Posted on 07/25/2018 7:25:36 PM PDT by E. Pluribus Unum
When you can explain why massive business tax cuts have led to accelerating CPI rather than price decreases maybe you’ll get it (hint producer surplus increased). In this case businesses are a euphemism for owners/shareholders.
Put another way, when my firm did the math in December and realized we’d save >$20 million in taxes this year, lowering prices wasn’t even in the discussion. Mgmt’s top three priorities for that extra cash was share repos, dividend increases and capital investments, in that order (aka producer surplus). In fact, our prices have gone up a bit more this year YTD than same time last year.
Your still confusing the issue with internal costs. It matters not what you do with the tax reduction. Costs going up or down may or may not affect the price. What does not change however is that the end user is paying ALL the costs on tbat product or service and that means they pay all the taxes. I can’t imagine being employed in the financial dealings of any company and not understanding that taxes are a cost and that all costs are reflected in your pricing and ultimatly paid by the end consumer.
Costs going up or down may or may not affect the price. What does not change however is that the end user is paying ALL the costs on tbat product or service and that means they pay all the taxes.
How is it possible if they pay for all the costs if costs going up may not effect the price? Now, answer my question in my prior post.
I think what you may be getting at, is the product/service doesn't get produced unless there is some producer surplus (profit), which is true - the firm will shut down. That isn't what we've been talking about, though, and isn't the issue with tariffs in 99% of the cases. I have purposefully not even made it more complicated to show it, which I can as there are a lot of other things to consider we haven't even discussed.
Are you serious? If costs increase maybe you take a pay cut and don’t raise your price there are a lot of possibilities. If costs increase significantly or you are already close to your margins You have no choice but to raise prices. You must be kidding, No one can’t be this dense and work in the financial sector. If you are serious don’t let your employer read this or you may lose your job. Taxes are costs dude. Your price will include all costs and hopefully a margin of profit. If you have a little wiggle room in your margins you can sometimes absorb an increase in costs, sometimes not. I really think this subject is beyond your understanding.
My posts have nothing to do with tariffs. My post was directly addressing the statement “businesses don’t pay taxes”. You have been going on about how that is not really true.
What a disgusting woman.
I’ll post a real example of how this works for a retailer in a bit. Maybe that will help.
lots of fellow Americans believe in confiscatory taxation, as long it’s not them paying it. Wait until they find out it will be them paying it.
Ah so taxes are a cost that doesn’t affect the price of products or services because business pay them. Got it.
Strawman alert! That is not what I said. It's also not what is illustrated by the producer and consumer surplus graphs I showed you. The cost of the item rising does indeed effect the price, as the producer supply line shifts. The question is does this
1) all hit the consumer (which is what you have been saying
2) all hit the supplier
3) part to each
4) another party. The answer is C and D in the case of the world today.
Here is an example of a large retailer that currently buys a widget from a company in China. Let's pretend in 2016, Walmart did an RFP from 10 different firms for the same Widget, which Target sells for $18.
Chinese company X charged Walmart $10, plus $0.50 distribution. They can produce the item for $6 cost
US Firm Y charged Walmart $11.25, plus $0.25 distribution. The US firm can produce this for $7 cost
Malaysian firm charged Walmart $10.75 plus $0.50 distro. The Malaysian firm can produce this item for $6.50 cost
Let's assume the other 7 bids are all various levels of degree inferior for Walmart. Walmart, of course, chose the Chinese firm, as that was the lowest bid by $0.75.
Now, let's say Trump adds a 20% tariff to Chinese goods. Chinese firm calls Walmart and says we need to up the price to $12 + $0.50 distro b/c of the tariff. What is Walmart going to do? They'll say - no way, I have (at least) 2 other firms I can get this product from for cheaper. You are going to have to keep your price, including the tariff, at $10 or I'm going to another company in a different country.
At this point, the Chinese company is in a bind. If they lose Walmart's bid entirely, the entire factory may shut. They have $4 worth of profit to play with.
Ultimately, the Chinese firm will either eat part of the $4 gross profit they make and keep the bid, or Walmart then starts buying from the Malaysian company. Let's assume that ultimately lands between $10 and $10.75. In either case, the tariff to the consumer, even in the worst case, is less than the 20%, because at most the cost goes up $0.75. So out of the 20% tariff, the Chinese firm producer surplus is at least $1.25 of that. Of the remaining up to $0.75, Walmart may eat part of it or try to pass it into the consumer, some variation.
The point is, while the cost does effect the price, it does not always cause the price to go up or down when costs (including taxes and tariffs and regulations). This again goes back to consumer and producer surplus, which changes as costs change and consumer preferences change.
No, of course not because you have no idea what you want that number to be and don’t want to be held accountable for what you say.
You are repeating exactly what I said ealier. Lol. I have owned and been partner in four businesses. From your text book ramblings I don’t get the impression you’ve been there. IMO you are kinda looking foolish continuing to argue that businesses don’t pay taxes. It’s good no one else is paying attention to this thread cause you would be getting flamed by now for silliness.
Sigh. The example I gave is exactly what happens for items by large retailers - I know - I’ve been there and done that. You might have been involved in a handful of very small businesses but I’ve been an exec for companies worth billions of dollars for the last 7 years with one step lower for the previous 5 years, with a T10 MBA, a BS in Econ with > 4.0 gpa, saved my last two companies over $20 million/year each, came up with the strategy my $7B company is currently executing it on among many, many other things. I went from an Ops mnager to an SVP of finance for a larger company in less than 7 years. I will retire before I hit 45 with no inheritance or my folks paying for my school with about $5m saved. Have a good evening.
Happy for ya dude but you been arguing in a circle and you know it and it’s on the internet never to disappear. Take care.
Lmao - only one arguing in a circle is you. I used actual real example of how pricing negotiatioms go and real micro economics. You used repeating your belief over and over again- except the one time you literally contradicted yourself in back to back sentences. Good night.
Wait until other people read your posts. Maybe we should repost this conversation and get some unbiased opinions.
More than welcome it.
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