The idea that corporations can just increase prices to cover their tax liability is stupid. If corporations had the capacity to just increase prices without hurting their profits, they would have done so already. Your argument, SF, rests on either the assumption that corporations do not optimally price their goods and services in the first instance or that corporations can increase prices whenever they want without hurting their profitability.
This is getting old. AGAIN.... IF they are not able to increase their prices, they will pass the costs on to the non-exec employees via lower salaries/benefits or cutting jobs.
Second... if you increase taxes on ALL corporations, then the industry as a whole is justified in raising prices. You seem to think that prices are maximized at all times. Have you noticed the price of gas, food, energy, clothing have ALL increased of late? Were consumers suddenly willing to pay more? Or did the corporations simply pass along HIGHER COSTS (not taxes in this case, but the point remains). As a companies COSTS increase, they are going to raise prices AS MUCH AS THEY CAN to prevent the hit coming to (1) Stockholders (2) Executives (3) Employees. IT IS STANDARD BUSINESS PRACTICE to pass as much of the cost increase on to consumers as possible. It is irresponsible of the company to NOT do so. The next place to take a hit is typically employees and given the rise in disparity between exec pay and employee pay... who do you think is bearing the brunt of that portion?
As to the first assumption, I tend to think that corporations on the whole are actually quite good at profit maximization and setting prices to achieve profit maximization such that passing along corporate taxes to the consumer, while it sounds plausible enough, just isn't achievable. On the second assumption, while some corporations in certain markets (monopolistic or close to it) can jack up prices on a whim, most cannot.
Yet companies have and will continue to raise prices as their costs go up. They always have, they always will.... AS MUCH AS THEY CAN. That is the FIRST place they go to cover additional costs.
That leaves you with two potential payers of corporate taxes, capital or labor. I have heard plenty of investors and large shareholders clamoring for the elimination of corporate taxes, but I haven't heard the same from labor unions. That leads me to conclude that, of the two groups, labor isn't taking the hit, shareholders are.
About 7.9% of the labor pool (private) is unionized. Take a look at Verizon right now. In the midst of the current economic condition, they are striking.... WHY? Verizon's profit margin has remained fairly steady around 6%... yet the unions are clamoring that they are not getting enough. Or am I mistaken?
Having said that, there is considerable disagreement in the economic literature and I know enough to know that there is no easy answer to the question.
Yes, the issue can indeed be complex, but the fact of the matter remains, there is a standard practice of where a company will go to pass along costs. First to consumers, second to employees, then to stockholders. I did break out the employee section into high exec and all others... that was my alteration.
The disagreement your author was highlighting is a slightly different argument in that he is discussing the ability of companies to lower costs in other areas... by transporting production overseas for example (which is still a hit to labor by the way)
Many small and mid size businesses, however, do not have this luxury given their size. Those will follow the pattern as I stated. It would be a bad business practice to eat cost of production increases either as the owner/stockholder or to the employee if the cost can be passed along to consumers. The whole point of capitalism is to be as efficient and profitable as possible.