Thread: Say thanks to the democrats for trying to raise gas prices!!!!!
View Single Post
Old 02-28-2008, 03:44 PM  
crockett
in a van by the river
 
crockett's Avatar
 
Industry Role:
Join Date: May 2003
Posts: 76,806
Quote:
Originally Posted by DateDoc View Post
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.
Except you forget the little fact that gas is sold as a commodity. The price is set by the market not by the oil company. They can't just up the price because they feel like it. The price goes up based on supply and demand.
__________________
In November, you can vote for America's next president or its first dictator.
crockett is offline   Share thread on Digg Share thread on Twitter Share thread on Reddit Share thread on Facebook Reply With Quote