222

 

Quote:
Originally Posted by stelligent View Post

 

 

Embarrassing?


Let me give you a clue. You're mixing up two different contexts of cost of capital in the same phrase. But that happens when you copy and paste in haste.

 

Comprende?

 

Embarrassing indeed. And notice I'm allowing you to sidestep the other embarrassing slip-up.

 

 

 

What are you talking about? "Contexts of cost of capital"?!

 

There is only one notion of cost of capital, i.e., the opportunity cost of capital, i.e., the return expected by investors. That is the only thing I -- or anyone that knows what it means -- refer to when the term is used.

 

It is quite obvious at this point that you are not up on much of this stuff, or perhaps you're tripping all over yourself (not the first time, I've noticed, in this Forum; you're another person whom I generally avoid by way of responses...... so, ciao, after this!).

 

Let's move along....


Edited by anantksundaram - 4/30/12 at 2:13pm
post #205 of 222

 

Quote:
Originally Posted by SpamSandwich View Post

 

 

Flat tax has arguable benefits, but elimination of the income tax, the IRS and the Federal Reserve should be a first-term priority for the next president.

 

And when you're done with that, why not do something easy like figure out how many angels can dance on the head of a pin.

There's absolutely no way that they're going to get rid of the income tax, the IRS, and the Federal Reserve - at least not in my lifetime.

 

Quote:
Originally Posted by anantksundaram View Post

 

 

LOL. If you want to continue to embarrass yourself, go ahead, by all means. There's no law against it.

 

If that is the "most stupid thing ever written here," then the most famous, and widely-used finance textbook in the world -- Brealey and Myers (you can look it up!) -- must be the most stupid thing ever written in finance.

 

Here's a verbatim quote from their introduction to Chapter 8 (p. 238, 9th edition; italics mine): "The company cost of capital is the opportunity cost of capital. It is usually calculated as a weighted average cost of capital, that is, the average rate of return demanded by investors in the company's debt and equity securities."

 

Comprende?

 

Do you really expect either zzzzzz or stelligent to know what they're talking about?

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post #206 of 222

 

Quote:
Originally Posted by jragosta View Post

There's absolutely no way that they're going to get rid of the income tax, the IRS, and the Federal Reserve - at least not in my lifetime.

 

 

That depends on how long you live.

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post #207 of 222

 

Quote:
Originally Posted by Apple ][ View Post

 

 

Slave-like labor? Southern slave owners? Apple?

 

I hold a few small positions in AAPL, I request to be formally addressed as MASTA from now on, LOL.

 


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post #208 of 222

Here's an illuminating article for all the Apple-hating idiots to stew over:

 

 

 

Quote:

An excerpt:

 

 

The most dubious of the lines that the Times attempts to draw is between Apple and the budget crisis at De Anza College, a Cupertino community college where Apple co-founder Steve Wozniak was once a student. The college is facing a “death spiral” because of a decline in funding from the state. This funding, the reader is led to conclude, would be more plentiful if corporations like Apple were to step up and pay, and not escape the tax bill by setting up an office in neighboring Nevada.

What the Times fails to make clear is how community colleges are funded in California. The picture is much more complicated. California community colleges draw the majority of their funding from the state’s general fund — which is drawn directly from the state’s personal and corporate income taxes — and from local property taxes collected by counties. As of the 2009-2010 budget cycle, these two buckets made up about 88 percent of the system’s funding. State lottery funds, federal funds and student fees made up the remainder.

Tax policy wonks — which I’m not — will remember that California was the birthplace of the property tax revolt movement in the 1970s. In 1978, California votersoverwhelmingly approved a measure that limits the amount by which property taxes can increase each year. Since then, at least one estimate pegs the amount that the state’s taxpayers have avoided paying at north of half a trillion dollars as of 2009. In February, the property tax shortfall facing the state community-college system was $41 million. Conclusion: If there is to be blame for the shortage of taxpayer funding at De Anza College, a healthy portion of it should be laid at the door of California’s own voters and taxpayers, who in 1978 thought that property-tax limitations were a good idea.

 

 

Link to the article:  http://allthingsd.com/20120430/apple-and-taxes-what-the-new-york-times-missed/

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post #209 of 222

 

Quote:
Originally Posted by Macnewsjunkie View Post

Start your own company.  I pay $100 in federal taxes for $100,000 in income.  It is legal and the law needs to be reformed.  It won't be as long as people are ignorant about how much they are getting ripped off. The reason we have a deficit is that we have made an overly complex and dishonest system.  Make Congress reform it and bury any member of Congress that says that tax reform needs to avoid raising taxes.  The taxes that should be raised are those who avoid paying taxes.  It is really simple.  Set a floor like the alternative minimum tax for corporations and investment income over 50,000.  

 

On the other hand, if Apple did not take every loop hole they can find then shame on them.  The guilty party is the Lawmakers that made this possible, and not the corporation that is looking after its shareholders.

 

How do you pay $100 of tax on taxable income of $100,000?      Are you writing off personal expenses as business expenses?    Are you talking about $100,000 of company revenue?     Is this a C Corp or an S Corp?

post #210 of 222

Huh? Rupert just soiled himself after reading that he owned the NYT.

post #211 of 222
Taxation is theft, at the point of a gun, plain and simple. I encourage every person and company to do all that they are able to lower taxation.

What is "my tax model"? By recognizing taxation is theft, you owe it to yourself or company to do all you can to minimize the theft. Apple and other companies take measures to minimize theft at their retail stores, and we learn they do the same with governments' theft. After all, a large portion of taxes just goto the tax eaters, which is amoral, inefficient, and out of control.

How many times have you heard bureaucrats and politicians trying to "make us safe", WHEN have you heard them talk about "making us more free"?! Rhetorically, we will be further enslaved by their excuse to make us "safe" but slaves.

Income Tax is the biggest scam in the US, and it is voluntary (yes, even IRS Commissioners admit as much), yet illegally enforced, and uses graft and deception to con people and companies into paying a tax which no person has a legal obligation for. Do some research, look up people like Joe Bannister, and Bill Benson, for example.

ENOUGH IS ENOUGH.


Quote:
Originally Posted by hmm View Post

 

Quote:
Originally Posted by libertyforall View Post

Good for Apple -- no corporation pays any taxes, it is always a cost passed on to consumers in the cost of products!

 

No person or company should pay more taxes than they can find out how to minimize their tax burden!  Kudos for finding ways to lower strangling taxation.  Government is too big at all levels anyways, what we need is LESS government, and the only way to do that is through LOWER TAXES!!!!!

Charging them less taxes doesn't actually bring prices down. If you're willing to pay $100 for an item, why would they charge you $90? Generally it's an issue of how many can be sold at a given price point, but if they could sell the same number of ipads at twice their current price, they would do so. Anyway now here's what you don't understand. You won't find a single example of a successful society within Western culture that uses your tax model. The second issue is that governments rarely ever contract. I don't mean the US government. I mean any government. You won't find what you consider ideal anywhere in the world, especially not in a large scale society.

 

 

Quote:
Originally Posted by MJ1970 View Post

 

 

No.

 

First, we're primarily talking about income taxes here.

 

Second, as a couple of astute posters have already pointed, corporate taxes are simply passed on the their customer. Period.

 

Third, many utilities are paid for directly by utility customers of which corporations are one.

 

Fourth, roads are typically paid for directly by gas taxes, making them essentially a usage fee which companies pay directly or indirectly anyway.

 

Fifth, government education is paid for by property taxes which companies pay directly or indirectly anyway

 

Finally, and most importantly, you assume that none of these things would be ever be possible or provided if it weren't for government and taxes. That's a fallacy.

 

 

At one point we didn't have corporate taxes, but people seem to forget that taxation on individuals was structured differently. Look at the top tax brackets in the former half of the twentieth century to see what I mean. 

post #212 of 222

 

Quote:
Originally Posted by hmm View Post

 

Charging them less taxes doesn't actually bring prices down. If you're willing to pay $100 for an item, why would they charge you $90? Generally it's an issue of how many can be sold at a given price point, but if they could sell the same number of ipads at twice their current price, they would do so. Anyway now here's what you don't understand. You won't find a single example of a successful society within Western culture that uses your tax model. The second issue is that governments rarely ever contract. I don't mean the US government. I mean any government. You won't find what you consider ideal anywhere in the world, especially not in a large scale society.

 

 

 

At one point we didn't have corporate taxes, but people seem to forget that taxation on individuals was structured differently. Look at the top tax brackets in the former half of the twentieth century to see what I mean. 

 

 

You know what is quite sad about your post? You are one of the few here who knows what he's talking about. Corporations won't pass taxes along to consumers. It would be impossible to do so. The American dollar fluctuate a lot these days and those changes are rarely seen in any price index whatsoever. Price fixing is a supply and demand game. Nothing else, nothing more. They simply don't want to pay taxes, but they are dishonest about it.

And for those who say that 47% of people don't pay taxes, well that's the biggest b*llshit assumption ever.

 

Simply imagine this simple scenario. I geniusbate, start a successful corporation by working hard or by a lucky streak, and employ all the posters on these boards. I pay you all one dollar per year, while I reap billions of your hard labor, then have the decency to claim that you don't pay any taxes and that you are not true Americans. Although it will work for some time, it is unsustainable in the long-term. What good is it that someone has a two million dollar car (piece of steel on wheel) when academic institutions are crumbling.

 

One last point, the government makes laws. That's a fact. Corporations blame the government for every law that has passed. However, what some simply fail to mention is that the government doesn't listen to common citizens. It listens to corporations (lobbyists). The problem is that corporations are not really smarter than the government, hence they cannot anticipate the consequences of their actions. When things go poorly, it's the government's fault (a beautiful scapegoat). This is why many politicians later go working for those same corporations.

 

To get to the point, the loopholes were created by the same corporations. I can hardly imagine bureaucrats saying: "Hey, let's create a loophole".

Hence, saying it's OK because it's legal is the biggest slap in the face one can get. By the same logic, if I'm rich and powerful enough, I can influence laws to burn building: "It's OK, it's in the law".

 


Edited by geniusbate - 4/30/12 at 6:22pm
post #213 of 222

Supply and Demand obviously effects prices on commodities like oil and sugar. But Apple sets the prices on their own kit, such as iPads, and they stay generally constant, regardless of supply and demand. People aren't out there in the market bidding the prices up or offloading items and causing the price to plummet. It's not an open auction like wall street or ebay. Pricing is often just an educated guess within a range (Apple does want to maintain their margins).

 

Apple even constrains the pricing that be set by their retail partners via a suggested retail price. You won't see a drastic price difference between an iPad bought from Apple.com and one bought at MacMall.

 

Once you've had your fill of that iPad and sell it on Craigslist or ebay, then it's all about supply/demand.

post #214 of 222

Totally true, but the companies basically simulate that supply and demand game by different mathematical models before the market entry. Once on the market, the prices rarely fluctuate. Taxes, no taxes ... blah... blah ... rarely matters except for election purposes...

post #215 of 222

I can't make out why the NYT is talking about Apple all the time, as if they are unique. Sadly -- yes, sadly -- the international reality of these transglobal corporations allow them to get low-cost labor across the world, and allow the company (and all other companies) to behave this way, in fact, demand it. The gospel of free trade is cemented by treaty after treaty, forget that it's not the best thing for our country. (I know, that's controversial, but that's what I think. How about this? You can't take the money out of the country until you pay taxes on it.

 

Apple alone would pay about $10 billion to the California treasury if they were upstanding citizens in this regard. Wow, that would come in handy for the schools and medical care and infrastructure repair. How about it, Apple? (And everybody else.)

 

But until the legal standards are changed, this is the way it is. No bull-- argument about, "but Apple is..." No, no. What's legal for one is legal for all.

 

In 1997, when Jobs returned, there was no question of manufacturing Macs locally, as Jobs had tried, twice. Instead, the only way to keep things as cheap as they ARE, now, compared to the '80s and early '90s, was to go offshore and set up the production process overseas. 

 

So California schools are begging for tax money so they can stop making education unaffordable. So Silicon Valley disappears, eventually, because it started up from huge government investments in Defense and R&D, and the large quantity of folks educated in California universities, which used to be almost free.

post #216 of 222

 

Quote:
Originally Posted by bigpics View Post

"Designed by Apple in California"

 

Looks better than "Taxed to death BY California".....

 

"Designed by Apple in California. Nyay-nyay-nyay-nyay-nyay!"

 

There, fixed that for you.

post #217 of 222
Quote:
Originally Posted by jragosta View Post

As soon as you agree to pay your legally required taxes and then contribute an additional 10% of your income voluntarily, then you would have the right to make that statement.

As soon as I start working in country A while paying the income tax rate of country B that statement might make sense. As usual, it doesn't.
Quote:
Originally Posted by Rogifan 
In Apple's SEC filing they report a 24.2% effective tax rate, much higher than the 9.8% the Times is reporting.

You think they would officially report that they pay too little tax? As noted in the report:

"Neither the government nor corporations make tax returns public, and a company’s taxable income often differs from the profits disclosed in annual reports. Companies report their cash outlays for income taxes in their annual Form 10-K, but it is impossible from those numbers to determine precisely how much, in total, corporations pay to governments. In Apple’s last annual disclosure, the company listed its worldwide taxes — which includes cash taxes paid as well as deferred taxes and other charges — at $8.3 billion, an effective tax rate of almost a quarter of profits.

However, tax analysts and scholars said that figure most likely overstated how much the company would hand to governments because it included sums that might never be paid. “The information on 10-Ks is fiction for most companies,” said Kimberly Clausing, an economist at Reed College who specializes in multinational taxation. “But for tech companies it goes from fiction to farcical.”"

Now, it could well be argued that if the only public financial evidence is fictional then so is the criticism of it but the report has information from ex-Apple employees who helped setup the systems:

"“We set up in Luxembourg because of the favorable taxes,” said Robert Hatta, who helped oversee Apple’s iTunes retail marketing and sales for European markets until 2007. “Downloads are different from tractors or steel because there’s nothing you can touch, so it doesn’t matter if your computer is in France or England. If you’re buying from Luxembourg, it’s a relationship with Luxembourg.”

Downloadable goods illustrate how modern tax systems have become increasingly ill equipped for an economy dominated by electronic commerce. Apple, say former executives, has been particularly talented at identifying legal tax loopholes and hiring accountants who, as much as iPhone designers, are known for their innovation. In the 1980s, for instance, Apple was among the first major corporations to designate overseas distributors as “commissionaires,” rather than retailers, said Michael Rashkin, Apple’s first director of tax policy, who helped set up the system before leaving in 1999."

Apple has said it “has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules.” and on the face of it, the Apple staff demonstrate a high level of integrity but the lower taxed offices are a reality and that is not ethical. Apple's HQ is in California and iTunes is a core product. UK sales in iTunes being paid by people paying UK tax rates are registered in Luxembourg - the UK site has the contact details of iTunes S.a.r.l in Luxembourg:

http://www.apple.com/uk/contact/

People in the UK pay taxes for healthcare and services. Tax on the profit shouldn't be going to Luxembourg just because they have a lower rate.
Quote:
Originally Posted by SpamSandwich 
Here's an illuminating article for all the Apple-hating idiots to stew over

Please avoid the use of ad-homs in your generalisations. The article doesn't in any way discount the report, all it says is the same thing people are saying here - that it's ok for Apple to avoid taxes on their own earnings as long as they are generating lots of sales tax and income tax from job creation i.e they can profit as much as they like while the majority of the population foots the bill for public services.
Quote:
Originally Posted by libertyforall 
Income Tax is the biggest scam in the US

We don't all have the privilege of avoiding it though and there's little sense in allowing the wealthiest to pay less so that the poorest pay more. We either all pay our fair share or none of us do. The debt the taxes are used for has to be paid, the reasons that the debt exists can be debated at length.
post #218 of 222

 

Quote:
Originally Posted by Marvin View Post


As soon as I start working in country A while paying the income tax rate of country B that statement might make sense. As usual, it doesn't.

 

No, it has nothing to do with multiple countries. You are claiming that Apple should be paying more taxes than legally required because it would be good for the country. If that's the case, it would be good for the country if YOU paid more taxes then legally required, as well. So why aren't you doing it?

 

Quote:
Originally Posted by Swift View Post

I can't make out why the NYT is talking about Apple all the time, as if they are unique. 

 

Because NYT is a smear rag and they get more hits when they attack Apple. No need to even be accurate in their article - as long as it's sensationalistic enough, they get lots of hits by writing about Apple.

Or maybe some NYT exec is short AAPL......

 

Quote:
Originally Posted by geniusbate View Post

 

 

 

You know what is quite sad about your post? You are one of the few here who knows what he's talking about. Corporations won't pass taxes along to consumers. It would be impossible to do so. 

 

That's overly simplistic, as well. While there is no DIRECT link between taxes and selling price, taxes clearly influence selling prices. Consider a basic Econ 101 supply/demand chart.


Taxes are a cost of doing business. If everyone has to pay taxes, that increases the cost of doing business and shifts the supply curve to the right. If I make 1 million widgets and pay $10 M in taxes, then that adds $10 per widget to my cost, so I am willing to make 1 million widgets only if the selling price is at least $10 higher than if there were no taxes.

 

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post #219 of 222

 

Quote:
Originally Posted by geniusbate View Post

Corporations won't pass taxes along to consumers. It would be impossible to do so. The American dollar fluctuate a lot these days and those changes are rarely seen in any price index whatsoever. Price fixing is a supply and demand game. Nothing else, nothing more. They simply don't want to pay taxes, but they are dishonest about it.

It's technically true that corporations don't directly pass taxes on to consumers.  However, in effect they do.  This is because corporate taxes are built into the business model of the competitors who are out there in the market pricing their products against each other (and, BTW, it's not just "supply and demand", but that's a longer discussion).  And so they ALL factor that into their pricing model.  One corporation can't come along and NOT factor in the taxes, because then they would not be profitable.  (Old joke:  "I'm losing money on every sale, but I make it up in volume!")  

 

The American Dollar fluctuating has little to do with anything in this discussion.  In fact, the ridiculously high corporate tax level in the USA leads to corporations essentially bifurcating their operations between the USA and internationally, and never repatriating the profits earned outside the country.

 

"They simply don't want to pay taxes but are dishonest about it?"   So you think that if corporate taxes were reduced to zero, prices would not be lower, profits would just zoom?  Um, no. There's this little thing called competition that would take care of that.  Somebody out there would see that they could lower prices, have a smaller profit margin, sell a zillion of them, and make more profit at the lower price point.  Not to mention get an upper hand in the market in terms of recognition and leadership (which BTW are some of the things other than "supply and demand" that determine pricing.  High tech goods are not oats in a barrel at the general store.)

post #220 of 222

The NYT article does not show any illegal or immoral acts by Apple.  Apple's name could have been replaced with any of hundreds of Fortune 500 companies that follow the same tax strategies.  

 

I used the post publication sell-off to add more shares to my IRA.  

post #221 of 222
Quote:
Originally Posted by jragosta View Post

That's overly simplistic, as well. While there is no DIRECT link between taxes and selling price, taxes clearly influence selling prices. Consider a basic Econ 101 supply/demand chart.


Taxes are a cost of doing business. If everyone has to pay taxes, that increases the cost of doing business and shifts the supply curve to the right. If I make 1 million widgets and pay $10 M in taxes, then that adds $10 per widget to my cost, so I am willing to make 1 million widgets only if the selling price is at least $10 higher than if there were no taxes.

 

Yes, taxes are a cost of doing business. But contrary to the assertion that they are the single big factor is laughable. In the case where taxes are only applied on profits....corporations cannot play with the price. I hope you get the point. Whether I sell you a 1$ pen or the same pen for 200$, if i'm taxed on profits, I would have no reason to jack the price up.

Quote:
Originally Posted by MyDogHasFleas View Post

 

It's technically true that corporations don't directly pass taxes on to consumers.  However, in effect they do.  This is because corporate taxes are built into the business model of the competitors who are out there in the market pricing their products against each other (and, BTW, it's not just "supply and demand", but that's a longer discussion).  And so they ALL factor that into their pricing model.  One corporation can't come along and NOT factor in the taxes, because then they would not be profitable.  (Old joke:  "I'm losing money on every sale, but I make it up in volume!")  

 

The American Dollar fluctuating has little to do with anything in this discussion.  In fact, the ridiculously high corporate tax level in the USA leads to corporations essentially bifurcating their operations between the USA and internationally, and never repatriating the profits earned outside the country.

 

"They simply don't want to pay taxes but are dishonest about it?"   So you think that if corporate taxes were reduced to zero, prices would not be lower, profits would just zoom?  Um, no. There's this little thing called competition that would take care of that.  Somebody out there would see that they could lower prices, have a smaller profit margin, sell a zillion of them, and make more profit at the lower price point.  Not to mention get an upper hand in the market in terms of recognition and leadership (which BTW are some of the things other than "supply and demand" that determine pricing.  High tech goods are not oats in a barrel at the general store.)

Good to have someone who knows it stuff. I oversimplified my assertations but its understandable since it' a message board :) However, the world is so interconnected that it is in fact true that taxes would play a big part in prices, you would see drastic price differences between different countries for the iPad. It is not the case.

 

Canada has much higher taxes than the US. The iPad or any other product for that matter is not necessarily more expensive. Maybe a few dollars but mostly due to the exchange rate fluctuations. Like I said above, if you tax on profits, corporation cannot pass it to the consumer.

 

My biggest point is not the divergent views. However, my problem lies in the simplified rhetoric present in the political sphere, including those boards around such a topic.

 

"You tax more so price will go up or you tax more so the economy will be bad." It's not the case. Since Reagan, taxes have been the lowest since at least a century and except for a defined period of time during Clinton (whatever the merits) the USA has been digging itself more and more in the ground. Most big corporations pay close to nothing and they don't pass along the savings to the consumer or to the country which results in bad education, bad jobs...

 

What's more interesting will be the next elections, where the level of the discourse will be even lower than on those boards. Everything will be simplified to soundbites. "No more taxes" "Taxes will destroy the economy".....

 

Funny times we live in.

post #222 of 222
Quote:
Originally Posted by geniusbate View Post

Yes, taxes are a cost of doing business. But contrary to the assertion that they are the single big factor is laughable. In the case where taxes are only applied on profits....corporations cannot play with the price. I hope you get the point. Whether I sell you a 1$ pen or the same pen for 200$, if i'm taxed on profits, I would have no reason to jack the price up.

 

 

 

You're completely missing the point - and misstating the comments that you're trying to refute.


If EVERYONE has to pay higher taxes, then it is likely to increase the market price. Companies want to make a reasonable profit after tax (where 'reasonable' depends on the circumstances). So higher taxes across the board is likely to increase the consumer's price.

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