Quote:
Originally Posted by Hugh R
Think of it like a gallon of gasoline. The feds and state tax it and you pay the tax. If the feds or state eliminated the tax, don't you think the "market clearing" price of the gasoline would creep back up to the same price? When you buy a gallon of gas you, or most people, don't think about the taxes, but rather the price. Some economist type please jump in here.
|
Been awhile (BS in Econ in the early 80's), but you are essentially correct with a few caveats. The cost of production would remain fairly constant so market forces would allow, in a market other than an oligopoly, a seller to make a fair profit by selling below current, tax swollen, prices, dampening the "market clearing" pressure.
YMMV, mine did, I became a Navy Pilot
