re: #680 Stonemason

I am arguing that taxes are a part of the cost of doing business and if they go up, something has to happen to offset that.

But that’s not true.

Look, here’s the math. Let’s say you and I are competitors for selling widgets. We both have costs of 10 cents a widget, and sell them at a dollar a widget, making 90 cents profit per widget.

Lets say we both have a cost increase. It can be a tax, it can be increased manufacturing costs, it can be anything at all. Our costs are both now 11 cents a widget.

You can go ahead and raise the price per widget to $1.01, in order to preserve the 90 cent a widget profit. However, if I do not, and accept an 89 cent per widget profit, I may capture enough market share from you to make it worthwhile.

Say initially we both split the market evenly: A hundred people buy widgets a year. Initially, we’re both making $45 a year profit. After you raise your prices, let’s say that 1 person is annoyed enough to switch from your brand to mine. You now make $44.10 profit a year, and I make $45.39 profit per year.

I didn’t raise my prices in regards to the tax, you did, and I’m now making more profit than you.

Does that make sense?