Quote:
Originally Posted by kutulu
A simple excercise: add up the total amount that the govt took in and subtract the sum of all direct taxes. Divide that by the total taxable income and you have the so-called average 'hidden tax' rate.
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I don't understand how this will tell us what portion of these direct taxes are added to the price of goods and services and therefore ultimately paid by the consumer.
It would seem to make sense that as taxes are raised on suppliers, manufacturers, shippers, etc.. that they will recoup most of this amount by adding it to the prices they charge.
If it costs you 2 dollars to manufacture a widget today and tomorrow the government raises taxes making your cost 3 dollars then you have to make up the difference somewhere and the price consumers pay for widgets is probably going to go up accordingly.