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From: stewart@ihldt.UUCP (R. J. Stewart)
Newsgroups: net.legal
Subject: Re: Corporate income tax
Message-ID: <2790@ihldt.UUCP>
Date: Wed, 13-Mar-85 16:27:28 EST
Article-I.D.: ihldt.2790
Posted: Wed Mar 13 16:27:28 1985
Date-Received: Thu, 14-Mar-85 05:58:12 EST
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Organization: AT&T Bell Laboratories
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>>> What good does taxing corporations do?  ...
>>> Individuals pay all the taxes in the end.

> Doesn't anybody study economics any more?  A basic principle is that
> business do *not* necessarily pass their costs on to the consumer.  Some
> businesses can pass on more than their costs.  But most businesses, faced
> with a 5% cost increase, find themselves only able to raise prices 4% without
> losing money due to decreased demand.  Believe me, as a businessman I *know*.

I claim that individuals *do* bear the taxes in the end.  Consider the
ways a business can support a tax:

1) Raise prices
2) Lower quality
3) Lower wages
4) Reduce owners' profit (or dividends, if a corporation)
5) Become more efficient

It seems to me that:

 - 1, 3, and 4 are clearly taxes on individuals, not businesses.
 - 2 is not substantially different from 1.  To get the same product
   (that is, of the same quality), you have to pay more.
 - 5 is not a way out.  The increase in efficiency could have been
   gained *without* the tax, so that one of the previous cases must
   apply.

If I've missed something, let me know.  I think this covers all the
bases, though.

Bob Stewart
ihldt!stewart