Quote:
Originally Posted by crockett
If they charge more.. guess what they pay "more" taxes.. It's like a dog chasing his tail it just dosn't do much for them.
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Let me see if i can explain this so you can understand it.
Year 1 - Company A makes $100k in pre-tax net revenue.
Taxes are at 25% so Company A pays $25k in taxes and nets $75k post-tax.
Year 2 - Govt raises taxes and taxes go up to 30%.
Company A (knowing taxes will be higher) raised the price of what it sells by 10% and has a pre-tax net revenue of $110k (it would in fact be higher but I will spare those details for you).
30% taxes are $33k yielding a post-tax profit of $77k.
Company A actually made more $$ and paid the higher tax rate. Oh wait, they passed the taxes on to the consumer. The fact that they can do this is because all other companies will too.