apparently doesnt understand a balance sheet

Post #300,635 by boxley 12/4/08 12:47:51 PM Reply	apparently doesnt understand a balance sheet all costs are built into the price of service and goods. You cant make money by selling underneath your costs hoping to make it up in volume A further note for folks that dont grok a balance sheet, is that every $1 entry in the asset column at the end of the day is balanced in the debt column owed to the owners whether public or private. The entity itself can never own anything or make a profit thanx, bill
Post #300,637 by Andrew Grygus 12/4/08 1:26:02 PM Reply	Hey! Stop bringing up reality . . . . . . it confuses the intellectuals.
Post #300,642 by crazy 12/4/08 2:09:37 PM Reply	Ahh, but you don't take account how much margin is there And who's more desperate to either buy or sell. Sure, there are many factors that have not been taken into account, but that demand curve really drives both sides, as long as there is enough profit in place to keep the company alive.
Post #300,647 by boxley 12/4/08 2:24:22 PM Reply	correct, except a lot of people miss the point "as long as there is enough profit in place to keep the company alive." meaning all costs including taxes are passed to the consumer thanx, bill
Post #300,653 by beepster 12/4/08 3:48:33 PM Reply	Bullpucky Its a zero sum game at the end. If it doesn't come across in price, then it will come with increases in taxes somewhere else because corp tax revenue will fall due to lower profits. In the end, the customer pays for EVERYTHING. I will choose a path that's clear. I will choose freewill.
Post #300,687 by Another Scott 12/4/08 10:54:07 PM Reply	We're all dead in the end. I thought the article made an interesting observation. However, the trouble with trying to summarize economics in two paragraphs is that it necessarily simplifies things. I'm not quite understanding your argument, Beep. How would, say, Microsoft (our favorite corp.) be hurt if they had to pay slightly more taxes? They seem to be doing well enough to have $23B in cash and short-term investments lying around: http://finance.yahoo.../bs?s=MSFT&annual In contrast, IBM has less than $10B in the same category: http://finance.yahoo.com/q/bs?s=IBM Apparently Microsoft is hanging on to its income to a much greater extent that IBM. I think it may be due to the fact that MS's prices often have little to do with their costs (e.g. consider how MS is willing to undercut Linux in the developing world). If everything is a "zero sum", then how is economic growth possible? My understanding is that economies grow because people invest and work and, in effect, take deferred compensation with the hope of having a piece of a bigger pie at a later date. How does the pie get bigger if what goes in exactly equals what goes out? In other words, elaborate please. :-) I think the biggest problem with this argument is that it treats things as being static. If a company has to raise cash quickly, or clear out inventory quickly, or raise production quickly to prevent waste and take advantage of better prices on raw materials when purchased in bulk, or whatever, then they're going to consider a lot more than the tax. Companies will sometimes take a short-term loss, and sometimes grab an easy profit when they can. Of course taxes aren't always passed through. It's almost always the case that statements with "always" in them are wrong at least part of the time. Remember that taxes are part of the cost of living in a civilized society. If companies that can afford to help pay for the cost of funding a civilized society don't do so to the extent that they should (and that extent is debatable, of course), then others who are less able to do so will have to make up the shortfall. (An interesting history of federal individual and corporate income taxes is here: http://www.taxanalys...eum/1901-1932.htm The 20th century corporate income tax is older than the federal income tax, but their history is inextricably linked.) Cheers, Scott.
Post #300,708 by boxley 12/5/08 9:39:25 AM Reply	read my post on the balance sheet that 23B in MS bank is a debt owed to the owners of the company, it does not belong to the company at all If you are suggesting that higher taxes would not hurt the company, taxes never hurt a company it just reduces the debt of the company to the owners so in the case of MS, you are digging into Andrew's back pocket for that money as he is a owner of a part of that company. Now if you think that owners should get less money, thats fine they can all cash out, tank the company put everyone out of work and then where would you be?
Post #300,713 by beepster 12/5/08 10:52:31 AM Reply	The vast oversimplification Consumption generates all revenue to corporations and government siphons from this for its "revenue". Reducing corp profits nets lower tax revenue from corp side that will be made up elsewhere (read consumers). It may not impact the price of the specific good in the short term and thus appear that its not being passed on...but you need to go back to premise 1...it all starts with consumption, which all starts with the consumer...which all starts with you or I. I will choose a path that's clear. I will choose freewill.
Post #300,724 by Another Scott 12/5/08 8:21:49 PM Reply	That's a pretty broad definition of "consumption", isn't it? Providing a service is satisfying a "consumption"? I've not heard the term used that way. Be that as it may... Consumption generates all revenue to corporations and government siphons from this for its "revenue". Government provides a variety of services to corporations related to: 1) Security (police, fire) 2) A legal system and a framework of laws (courts, access to them, rules, property rights) 3) Utilities (though publicly-granted monopolies to water, electricity, gas) 4) Roads and a transportation system 5) An educated workforce 6) Etc. Why should a corporation not pay something for these services that are made possible by government - the things that make a modern corporation possible? Bill Gates and Henry Ford didn't create the world in 7 days. Reducing corp profits nets lower tax revenue from corp side that will be made up elsewhere (read consumers). As mentioned above, corporate income taxes are based on profits which are defined as (revenue - expenses). So the case can be made that taxes on profits can't increase expenses (since it's a separate category that's already counted). So, taxing profits won't reduce corporate profits, will it? Cheers, Scott.
Post #300,727 by beepster 12/6/08 5:17:41 AM 12/6/08 5:31:57 AM Reply	Depends where the tax is applied. And a tax on profits decreases net profit, not gross. A change in income/profit tax will take longer to work through the system..but will eventually end up in price. So the short term discussion will be in your favor, they won't immediately raise prices to counter. There's no reason why govt shouldn't expect corporations to pay for services...but they pay for them with customer money. Companies don't make money, they make goods and services that people or other companies pay for. I'm not a proponent of eliminating corp income taxes as some are. I do think they can and should be lowered to improve the value equation of domestic investment. I will choose a path that's clear. I will choose freewill. Edited by beepster Dec. 6, 2008, 05:31:57 AM EST Expand All History
Post #300,723 by Another Scott 12/5/08 8:03:23 PM Reply	That's far too idealistic. Tell Netscape that Microsoft doesn't own anything. Whoops. :-/ Corporations have a history of accumulating wealth and power. They don't simply act as a faceless piggy bank for their owners. Returning to the article, I find T-Bone's comments to make more sense from a thought-experiment perspective - http://angrybear.blo...orate.html#730794 [Let's consider 3 arguments:] #1 Corporations don't pay taxes. It all gets passed on to consumers. I'll have to say Terry most clearly pointed out what many people miss. The corporate tax falls on profit. Profits are Revenues minus Costs. Tax on profits does not and cannot raise costs. And business already try to maximize profit at all times. Take this example: Say it costs you 50 cents to make a donut. Now you can sell your donuts for: $1 each, and 10 people would buy them for a total of $5 profit $0.75, and 30 people would buy them for a total of $7.50 profit $2 each, and 1 person would buy them for a total of $1.50 profit Regardless of whether the tax on profit is 5% or 50%, the ideal price is $0.75. I think this definitively negates the notion that we ought not tax profits because "it gets passed to consumers" because it's just not true. Yes, it's simplistic (e.g. it doesn't consider incentives), but there is some "there" there. Cheers, Scott.
Post #300,726 by boxley 12/5/08 9:45:13 PM Reply	thats a fact jack the first time a corp starts selling below cost the owners leave for greener pastures, what is the share price of gm at the moment? Take accounting 101 then come back to the argument please
Post #300,730 by crazy 12/6/08 12:17:49 PM Reply	Oh, to live in such a simple world Must be nice. They spent many years with short term investment and long term cost (big vehicles that could not last, health care / pension ownership transfer, etc). Billions made, but more billions owed for the next guy. Long term large cost environments such as GM are like countries, huge amount of money washing around, people afraid of them or the issues surrounding their demise. And please, tell me why people buying the cars (or paying taxes that end up subsidising them) should fund the "job bank"? Yes, your equation is usable for the guy on the corner selling donuts, but worthless in this complex situation.

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