I have vast respect for Robert Reich’s knowledge and intelligence, so this statement really surprises me. Corporate taxes are like tariffs - if you raise them, companies raise their prices to recover that cost, passing the burden to their customers. In spite of how everybody cheers for business taxes, they have always been essentially sales taxes, paid by the public. A simplified Accounting 101 explanation tells you corporate tax is paid on profits, but on a deeper level companies know what their profit margin is, and if their tax rate changes they can recalculate prices to compensate so they can maintain the same profit level. Reich must surely understand this. I would love to hear his reasoning.
I have vast respect for Robert Reich’s knowledge and intelligence, so this statement really surprises me. Corporate taxes are like tariffs - if you raise them, companies raise their prices to recover that cost, passing the burden to their customers. In spite of how everybody cheers for business taxes, they have always been essentially sales taxes, paid by the public. A simplified Accounting 101 explanation tells you corporate tax is paid on profits, but on a deeper level companies know what their profit margin is, and if their tax rate changes they can recalculate prices to compensate so they can maintain the same profit level. Reich must surely understand this. I would love to hear his reasoning.