How can we stop the rich from passing costs to consumers if we taxed them?

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creativebuzz
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So this whole idea of taxing the rich...

What if we did tax them and they just passed their costs onto consumers? How would we prevent that from occurring?
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scrotgrot
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(Original post by creativebuzz)
So this whole idea of taxing the rich...

What if we did tax them and they just passed their costs onto consumers? How would we prevent that from occurring?
Tax land only.
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sw651
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(Original post by creativebuzz)
So this whole idea of taxing the rich...

What if we did tax them and they just passed their costs onto consumers? How would we prevent that from occurring?
Simple: Don't tax them as much, the thing is, they earn so much that 15% tax for them would be the same as 45% tax for someone else
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sw651
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(Original post by scrotgrot)
Tax land only.
Not all the rich own large amounts of land
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Simes
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Eat the rich.
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cole-slaw
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You're confusing the rich with businesses. They're not the same thing.
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creativebuzz
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(Original post by sw651)
Simple: Don't tax them as much, the thing is, they earn so much that 15% tax for them would be the same as 45% tax for someone else
Are you saying that taxing them at 15% would have hardly any effect if it was passed onto consumers anyway? Or are you trying to say that taxing them 15% would be so low that they wouldn't pass them onto consumers?
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creativebuzz
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(Original post by cole-slaw)
You're confusing the rich with businesses. They're not the same thing.
Corporations are also avoiding tax
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cole-slaw
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(Original post by creativebuzz)
Corporations are also avoiding tax
Yes, many of them are. And they should be made to pay it. Other smaller businesses are forced to, why should big companies get sweetheart deals?

Honestly, would anyone really care if Starbucks left the UK in protest at being made to pay tax? Its not like people would suddenly stop drinking coffee. Either the other existing chains (Costa, Café Nero etc) would expand, or another business would seize the opportunity to launch.
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Simes
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Eat the rich…

(Original post by creativebuzz)
Corporations are also avoiding tax
…but not the food they sell.

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creativebuzz
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(Original post by cole-slaw)
Yes, many of them are. And they should be made to pay it. Other smaller businesses are forced to, why should big companies get sweetheart deals?

Honestly, would anyone really care if Starbucks left the UK in protest at being made to pay tax? Its not like people would suddenly stop drinking coffee. Either the other existing chains (Costa, Café Nero etc) would expand, or another business would seize the opportunity to launch.
Yeah, I completely agree. Also, I hardly doubt that Starbucks would leave the UK. Their argument is that if they leave they would leave a dent in UK's GDP; however if they leave it's more likely that WE leave a dent in their earnings instead. I feel as that they would experience a bigger impact from their exit, not the other way round.
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creativebuzz
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(Original post by cole-slaw)
Yes, many of them are. And they should be made to pay it. Other smaller businesses are forced to, why should big companies get sweetheart deals?

Honestly, would anyone really care if Starbucks left the UK in protest at being made to pay tax? Its not like people would suddenly stop drinking coffee. Either the other existing chains (Costa, Café Nero etc) would expand, or another business would seize the opportunity to launch.
On the topic of the rich and taxing etc, I'm interested to hear what is your opinion to inequality and whether you believe that it is inevitable? I've been reading about it and my opinion is that it can be fixed through higher tax on the rich and preventing big corporations from jumping through loopholes.
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cole-slaw
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(Original post by creativebuzz)
Yeah, I completely agree. Also, I hardly doubt that Starbucks would leave the UK. Their argument is that if they leave they would leave a dent in UK's GDP; however if they leave it's more likely that WE leave a dent in their earnings instead. I feel as that they would experience a bigger impact from their exit, not the other way round.
You are entirely correct. Its much easier for the coffee drinkers of Britain to find some other coffee retail outlet than it is for Starbucks to replace one of their biggest markets.

People who claim it would be a disaster if companies like Starbucks left either know nothing about economics, or are lying.

Remember: 90% of the people you hear talking on the news are either liars or idiots. Sometimes they're both. This applies doubly to Tory politicians.
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cole-slaw
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(Original post by creativebuzz)
On the topic of the rich and taxing etc, I'm interested to hear what is your opinion to inequality and whether you believe that it is inevitable? I've been reading about it and my opinion is that it can be fixed through higher tax on the rich and preventing big corporations from jumping through loopholes.
Some level of inequality is inevitable because people have different levels of ability. But current levels of inequality are way beyond the level that is necessary and inevitable. The current economic and political system is designed expressly to increase inequality and coalesce wealth and power into the hands of the minority.

The Tories are the party of the top 1%. They always have been and always will be. Their policies are expressly designed to make the top 1% richer and more powerful. This inevitably means the other 99% are worse off.
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creativebuzz
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(Original post by cole-slaw)
Some level of inequality is inevitable because people have different levels of ability. But current levels of inequality are way beyond the level that is necessary and inevitable. The current economic and political system is designed expressly to increase inequality and coalesce wealth and power into the hands of the minority.

The Tories are the party of the top 1%. They always have been and always will be. Their policies are expressly designed to make the top 1% richer and more powerful. This inevitably means the other 99% are worse off.
You mentioned that "some level of inequality is inevitable" so how much inequality would you consider to be "acceptable"?
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Whyhuyrah
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A maximum pricing policy. This is more theoretical as it would be very interventionist in a market and is likely not to happen because of the resulting disinvestment. So stopping them passing on cost is just something that will never happen in the economy because they seek to regain profits. So the questions should be "How do you reduce the effect of taxes on the rich in the macroeconomy?" and "Do you think the positive effects of taxation outweigh the negative effects?".So you can reduce the effects of implementing a tax on the rich by messing with the price elasticity of demand in the economy, for when you raise taxes, the supply curve shifts up. This means if demand is generally inelastic, the price rise will be much greater than if demand was elastic. A little homework would be to look up incidence of tax diagrams to see how this mechanism works. Therefore, to apply this microeconomic logic to the macroeconomy, you would have to look at the aggregated effect of this in all of the markets in the economy, if all other things being equal, you find a rise in taxes would lead to a proportionally bigger rise in inflation, then it would mean the tax is being passed on to consumers more than it is not, meaning morally taxes on rich should fall. Alternatively, if you found a rise in taxes would lead to an equal or proportionally smaller rise in inflation then taxes should remain the same or rise respectively. So to minimize the resulting inflation, obviously you reduce taxes to £0, however, you have to consider the effect from multiple factors: the budget deficit, inflation and welfare loss of consumers. This is because this is an economic question that will have different views as people will evaluate their justification differently. For instance "I think the UK needs inflation to reach the MPC's target of 2.0% at the moment, and tax revenue needs to rise to reduce the government deficit, and the welfare loss to consumers is a price worth paying for these two positives" (Very short conclusion but this reply is getting long). So I would conclude taxes are justified, because the effect of taxes is generally positive.
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Bupdeeboowah
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(Original post by creativebuzz)
Corporations are also avoiding tax
The UK is a major destination for tax avoidance and tax inversion, believe it or not. Changing tax avoidance rules drastically could result in UK-domiciled tax-avoiding companies leaving the country.
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Bupdeeboowah
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(Original post by cole-slaw)
You are entirely correct. Its much easier for the coffee drinkers of Britain to find some other coffee retail outlet than it is for Starbucks to replace one of their biggest markets.

People who claim it would be a disaster if companies like Starbucks left either know nothing about economics, or are lying.

Remember: 90% of the people you hear talking on the news are either liars or idiots. Sometimes they're both. This applies doubly to Tory politicians.
But how about other companies which dominate the market, such as Facebook and Amazon?
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cole-slaw
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(Original post by creativebuzz)
You mentioned that "some level of inequality is inevitable" so how much inequality would you consider to be "acceptable"?
Its not like its a number, its more a set of principles. People should be paid for what they do, not what they have, or what additional bargaining power they are allowed to exploit. If person A gets paid twice as much as person B because he is able or willing to produce something of twice the value, then that is fair enough. But if he is getting paid twice as much because of his contacts, or he has fiddled the rules (and been allowed to set his own wages), or because the industry he works in is rigged, then that is not.

You can look at different industries and identify if the workers are being under or overpaid for the value of work they are producing. In theory, the free market should do this automatically. In reality, it rarely does. Currently, a few people are vastly, vastly, overpaid (eg bankers, CEOs) due to corruption, regulatory capture, misincentives in the corporate structure, managerial capitalism. Others earn far more money on their investments than their risk premium should really allow for. As a result, the majority of the country are actually vastly underpaid for the work they do.
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Whyhuyrah
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(Original post by cole-slaw)
You are entirely correct. Its much easier for the coffee drinkers of Britain to find some other coffee retail outlet than it is for Starbucks to replace one of their biggest markets.

People who claim it would be a disaster if companies like Starbucks left either know nothing about economics, or are lying.

Remember: 90% of the people you hear talking on the news are either liars or idiots. Sometimes they're both. This applies doubly to Tory politicians.

Why raise corporation tax if corporations leave, and corporate tax revenue falls anyway. "People who claim it would be a disaster if companies like Starbucks left either know nothing about economics, or are lying" ...My god, look up the Laffer curve and you might learn something about economics.
All you get from a rise in corporation tax is a fall in GDP. You do not automatically get a rise in tax revenue from it.
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