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From: brianb@drutx.UUCP (Brian Bell)
Newsgroups: talk.politics.misc,net.taxes
Subject: Re: Companies *do* pay taxes
Message-ID: <1377@drutx.UUCP>
Date: Tue, 23-Sep-86 10:18:59 EDT
Article-I.D.: drutx.1377
Posted: Tue Sep 23 10:18:59 1986
Date-Received: Wed, 24-Sep-86 00:03:13 EDT
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Organization: AT&T Technologies, Denver CO
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Xref: mnetor talk.politics.misc:274 net.taxes:584

I wrote:
>> A customer making a choice between equivalent products made by
>> competing companies will choose the least expensive one (at least
>> according to the "rational person" premise of economic theory).

Dennis replied:
> I don't know what all the "rational person" premise says,
> but I do know from a few marketing courses that price
> isn't the only factor a person considers when making a
> purchase decision.  Any argument that starts from that
> premise is suspect in my mind.

You are correct.  *Price* is only a portion of the costs I incur
when I buy a product.  Other costs may be transportation to my location,
duty and brokerage fees if I'm buying a product from overseas, or repair
and replacement costs for shoddily built material.  There are also a
myriad of possible costs connected to the terms of the sale.  For instance,
if I am required to pay in advance and the material is not in my hands for
a number of weeks after that, I have incurred a cost through losing the
use of that money for a period of time.

The "rational person" premise states that people will choose a course of
action based on minimizing their costs and maximizing their benefits.
In an oversimplified phrase, "get the most for your money".  If the science
of marketing (or is it an art?) did not exist, I believe this premise
would be quite valid.  (On the other hand, I could argue that marketing
merely adds considerations of prestige, self-esteem, etc. to the rational
decision of which product to buy, but that's another subject entirely.)
However, we all know that I did not buy my black and gold 280ZX with T-tops
and leather interior because it was the best car for the money.

But...

This really has nothing to do with my argument, which is based on two
companies with basically equivalent products (and equally effective
marketing, if you care to add that).  If one company pays a higher tax
rate, that DOES NOT equate to higher prices for its product.  If it
did, that company would not be able to compete.  It equates to LOWER
PROFITS for that company, which is the boat that many U.S. corporations
are riding in.  And don't forget,

PROFITS = INVESTMENT = GROWTH = JOBS  (ok, ok, oversimplified...
							 but true).


> Dennis R. Vogel

Brian Bell
AT&T Technologies
Denver CO