>Shane Mage wrote:
>
>>Almost all CIT comes from big corporations
>>who hold a monopoly or oligopoly (shared monopoly)
>>market dominance. Again, by elementary theory, these monopolists
>>have set their prices, wages, and supply costs at the level they
>>calculated to produce maximum profit. Therefore they
>>have very little (at best) ability to pass through a tax on
>>profit to their workers or consumers.
>
>If they all pay roughly the same tax, then it's part of their cost
>structure, so they can just add it to their markup.
A tax on realized profits is, for an individual firm, neither a cost of production nor an overhead cost, and it is never, ever, accounted as such. And if a firm could "just add it to [its] markup" it would have already, unless it either is not trying to maximize its profits or else it faces demand and supply curves materially altered by the mere fact of the tax change.
>The idea that large corporations today are monopolies who set their
>own prices is quaint...
Industries do not consist of a single monopolistic firm but of several oligopolistic firms. Even in the unconcentrated 18th century world, Adam Smith could recognize that members of the same trade rarely if ever met, even for the most innocent purposes, without the meeting resulting in a conspiracy against the public aimed at raising prices and reducing wages. Today such meetings involve far fewer firms and are quite regularized, making oligopolistic collusion (while laughing at antitrust laws if the participants even remember that they haven't been formally repealed) the norm. If (pace Galbraith c.1965) profit maximization is the economic norm under capitalism, then the sharing monopolists *do not control their own prices* since those prices are already at or close to the profit-maximizing level for the industry. (Of course oligopolists compete--but in other ways than by undercutting each other's prices).
None of this is to deny that there are "long run" effects of every change in tax regimes just like all other economic parameters. Chaos theory tells us that the situation resulting from such effects cannot be predicted with even moderate precision (and we all have heard ad nauseam what Keynes said...)
Shane Mage
"When we read on a printed page the doctrine of Pythagoras that all things are made of numbers, it seems mystical, mystifying, even downright silly.
When we read on a computer screen the doctrine of Pythagoras that all things are made of numbers, it seems self-evidently true." (N. Weiner)