Psaki: ‘Unfair and Absurd’ To Say Companies Would Raise Prices in Response to Tax Increases

[Nostra]

Actually, higher taxes forces corporations to operate more efficiently and effectively, and encourages reinvestment in their own business.

Whatever they reinvest in their company is tax deductible or a tax write off.. Give raises to employees, or hire more... all a tax write off....expand your inventory, or build additional retail stores or office space, all a tax write off....

These type of things are done, to avoid owing higher taxes from a higher tax rate....and to avoid having to raise the price of goods higher than the market is willing to pay....

No, higher taxes are passed on to the consumer. Period.

You are economically illiterate.

 

[task0778]

Actually, higher taxes forces corporations to operate more efficiently and effectively, and encourages reinvestment in their own business.

Whatever they reinvest in their company is tax deductible or a tax write off.. Give raises to employees, or hire more... all a tax write off....expand your inventory, or build additional retail stores or office space, all a tax write off....

These type of things are done, to avoid owing higher taxes from a higher tax rate....and to avoid having to raise the price of goods higher than the market is willing to pay....

1. Not every business can operate more efficiently than they already are. Don't you think they'd be doing that already by now?

2. Does it not stand to reason that in general when you raise taxes there is a corresponding reduction in profits? Nobody makes more money when their tax burden goes up, common sense tells us that. Your overhead expenses went up but your revenues didn't.

a. For some companies that reduction in profits means it ain't worth it to stay in business, the risks outweigh the rewards at some point. As state above, not every company can operate more efficiently than they already are, so they have to resort to other avenues. From cutting the number of employees to the number of hours worked per employee, to reducing their benefits to automating to moving to a RTW state or overseas if feasible to raising prices of the market will bear it.

b. For investors in new startups, higher taxes means less reward (profit). Everybody does a cost/benefit analysis before deciding to invest their money, and when you increase the cost then you have tilted the decision away from investing in a new business. You are in effect discouraging the creation of more jobs, and the same holds true for expansions of existing businesses. If there enough profit there, or should an investor put his/her/their money elsewhere for a better return?

c. "These type of things are done, to avoid owing higher taxes from a higher tax rate". You bet your ass they are, but the reality is that many businesses don't have the wiggle room to do anything else but raise prices. Maybe they do the other things you mentioned but it isn't enough, especially when so many small business owners will be affected by the higher tax rates that Biden wants to enact.

How Biden’s corporate tax hike would hit small businesses - Washington Examiner

More than 1 million small businesses would be hit by President Joe Biden's corporate tax rate increases, according to an analysis prepared by the U.S. Chamber of Commerce. This study indicates that the Biden administration's claim that their tax rate increase would only hit the largest...

www.washingtonexaminer.com

 

[Care4all]

2. Does it not stand to reason that in general when you raise taxes there is a corresponding reduction in profits? Nobody makes more money when their tax burden goes up, common sense tells us that. Your overhead expenses went up but your revenues didn't

Gross profit, vs net profit... Gross is before taxes owed are paid.

They can make more net profit, even with higher taxes. If they increase sales, with the same fixed expenses and cost of goods, a corporation can make more profit in dollar terms, so that a higher tax rate on profit, can still net you more profit dollars than the previous year, with smaller volume and lower tax rates.

a. For some companies that reduction in profits means it ain't worth it to stay in business, the risks outweigh the rewards at some point. As state above, not every company can operate more efficiently than they already are, so they have to resort to other avenues. From cutting the number of employees to the number of hours worked per employee, to reducing their benefits to automating to moving to a RTW state or overseas if feasible to raising prices of the market will bear it

Profit, is profit. It means you've paid every single bill, big and small, every salary and every bonus, and bought your materials for future product etc, then basically, what is left over, is the gravy....the taxable profit.... If they reinvest in to growing the business, all of that comes out of the gross profit or borrowed and is not taxable income.

b. For investors in new startups, higher taxes means less reward (profit). Everybody does a cost/benefit analysis before deciding to invest their money, and when you increase the cost then you have tilted the decision away from investing in a new business. You are in effect discouraging the creation of more jobs, and the same holds true for expansions of existing businesses. If there enough profit there, or should an investor put his/her/their money elsewhere for a better return.

In general, new start ups don't make a profit and they pay no taxes for the first 2 to 5 years....or longer, if they have no profit, to tax. But we are not talking about startups, we are talking C corporations, with share holders / on the stock exchange / wall street.

c. "These type of things are done, to avoid owing higher taxes from a higher tax rate". You bet your ass they are, but the reality is that many businesses don't have the wiggle room to do anything else but raise prices. Maybe they do the other things you mentioned but it isn't enough, especially when so many small business owners will be affected by the higher tax rates that Biden wants to enact

Most all small businesses are LLCs or S Corps, or are just individual private owners and are not affected by corporate tax rates, which are public corporations, most all with shares to sell, on the stock market.


As far as your article on c corps being small businesses too.... they can't be that small, to be a C Corp... the article is a scare tactic..... Not to help out smaller businesses, but to try for some kind of sympathy so that the mostly huge, mega size corporations don't get a tax increase imho.



..................

Trump’s Corporate Tax Cut Is Not Trickling Down

Business investment is slowing, despite lofty promises, and worker bonuses were a mirage.

www.americanprogress.org

Two years ago, President Donald Trump and Republicans in Congress cut the corporate tax rate from 35 percent to 21 percent via the Tax Cuts and Jobs Act of 2017 (TCJA). At the time, the Trump administration claimed that its corporate tax cuts would increase the average household income in the United States by $4,000. But two years later, there is little indication that the tax cut is even beginning to trickle down in the ways its proponents claimed.

The Trump administration claimed its corporate tax cuts would translate into a $4,000 raise for the average household​

In selling the large corporate tax cut to Congress and a skeptical American public, the Trump administration claimed that corporate tax cuts would ultimately translate into higher wages for workers. The tax cuts would trickle down to workers through a multistep process. First, slashing the corporate tax rate would increase corporations’ after-tax returns on investment, inducing them to massively boost spending on investments such as factories, equipment, and research and development. This investment boom would give the average worker more and better capital to work with, substantially increasing the overall productivity of U.S. workers. In other words, they would be able to produce more goods and services with every hour worked. And finally, U.S. workers would capture the benefits of their increased productivity by successfully bargaining for higher wages.

According to President Trump’s Council of Economic Advisers (CEA), this process would “in the medium term boost the average U.S. household income annually in current dollars by at least $4,000, conservatively.” CEA’s “optimistic” estimate of the average household’s raise was $9,000. Then-CEA Chairman Kevin Hassett claimed that it would take “three to five years” for these massive trickle-down effects to materialize. A number of critics noted that the Trump administration’s claims were unlikely to pan out, in part because they hinged on the same supply-side economics that decades of tax cuts for the wealthy have consistently discredited.

These critics emphasized a number of flaws with the CEA’s theory of the case. First, corporations were holding large amounts of cash. Second, they were able to access capital very cheaply with interest rates at historic lows for almost a decade. Third, the effective tax rates on U.S. corporate investment, especially debt-financed investment, were already quite low, indicating that the cost of capital—let alone the portion attributable to taxes—was hardly holding back corporate investment. The critics noted that greater corporate market power meant that corporate profits consisted largely of economic rents, not marginal returns on investment. Therefore, a new corporate tax cut would, even if effective, likely be passed onto shareholders rather than being reinvested by the firms receiving the tax cut. Critics emphasized further that even if the tax cuts sparked an investment boom that increased productivity, it would be far from clear whether workers would be able to capture the gains, given the power imbalances between U.S. workers and employers.

The promised boom in business investment never happened​

In the year following the tax cut, business investment increased—but not by nearly as much as the tax cut proponents’ predictions would have implied. Furthermore, a study by the International Monetary Fund (IMF) concluded that the relatively healthy business investment in 2018 was driven by strong aggregate demand in the economy—not the supply-side factors that tax cut proponents used to justify the tax cut. In other words, the increase in business investment from the relatively weak 2015-2016 period seems like another example of an economic indicator returning to more-normal levels.

Worse, business investment has slowed more recently. The most recent data show that private nonresidential investment actually declined in the second quarter of 2019, contributing to an overall slowdown in growth. Federal Reserve Chairman Jay Powell pointed to the “continued softness” expected in business investment and declining output in manufacturing sector as reasons for the Fed’s recent rate cut. Measures of the investments that companies are planning have also declined. As analysts at the nonpartisan Tax Policy Center wrote recently, “This slowdown in business purchases of plant and equipment contrasts sharply with President Trump’s rosy forecast of a long-term investment boom that would lead to annual wage increases of $4,000 or more.” Moreover, investment in housing has declined every quarter since the passage of the tax legislation.

Instead of substantially increasing investment, the windfall businesses received largely went to paying off wealthy investors. One analysis of Fortune 500 companies found that just 20 percent of increased cashflow in 2018 was spent on increasing capital expenditures or research and development. The remaining 80 percent of cashflow went to investors through buybacks, dividends, or other asset planning adjustments. The vast majority of corporate stocks are held by the wealthy, including foreign investors, and thus they are the ultimate beneficiaries of the windfall corporate tax cuts.

To be sure, President Trump’s erratic pronouncements on tariffs have clearly created considerable uncertainty for businesses, leading many to hold back on investments. At this point, it is not possible to disentangle the negative effects of Trump’s misbegotten trade war from his tax policies. What we do know, however, is that nearly two years after the tax bill passed, the investment boom that was supposed to justify the corporate tax cuts—and even pay for those tax cuts over the long run—simply has not happened.

 

[Care4all]

No, higher taxes are passed on to the consumer. Period.

You are economically illiterate.

Yet lower tax rates are not...

Sure, whatever!

 

[dudmuck]

No, higher taxes are passed on to the consumer. Period.

You are economically illiterate.

You can only "just raise prices" to whatever you want if you have a monopoly on a necessity.
If you don't have a monopoly on a necessity, any corporate tax increase will be split between an increase in your prices and a drop in your profits.
The balance between the two depends on the elasticity of demand for your product.

So the cost of corporate taxes are usually split between the companies and the customers.

 

[22lcidw]

If there was a market for an additional 500 widgets, you would already be filling it regardless of the taxes

You widgeted prosperous cities into poverty centers.

 

[22lcidw]

Yet lower tax rates are not...

Sure, whatever!

Why do people leave higher tax areas then? We are trying to figure it out.

 

[Care4all]

Why do people leave higher tax areas then? We are trying to figure it out.

We brought the corporate tax rate down from a 35% tax rate to a 21% tax rate when corporations were ALREADY doing fantastic and were hot, hot, hot....the stock market was booming.

Not a dime of that yearly tax cut went to consumers, year after year after year since the 2017 tax cut passed.

It's time to stop repeating the Big Corporation bull crud propaganda. Just stop!

 

[Independent thinker]

And all 43 Biden supporters nod in agreement.

Psaki: 'Unfair and Absurd' To Say Companies Would Raise Prices in Response to Tax Increases

White House press secretary Jen Psaki on Monday defended House Democrats' tax plan in the face of criticism that the legislation would see taxes and consumer prices rise for many Americans. Psaki insisted President Joe Biden is committed to keeping taxes the same for anyone making less than...

freebeacon.com

The left seem to always have this mentality that you can rip the clothes off of a wealthy person, rape them, and then expect the wealthy person to just sit there, do nothing, and accept that they deserved it and that it was their own fault. They don't expect women to accept all that and yet they somehow believe that the wealthy will just accept it and not do anything about it. Then the left get their panties in a wad when the left take countermeasures.

 

[rightwinger]

The left seem to always have this mentality that you can rip the clothes off of a wealthy person, rape them, and then expect the wealthy person to just sit there, do nothing, and accept that they deserved it and that it was their own fault. They don't expect women to accept all that and yet they somehow believe that the wealthy will just accept it and not do anything about it. Then the left get their panties in a wad when the left take countermeasures.

The right always had the mentality that if we don’t pamper the wealthy, they will leave us

 

[jbrownson0831]

We brought the corporate tax rate down from a 35% tax rate to a 21% tax rate when corporations were ALREADY doing fantastic and were hot, hot, hot....the stock market was booming.

Not a dime of that yearly tax cut went to consumers, year after year after year since the 2017 tax cut passed.

It's time to stop repeating the Big Corporation bull crud propaganda. Just stop!

So penalize them instead....good Dimmer philosophy.

 

[Weatherman2020]

The right always had the mentality that if we don’t pamper the wealthy, they will leave us

Yet your entire welfare and economic situation is based upon what wealthy people provide you.

 

[Weatherman2020]

We brought the corporate tax rate down from a 35% tax rate to a 21% tax rate when corporations were ALREADY doing fantastic and were hot, hot, hot....the stock market was booming.

Not a dime of that yearly tax cut went to consumers, year after year after year since the 2017 tax cut passed.

It's time to stop repeating the Big Corporation bull crud propaganda. Just stop!

Liar. All you have are pathetic lies.

 

[rightwinger]

Yet your entire welfare and economic situation is based upon what wealthy people provide you.

Actually it is working Americans who create wealth

 

[Weatherman2020]

Actually it is working Americans who create wealth

Thanks for validating your reliance upon wealthy people.

 

[rightwinger]

Thanks for validating your reliance upon wealthy people.

The wealthy people rely on exploiting those who create wealth

 

[Care4all]

Some did lower cost, but there were various other options available. Some gave employees pay increases or bonuses while still others provided shareholders the benefit of a bigger dividend. The tax decrease provided companies the opportunity to pay down debt or buy back stock having affect of increasing the value to shareholders. I suspect that going in the opposite direction companies will find it much easier to pass along costs rather than going to employees, shareholders and banks with hat in hand asking for that money back.

Trump’s Corporate Tax Cut Is Not Trickling Down

Business investment is slowing, despite lofty promises, and worker bonuses were a mirage.

www.americanprogress.org

But did you get a $4000 to $9000 raise due to the corporate tax cuts as Trump PROMISED?

 

[easyt65]

And all 43 Biden supporters nod in agreement.

Psaki: 'Unfair and Absurd' To Say Companies Would Raise Prices in Response to Tax Increases

White House press secretary Jen Psaki on Monday defended House Democrats' tax plan in the face of criticism that the legislation would see taxes and consumer prices rise for many Americans. Psaki insisted President Joe Biden is committed to keeping taxes the same for anyone making less than...

freebeacon.com

Psaki, like Biden, is a proven LIAR who has ZERO credibility. Again, like Joe, nothing she says can be believed...NOTHING.

 

[Hutch Starskey]

And all 43 Biden supporters nod in agreement.

Psaki: 'Unfair and Absurd' To Say Companies Would Raise Prices in Response to Tax Increases

White House press secretary Jen Psaki on Monday defended House Democrats' tax plan in the face of criticism that the legislation would see taxes and consumer prices rise for many Americans. Psaki insisted President Joe Biden is committed to keeping taxes the same for anyone making less than...

freebeacon.com

So prices went down with the tax cut then?

 

[Weatherman2020]

So prices went down with the tax cut then?

Did you see prices skyrocketing like they are under Joe?