There are nuances to that so called 'talking point' , but the bottom line is it is irrefutable = and THAT is why you hate it.
Let me explain this in story form, that way we will minimize the use of all of those yucky numbers and math and stuff...
Dan's Widget Company needs a profit margin of about 5% yearly to remain competitive - which means have the money to pay the bills, the shareholders, the talent, and R&D for the next big thing. If Dan's has a good year where they make maybe 7 or 8%, then they might be able to expand, pay bonuses, hire new talent, upgrade infrastructure, etc etc. They might even bank some of that for a rainy day.
Now, if taxes, fees, etc, increase to the point where Dan's profit margin falls below 5%, what happens ?
Probably nothing at first, but eventually the company will be faced with tough decisions if they can't get back to that 5% baseline soon.
Choices :
A ) Quality reduction - produce the same widget at the same price using less expensive materials. If the product becomes too shoddy, consumers will go elsewhere.
B ) Cut back R&D and focus on the core widget business - if Dan's continues down that path for too long, they will fall behind their competitors, and their widget will no longer be attractive to consumers.
C ) Cut back what they pay their talent - Belt tightening will work for the short run, but talent will expect to get paid what its worth, and if Dan's wont pony up the cash, a competitor surely will.
D ) Decrease the size of business, sell assets. - Works until Dan's ends up housed in a tool-shed in an empty lot someplace.
E ) Decrease the size of business, lay-offs. - Works until Dan's can't keep up with demand, and they lose business to their competitors.
F ) Relocate to a more tax-friendly state/country. - This path is often followed, which is why liberal-run states are losing their businesses to conservative ones. The irony is increased taxes assessed return decreased tax revenue.
G ) Increase the cost of widgets to maintain the 5% bottom line.
F ) Some combination of any or all of the above.
Now take a look at line G - increasing the cost to consumers keeps Dan's in business, and everybody employed. And if it only takes an increase of a few cents on the dollar per widget, nobody will really notice.
