Don't mess with New Hampshire.

[OFFascist]

Great news.

Driver's licenses and state IDs are a run by the states. The feds should not be involved.

 

[Dissipate]

Originally posted by: ElFenix

you fail at microeconomics.

e-penis++? No. Real penis--.

in a normal competitive market with a negatively sloped demand curve and a postively sloped supply curve, the tax burden is shared by both the supplier and demander, the quantity supplied and the quantity demanded decrease, the price paid by the demander increases, the price recevied by the supplier decreases, and there is deadweight loss consisting of the triangle between where the normal market clearning price is and the new quantity line.

the situation you've described would only be where demand is perfectly flat.

a drawing

the purple is the tax collected, the yellow is the deadweight loss. the red lines indicate the price paid by consumers and the quantity sold. the blue line (at the bottom of the purple) indicates the indicates the price received by suppliers.

BULLLLSH!T! Why in the world would the quantity demanded decrease? Suddenly because there is a sales tax my desire for a particular good goes down?

Do you know why anyone with half a brain thinks mainstream economists are complete clowns (in spite of the fact that if you put 12 of them in a room and ask them a simple basic question about how markets work, there is a high probability that you will get 12 different answers)? The reason why is that they get so tied up in their graphs, equations and 3rd rate mathematical models they neglect common sense reasoning. I believe that the epitome of mainstream economic stupidity occurs whenever there is a hurricane. Every time there is a hurricane or a natural disaster there is some mainstream economist who claims that it will actually help the economy. One with common sense would believe that death and destruction would be bad for the economy. But give an economist a few equations and a few graphs and he will turn common sense on its head.

Mainstream economics is in a state of absurdity and confusion that is not much better than the old days when Keynesianism was in vogue.


Now, you can take your graphs and equations and continue to espouse a theory that defies common sense or you can take a look at this.

D. Shifting and Incidence: A General Sales Tax

The most popular example of a tax supposedly shifted for­ward is the general sales tax. Surely, for example, if the govern­ment imposes a uniform 20-percent tax on all retail sales, and if we can make the simplifying assumption that the tax can be equally well enforced everywhere, then business will simply ?pass on? the 20-percent increase in all prices to consumers. In fact, however, there is no way for prices to increase at all! As in the case of one par­ticular industry, prices were previously set, or approximately so, at the points of maximum net revenue for the firms. Stocks of goods or factors have not yet changed, and neither have demand schedules. How then could prices rise? Moreover, if we look at the general array of prices, as is proper when dealing with a gen­eral sales tax, these are determined by the supply of and the de­mand for money, from the goods and money sides. For the general array of prices to rise, there must be either an increase in the sup­ply of money, a decrease in the demand schedule for money, or both. Nothing in a general sales tax causes a change in either of these determinants.[44]

Furthermore, the long-run effects of a general sales tax on prices will be smaller than in the case of an equivalent partial excise tax. A tax on a specific industry, such as liquor, will push resources out of this industry and into others, and therefore the relative price of the taxed commodity will eventually rise. In a general, uniformly enforced sales tax, however, there is no room for such shifts of resources.[45]

The myth that a sales tax can be shifted forward is comparable to the myth that a general union-imposed wage increase can be shifted forward to higher prices for consumers, thereby ?causing inflation.? There is here no way that the general array of prices can rise, and the only possible result of such a wage increase is mass unemployment.[46]

In considering the general sales tax, many people are misled by the fact that the price paid by the consumer necessarily includes the tax. If someone goes to a movie and pays $1.00 admission, and if he sees prominently posted the information that this covers a ?price? of 85¢ and a tax of 15¢, he tends to conclude that the tax has simply been added on to the ?price.? But $1.00 is the price, not 85¢, the latter sum simply being the revenue accruing to the firm after taxes. The revenue to the firm has, in effect, been reduced to allow for payment of taxes.

This is precisely the consequence of a general sales tax. Its im­mediate impact lowers the gross revenue of firms by the amount of the tax. In the long run, of course, firms cannot pay the tax, the loss in gross revenue of firms being imputed backward to interest income by capitalists and to wages and rents earned by owners of original factors?labor and ground land. A decrease in gross revenue to retail firms is reflected back to a decreased de­mand for the products of all the higher-order firms. The major result of a general sales tax is a general reduction in the net revenues accruing to original factors. The sales tax has been shifted backwards to original factor returns?to interest and to all wages and ground rents. No longer does every original factor of produc­tion earn its discounted marginal product. Original factors now earn less than their DMVPs, the reduction consisting of the sales tax paid to the government.

Let us now integrate this analysis of the incidence of a general sales tax with our previous general analysis of the benefits and burdens of taxation. This is accomplished by remembering that the proceeds of taxation are, in turn, spent by the government. Whether or not the government spends the money for resources for its own activities or simply transfers the money to people it subsidizes, the effect is to shift consumption and investment de­mand from private hands to the government or to government-supported individuals, by the amount of the tax revenue. The tax has been ultimately levied on the incomes of original factors, and the money transferred from their hands to the government. The income of the government and of those subsidized by the government has been increased at the expense of the tax pro­ducers, and therefore consumption and investment demands on the market have been shifted from the producers to the expropriators by the amount of the tax. As a consequence, the value of the monetary unit will remain unchanged (barring a difference in demands for money between the taxpayers and the tax-con­sumers), but the array of prices will shift in accordance with the shift in demands. Thus, if the market has been spending heavily on clothing, and the government uses the revenue mostly for the purchase of arms, there will be a fall in the price of clothes and a rise in the price of arms, and a tendency for nonspecific factors to shift out of the production of clothing and into the production of armaments.

As a result, there will not finally be, as might be assumed, a proportional 20-percent fall in all original factor incomes as the result of a 20-percent general sales tax. Specific factors in industries that have lost business from the shift from private to governmental demand will lose proportionately more in income; specific factors in in­dustries gaining in demand will lose proportionately less?some may gain so much as to gain absolutely from the change. Non­specific factors will not be affected as much proportionately, but they too will lose and gain according to the difference that the concrete shift in demand makes in their marginal value produc­tivity.

It should be carefully noted that the general sales tax is a con­spicuous example of failure to tax consumption. The sales tax is commonly supposed to penalize consumption, rather than income or capital. Yet we find that the sales tax reduces, not just consump­tion, but the incomes of original factors. The general sales tax is therefore an income tax, albeit a rather haphazard one. Many ?right-wing? economists have advocated general sales taxation, as opposed to income taxation, on the grounds that the former taxes consumption but not savings-investment; many ?left-wing? economists have opposed sales taxation for the same reason. Both are mistaken; the sales tax is an income tax, though of a more haphazard and uncertain incidence. The major effect of the general sales tax will be that of the income tax?to reduce the consumption and the saving-investment of the taxpayers.[47] In fact, since, as we have seen, the income tax by its nature falls more heavily on savings-investment than on consumption, we reach the paradoxi­cal and important conclusion that a tax on consumption will fall more heavily on savings-investment than on consumption in its ultimate incidence.

Text

 

[ElFenix]

Originally posted by: Dissipate

Originally posted by: ElFenix

you fail at microeconomics.

e-penis++? No. Real penis--.

in a normal competitive market with a negatively sloped demand curve and a postively sloped supply curve, the tax burden is shared by both the supplier and demander, the quantity supplied and the quantity demanded decrease, the price paid by the demander increases, the price recevied by the supplier decreases, and there is deadweight loss consisting of the triangle between where the normal market clearning price is and the new quantity line.

the situation you've described would only be where demand is perfectly flat.

a drawing

the purple is the tax collected, the yellow is the deadweight loss. the red lines indicate the price paid by consumers and the quantity sold. the blue line (at the bottom of the purple) indicates the indicates the price received by suppliers.

BULLLLSH!T! Why in the world would the quantity demanded decrease? Suddenly because there is a sales tax my desire for a particular good goes down?

maybe you'd still buy it, that just means your utility gained is enough to overcome the increased cost due to the tax. neither your desire, nor anyone else's desire, for the good goes down. that would be a decrease in demand. no, what happens is that, as compared to the non-taxed world, the tax increases the price paid by the consumer to such a point where the cost of the product and the tax paid by the consumer overcomes the benefit gained by that consumer by having the product.

the way they try to argue around the price shift just ignores or glosses over several important points. first, the firms will produce where marginal revenue equals marginal cost. if their revenue goes down, then their production goes down. that changes the supply curve so the price goes up. a tax does the same thing but without changing the supply curve. another thing they start off with is arguing against a false premise. their false premise is that the 20 percent tax will be passed only wholly to the consumer. again, this is simply wrong for any normal market. the cost will be split between both the business and the consumer. let's use their movie ticket example. if the consumer pays $1 and the business receives $0.85 for every ticket sold, then yes, $1 is the price the consumer paid, and $0.85 is what the business gets in revenue. but, what happens if the tax is removed? could it be that people who wouldn't pay $1 might come into the market? the business would be happy to charge $0.93 cents because now they're getting $0.08 more for every ticket sold and they're selling more tickets because people who wouldn't pay $1.00 but would pay $0.93 to see a movie are coming in.

i guess you've never been in hot deals where someone refrains from buying the product, posting 'tax kills it.' obviously, for those people their utility from the product was not great enough to overcome the tax rate imposed. they would have gotten on the deal had tax not killed it. so, the quantity demanded decreases.

 

[Dissipate]

if the consumer pays $1 and the business receives $0.85 for every ticket sold, then yes, $1 is the price the consumer paid, and $0.85 is what the business gets in revenue. but, what happens if the tax is removed? could it be that people who wouldn't pay $1 might come into the market? the business would be happy to charge $0.93 cents because now they're getting $0.08 more for every ticket sold and they're selling more tickets because people who wouldn't pay $1.00 but would pay $0.93 to see a movie are coming in.

HuH? Why would the business be 'happy' charging $.93? That is some benevolent business you have there. They would continue charging $1.00 and they would get the full $1.00 in revenue after the tax. That was the equillibrium price before the tax and that is what it would be after the tax.

The one argument that could be made is that the real price of a movie ticket could go down. If the movie theater business was allowed to keep all of its revenue it would have the means to expand (as every other business would) i.e. production would go up.

But this is not exclusive to a sales tax. It is true of any tax.

 

[EatSpam]

Originally posted by: Genx87
What morons, god forbid they verify who it is they are issuing an ID to.

On top of that these idiots must have forgot what a SS card is. We have had a national ID card for 70 years.

Yeah, I mean god forbid we don't have licenses that illegal aliens can easily get. I mean, how would NH's economy function without illegals.

 

[Dissipate]

i guess you've never been in hot deals where someone refrains from buying the product, posting 'tax kills it.' obviously, for those people their utility from the product was not great enough to overcome the tax rate imposed. they would have gotten on the deal had tax not killed it. so, the quantity demanded decreases.

All that happens there is that the seller is not willing to sell their item at a price that is the 'sale price' minus the percent of sales tax (i.e. the revenue for the item is too low for them). Hence, they give the buyer the 'option' of paying the sales tax so that the price is high enough for the seller.

Some buyers will go for it and others will not. It all evens out.

 

[WHAMPOM]

Originally posted by: Dissipate

Originally posted by: Thera

Originally posted by: Dissipate
New Hampshire is one of the greatest states in the 'union.' It is one of only 2 states that doesn't have either a state income tax or a sales tax.

The difference in revenue is made up with property tax. Still a great state though.

Yeah, I guess you would have to look at other factors to determine overall tax burden.

I don't think there is any state that has no property tax.

Florida?

 

[Dissipate]

Originally posted by: WHAMPOM

Originally posted by: Dissipate

Originally posted by: Thera

Originally posted by: Dissipate
New Hampshire is one of the greatest states in the 'union.' It is one of only 2 states that doesn't have either a state income tax or a sales tax.

The difference in revenue is made up with property tax. Still a great state though.

Yeah, I guess you would have to look at other factors to determine overall tax burden.

I don't think there is any state that has no property tax.

Florida?

Florida has property tax.

 

[Mail5398]

Economists agree on many things. People who do not understand or who are ignorant like to point out the differences and debunk the whole subject.

I can take any subject and do that.

 

[Dissipate]

Originally posted by: Mail5398
Economists agree on many things. People who do not understand or are ignorant like to point on the differences and debunk the whole subject.

I can take any subject and do that.

So I'm not supposed to take note when an economist tells a newspaper that a hurricane or other natural disaster is good for the economy?

 

[Mail5398]

For certain segments of the economy a natural disaster is a good thing.

 

[Dissipate]

Originally posted by: Mail5398
For certain segments of the economy a natural disaster is a good thing.

For certain segments, for a short amount of time, yes some individuals in the economy benefit. Overall, it is a disaster. It isn't a 'good thing' though.