Do the companies in this country actually pay taxes?

[rich_t]

Or do they have simply roll their tax burden onto the price of what the consumer pays?

Let's take the dairy farmer as an example.

The dairy farmer milks his cows, he takes the product of his labors to a dairy processing plant. 

The dairy farmer knows that he will be taxed on his income of his product.  He includes that taxation cost as part of the price of his product to the dairy processing plant.

The dairy processing plant, processes the dairy goods, then sell them to a wholesaler.

The dairy processing plant knows they will be taxed on the income of what they sell to the wholesaler.  So they increase their costs accordingly.

The wholesellers sell their product to a retailer, these wholesellers know they will be taxed on the income of their product to the retailer, and they charge the retailer accordingly.

The retailer sells the product to the consumer, the retailer knows that they will be taxed on the income of the product to the consumer, so they increase their cost to the consumer accordingly.

So...  At the end of the day who pays the taxes for that product?  It wasn't The farmer, the dairly processing plant owner, the wholeseller or the retailer.  The consumer did.

In fact the consumer paid the taxes for 4 different companies.

This applies to any industry in the country.

[thundley4]

If dairy farming is anything like other farming, the price is set by the market, not the seller. Other than that , it's pretty much true.

[MrsSmith]

If dairy farming is anything like other farming, the price is set by the market, not the seller. Other than that , it's pretty much true.

That is true for milk prices.  The farmer and the consumer are the ones shafted in the given scenario.

[rich_t]

Oh for crying out loud...  Replace dairy farmer with widget maker.

The point remains the same.

 

Companies DO NOT pay taxes.  They roll the cost to the consumer.

[MrsSmith]

Oh for crying out loud...  Replace dairy farmer with widget maker.

The point remains the same.

 

Companies DO NOT pay taxes.  They roll the cost to the consumer.

In that case, you'd be right.  Just saying that farmers, ranchers and dairy producers have no power to price their goods.  They have to take whatever the market is.  I'm sure they aren't the only ones stuck taking market prices...look at oil producers. 

Still, your equation is true.  All taxes are paid by the consumer, in the end.

[ReardenSteel]

That idea is not quite "all right" or nearly "all wrong".

Even though the US is a "mixed economy" and not a free one, we still have a pretty dynamic market. Companies actually pay taxes, by the means you laid out, as consumers themselves. That is they pay the tax inflated cost for their raw materials, employees, property etc.

Also, it's important to remember what the French economist Bastiat called 'the things unseen' and note that supply and demand are at work at all times. What I'm getting at is the fact that the more Product X cost, the less Product X is sold. Therefore, the higher the tax (which must be passed on) the more a company is hurt with fewer sales. (an unseen tax)

[Rebel]

In that case, you'd be right.  Just saying that farmers, ranchers and dairy producers have no power to price their goods.  They have to take whatever the market is.  I'm sure they aren't the only ones stuck taking market prices...look at oil producers. 

Still, your equation is true.  All taxes are paid by the consumer, in the end.

....and when the taxes get too high, and they can't keep up with farming when the price of the commodity drops, they get out of farming.

Great job, Dems! Taxes, aren't they grand!!?

We need the damn Fair Tax.

[Woody]

Just saying that farmers, ranchers and dairy producers have no power to price their goods.  They have to take whatever the market is. 

Minor quibble: The producers are half of the market - the supply half.  A single dairy producer can't change the price of milk much (milk is a bad example, really, because the US gov't sets a price floor for milk, but let's run with what we brung).  But if a consortium of dairy producers got together and agreed to limit their supply in order to raise the price (see: OPEC), then it would have a significant effect.

As for the original point, taxes are a cost of doing business.  Businesses are profitable (and in existence) only when the total revenue exceeds the total costs.  Corporate taxes create a disincentive to start a business. 

Really simplistic example: I have a business plan that costs $100,000 to execute.  I have a 50% chance of success, in which case I will make a 20% profit annually; I also have a 50% chance of failure, in which case I will lose all of my investment.  On the surface, this seems like a worthwhile endeavor: 20% forever vs. zilch; a lot of folks would take that bet.  Now let's reduce that profit by 35%, and see how many folks would take 13% forever vs. zilch.  Hm... Not so many. 

Now, how many jobs are lost due to corporate income taxes?  How many inventions have we lost because it's just not worth it to put decades of your life into something, only to have the government take a third of it? 

I view taxes as friction on the economy.  Some is necessary, but the current tax structure is a disaster.  Don't even get me started on the whole "progressive is better" thing...

[JohnnyReb]

Companies, cooperations, taxes, maxes......It's just another tax collection point for the government in the great "chain of Taxation".

Stop collecting along the chain, let the consummer pay it all at purchase, like they're already doing. Talk about starting a revolution, it'll be the great war caused by "tax on milk", "he Boston milk party"........nawh, not Boston, they're use to high taxes.

You know, like, store owner to customer, "That'll be a dollar 29 for the gallon of milk and $3. 26 in taxes for a total of.........$4.55. Thank you and have a good day." 

[formerlurker]

A single dairy producer can't change the price of milk much (milk is a bad example, really, because the US gov't sets a price floor for milk, but let's run with what we brung). 

Doesn't the government subsidize the dairy industry? 

[Woody]

Doesn't the government subsidize the dairy industry? 

Exactly, by setting a minimum price for milk.  The price floor is set above the natural market price, so a surplus of milk is produced.  The government buys that milk, and distributes it as international aid, although sometimes they turn it into welfare cheese. 

The irony of the "milk-based international aid" thing is that the countries that receive the most aid, also have the highest incidence of lactose intolerance (Asia and Africa).

(This is all from a late-80s degree in Economics; things may indeed have changed.)