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Bill Dollar

join:2009-02-20
New York, NY

1 recommendation

reply to FFH5

Re: Worth repeating - corporations don't pay taxes-customers do

Um, actually you are 100% wrong, and you should know better. Unless the products are completely price inelastic to the consumer, some of the tax incidence falls on the company as well as the consumer. Verizon's basket of goods are not inelastic.

Bottom line, any tax levied on Verizon, some portion fall on the customer, but the rest fall on the company. You know, the one that paid it's CEO nearly $20M a year in compensation.

»en.wikipedia.org/wiki/Tax_incidence


FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5

1 recommendation

said by Bill Dollar:

Um, actually you are 100% wrong, and you should know better. Unless the products are completely price inelastic to the consumer, some of the tax incidence falls on the company as well as the consumer. Verizon's basket of goods are not inelastic.

Bottom line, any tax levied on Verizon, some portion fall on the customer, but the rest fall on the company. You know, the one that paid it's CEO nearly $20M a year in compensation.

»en.wikipedia.org/wiki/Tax_incidence

I understand that, but almost all corporations are operating under price inelastcity, so taxes are all passed on to consumers as the example in the link you provided states:
Imagine a $1 tax on every barrel of apples an apple farmer produces. If the product (apples) is price inelastic to the consumer (whereby if price rose, a small demand loss would be accounted for by the extra revenue), the farmer is able to pass the entire tax on to consumers of apples by raising the price by $1. In this example, consumers bear the entire burden of the tax; the tax incidence falls on consumers.
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»www.politico.com/rss/2012-election.xml
»www.politico.com/rss/2012-election-blog.xml



Bill Dollar

join:2009-02-20
New York, NY

1 recommendation

You don't seem to understand the underlying economic concept of price elasticity, so I'm not sure furthering this discussion is of any use. But it is 100% wrong to say "almost all corporations are operating under price inelasticity." That's completely the opposite of the empirical reality, and it is not even close to reality in telecom. The basket of goods Verizon sells are nowhere near being inelastic, especially their highest margin offerings like mobile and fixed data.

p.s., citing that example without citing the rest of the example is either misleading or pardon the lack of a better word, ignorant. Read further down on the apples example, "On the other hand..."


CableConvert
Premium
join:2003-12-05
Atlanta, GA
Actually, Verizons prices are quite elastic WHERE THERE IS COMPETITION. In those markets prices trend lower to compete. Where none exists, they are not. Both of you are somewhat right and somewhat wrong. In a competitive market, there is a maximum price consumers will pay or they will go to a competitor that offers more value...regardless of taxes the corporation pays. If the market is not competitive, every increase is passed on to consumers. In this market even if taxes were 0 prices wont come down...why would they? You have the market cornered my monopoly, or duopoly. You can't discuss free market solutions when you dont have a competitive free market, and thats the 1000lb elephant in the room everyone refuses to see from the FCC to Congress.


CableConvert
Premium
join:2003-12-05
Atlanta, GA
reply to FFH5
...unless there is a competitor that figures out a way to do it better/cheaper that gives the consumer more value. Example...flat screen TVs. When you had 1 or 2 companies that made them, prices were very high. When the "generic" companies started to manufacture them, prices dropped like a rock, and the 1 or 2 that were making them matched the price drops. Prices can be quite elastic under certain circumstances. Saying all are inelastic is wrong


93388818
It's cool, I'm takin it back
Premium
join:2000-03-14
Dallas, TX
reply to Bill Dollar
said by Bill Dollar:

...the one that paid it's CEO...

irrelevant


Thaler
Premium
join:2004-02-02
Los Angeles, CA
kudos:3

1 recommendation

reply to Bill Dollar
said by Bill Dollar:

Bottom line, any tax levied on Verizon, some portion fall on the customer, but the rest fall on the company. You know, the one that paid it's CEO nearly $20M a year in compensation.

You believe if costs are raised on (insert company here) that they'd just bite the bullet, or would they pass that cost onto their customers?

Pretty sure if the costs of business for Verizon increases by $1 per line, they're going to charge at least $1 more per line to match.