A large corporation's taxes are significantly increased. How do they respond?
a) They shrug their shoulders, pay the taxes, and proceed business as usual.
b) They pass the cost of the tax increase onto the consumer.
c) They reduce their labor force to compensate.
d) They move to a different state or country that offer tax breaks.
The correct answer depends on your political leanings.
If you are a liberal, the correct answer is A.
If you have a brain, the correct answer is B, C, and especially D.
mixture of b, c and d based on whatever makes the best business sense.
"a) They shrug their shoulders, pay the taxes, and proceed business as usual."
This answer is wrong. Higher taxes would result in a corporation most likely looking into how to increase productivity to offset the loss.
"b) They pass the cost of the tax increase onto the consumer."
This answer is wrong. They can't pass the cost onto the consumer, because the consumers are the ones determining the prices.
"c) They reduce their labor force to compensate."
This can happen, but laying off workers is the laziest way possible to increase productivity, and ultimately, such a move leads to lower worker morale, and could ultimately cost the company more in the longer term than what it would gain in the short term.
"d) They move to a different state or country that offer tax breaks."
Certainly possible, assuming there are options available. I would note that China has a 25% corporate tax rate, the US has a 35% rate, and Ireland had a 12.5% corporate tax rate. Ireland is an economic basketcase now, the US ain't doing much better, and China has 9% GDP growth rates. I think cheap labor is more desirable than cheap tax rates.
Of course, it's a little silly to be held hostage by a corporation, when corporations are creations of the state. If they want to move jobs to tim-buck-too, then just dissolve their charter and be done with it.
You call yourself GE.
You kiss the ass of the President, your CEO becomes one of his "Czars", and you get away with paying NO, ZERO, NADA taxes even though you make a profit of over a billion, with a B, dollars...
"GE, we bring good things to light".
...but they are just 1 of 83 other of the top 100 companies in the US that pays zero taxes. Corporations have been getting special treatment long before Obama showed up. Just sayin...
"Jeffrey Immelt To Head President's Council On Jobs And Competitiveness"
He is supposed to advise on job creation and competitivness.
All the while not paying ANY corporate taxes and promoting overseas manufacturing and labor.
What a sweet deal, if you can get it.
B with a caveat- they will TRY to pass along the cost.
D- more likely, but then fuck you corporations, now you get a tariff (tax) to sell your goods in the US, and again, they try to pass along the cost.
There is no simple answer. I know I don't want corporations to have a higher tax rate...i just want them to stop having all those loopholes that allows them to pay $0
a) They shrug their shoulders, pay the taxes, and proceed business as usual.
b) They pass the cost of the tax increase onto the consumer.
c) They reduce their labor force to compensate.
d) They move to a different state or country that offer tax breaks.