Gas Prices Hit Working Class

You tried to explain then, and it makes no more sense than this one does because your explanation doesn't address the point. If the goverment assesses taxes on a company, that company pays taxes out of the revenues it gets from consumers. The company has no other money on which to draw to pay it with. Your explanation is flawed in that it fails to account for that.

If that $100 market price won't cover the cost (production, materials, overhead, taxes, etc ... i.e., the cost of doing business), then the product will cease being made. Companies do not exist to take a loss. If taxes cause a product to be priced beyond what the market will bear (meaning that the company can't pass on the tax to the consumer), the product will cease to be made.

In that case, the company will have no revenues for that product to pay taxes on.

If the company can make the product for less than $100 (the market price), it may decide to pay the taxes out of the $100 it receives, which still means that the tax was passed on to the consumer, since again the consumer is the one paying the taxes with the $100 per piece.

You too.

 

I think it absolutely does, because it is a part of the cost of making the product. That is all factored into what the company puts the product on the market for. If a company says, "We will have to pay 36% of our income to the government," that will most certainly factor into what they sell it for.

Let's say that before taxes, a company is operating at a 20% profit margin. That means a 36% tax would cancel all revenues and in fact mean the company was running a deficit. They have come up with that extra 16% from somewhere, and the only option is putting it onto the price of the product. If that places it out of the market price, they will cease to sell; they will sell the remaining inventory at a loss; and they will cease to produce it.

Now, here's the rub, if the government ceased corporate taxes tomorrow, those prices wouldn't drop because they are already built in and people are paying them.

 

Don't corporations just pay taxes on the profit?

 

No, they also pay taxes on property, wages, etc. All of these things have to be rolled into the cost of doing business.

My example above was poorly worded, though.

 

It would be an impossible and vicious circle to pass taxes on to the consumer. The more you raise your prices the more liability you create tax wise since companies are taxed on their profits. Whjat companies do is look to find reasonable avenues to shelter their costs and reduce their liabilities.

 

But as I have pointed out, part of their cost is taxes. They have to be paid, and that money can only be gotten from consumers. There is no other source of income.

 

If your employer pays you $10 per hr. You pay maybe $3 of it in taxes. the employer must pass on, as a cost, the whole $10, to the buyer/customer.

 

Taxes are paid on net profits, not gross profits.

 

If you are charging the consumer for the taxes charged to you you are now raising your taxes yet again based on taxes. This is idiotic and does not happen much even though it is seen as the cost of doing business. Not all such costs are passed on to the consumer. Tax costs are dealt with by avoiding taxes not adding to them. Every time you pass your tax costs on to the consumer you are raising your taxes again. It is a never ending cycle.

 

I know I have passed or worked in the cost of many so called taxes into what I charge. Road taxes, fuel taxes, my part of FICA, workers comp(some don't call this a tax but I do) fixed tax on tires and the list goes on and on. Look at the taxes one pays on his employees. If I didn't I would lose on each load. I don't think many know how much we pay in taxes.

 

Yes, sort of like this senario. Gas prices have increased for you to travel to and from the church building. So, as a solution, you prepare a sermon on tithing and offerings, a real barn burner. The congregation feels so guilty, church income increases, and voila, no more gas price problem.

 

No, you can't say that using my logic.

 

That is all built in to the system. It is not a never ending cycle.

 

I have no idea how this is similar to anything I have said.

I walk to church and I don't preach on tithing. I try not to guilt people into doing anything. And gas prices are a problem no matter how much money comes in in the offering.

 

"built into the system"? What does that mean? How is it built into the system?

 

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LE