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Response to TampaAnimusVortex (Reply #53)

Sat Dec 19, 2015, 07:57 PM

54. So you agree no economists think corporate taxes are "generally" passed on to consumers.


Taxes are a cost to corporations much as labor and capital. Taxes are passed on to the consumer in prices generally.

Corporations generally don't pay taxes, they collect them.


That was your post, and it is not a true statement. I was happy to grant you that it is possible for corporations to try to pass on taxes to consumers, although it "generally" doesn't happen, but your argument was that it generally does happen.

That argument is wrong, and the chart you presented pertaining to costs and supply and demand does not have anything to do with how corporate taxes work.

It is a silly argument that is the equivalent of suggesting that raising taxes on individuals causes them all to run out and get higher-paying jobs so they make exactly the same amount of money after taxes as before. Things just don't work that way.

Again, the proposition that corporate taxes are just "costs" that pass through corporations to consumers has been studied, and it is false.

In the first place, almost no economists believe that the incidence of corporate income taxation falls on consumers. Most studies show that the actual burden of the tax is unequally divided between corporate shareholders, the corporation itself and the corporations employees but never consumers. In 1962, Arnold Harberger, a conservative University of Chicago economist and colleague of Milton Friedman did a careful study of the incidence (distribution of the burden) of the corporate tax and found that it fell largely on corporate shareholders in the form of lower dividends and stock value. Other studies show some ratio of distribution between labor and management, but it almost never includes consumers of the corporation's output. Another free market economist, Bruce Bartlett (a former Reagan adviser), explains why;

"...most people assume that the corporate income tax is largely paid by consumers of its products or services. That is, they assume that although the tax is nominally levied on the corporation as a whole, in fact the burden of the tax is shifted onto customers in the form of higher prices. All economists reject that idea. They point out that prices are set by market forces and the suppliers of goods and services arenít only C-corporations, which pay taxes on the corporate tax schedule, but also sole proprietorships, partnerships and S-corporations that are taxed under the individual income tax. Other suppliers include foreign corporations and nonprofits. Therefore, corporations cannot raise prices to compensate for the corporate income tax because they will be undercut by businesses to which the tax does not apply."

http://www.dailykos.com/story/2014/5/8/1297707/-Do-Corporate-Income-Taxes-Really-Get-Passed-On-To-Consumers-Another-Conservative-Zombie-Myth

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LineLineLineLineLineLineLineLineReply So you agree no economists think corporate taxes are "generally" passed on to consumers.
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