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Originally Posted by scaeagles
I always think it so funny when someone says we need to tax corporations more to take the burden off the little guy.....businesses don't pay taxes! The consumer does in the form of higher prices.
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Simple economics shows that, due to supply and demand, when a tax is levied, prices are not raised in proportion to the tax. The supplier absorbs a percentage of the tax, the more inelastic the demand, the lower that percentage. So a product like gasoline, which is very inelastic (as in, people will buy it, even if the price increases significantly), nearly all tax is passed on to consumers. While more expendable products, the demand would drop too much if the price is raised, so the supplier takes on more of the tax. This is why taxing the supply side can generate the same amount of revenue with a proportionately smaller affect on overall prices.