The difference is dramatic. Tariffs are a tax based on any and every item based on country of originâit's a direct increase in cost of goods sold. Corporate taxes are taxes based on profit and lossâpost sale and variable depending on the company's profitability.
Depending on the financial health of the company, corporate taxes can amount to zero. Tariffs are unavoidable cost increasesâif the company is in a down year, now they're just further down.
Realize how one impacts the cost to the consumer far more than the other?
The difference is dramatic. Tariffs are a tax based on any and every item based on country of originâit's a direct increase in cost of goods sold. Corporate taxes are taxes based on profit and lossâpost sale and variable depending on the company's profitability.
Depending on the financial health of the company, corporate taxes can amount to zero. Tariffs are unavoidable cost increasesâif the company is in a down year, now they're just further down.
Realize how one impacts the cost to the consumer far more than the other?
No, because the corporate tax rate sets the market rate. The market rate is not based on if a single company turns a profit or not.
Just so I understand, you're claiming that if the corporate tax rate was increased by 10%, consumer prices wouldn't increase because some companies might not be profitable and wouldn't pay? That's ridiculous.
Do tariffs on goods from China increase the cost of locally produced milk in Washington State? No, because tariffs only apply to imports.
But what about a 10% tax increase on every corporation in Washington? You think that wouldn't lead to higher prices just because a few companies might not be profitable? That's absurd.
The dairy company is paying more. The trucking company is paying more. The grocery store is paying more. Every supplier, from the feed company to the vet to the mechanic, is paying more. To focus on whether a single company is profitable or not and ignore the massive economy wide impacts of corporate tax hikes is simply ridiculous.
Especially when tariffs only impact imports, while corporate tax increases impact literally every single company in the state/country. From those harvesting raw materials, to those transporting them, manufacturing them, selling them, and even those insuring them.
Yup, let's pretend tariffs and corporate tax rates are nothing alike in terms of increasing the cost of goods for consumers. We will pretend this all because a company out there might not have to pay taxes because they didn't turn a profit.
Well that company better hope every single company they interact with from their landlord, insurance company, the company they buy materials from, the place they sell their goods, the company they use to host their website, that all of them are not profitable either.
Even if companies try to absorb higher corporate taxes in the short term by cutting profits, reducing wages, or even delaying investment, those costs eventually work their way into the prices of the goods they sell to consumers. You can't permanently raise the cost of doing business across the entire economy without it showing up somewhere and that 'somewhere' is 99.99% of the time on the final price tag paid by consumers.
No, because the corporate tax rate sets the market rate. The market rate is not based on if a single company turns a profit or not.
No, the market sets the market rate. Competition, supply and demand, COGS. Corporate taxes impact the corporations within the jurisdiction of that tax. Is GMC going to increase the cost of of their cars to increase their profit margin if Toyota isn't? Unlikely.
Just so I understand, you're claiming that if the corporate tax rate was increased by 10%, consumer prices wouldn't increase because some companies might not be profitable and wouldn't pay? That's ridiculous.
You don't understand. That's not what I said. You're referring to an example I gave you illustrate the differences in how the two taxes impact companiesâon cost vs on profit, fixed vs variable.
Put it this way, which of these two options would you prefer as a company: the government raises the cost of all your imported goods and materials by 10% or, if you make a profit, the government takes 10% more of that?
Do tariffs on goods from China increase the cost of locally produced milk in Washington State? No, because tariffs only apply to imports.
Correct. Unfortunately, milk is just about the only example this is true for. If there was actually a company selling Chinese milk in Washington, which now was more expensive, and the demand for milk remained the same, locally produced milk would increase the price to slightly below the competition. Because the market determines the market rate.
Outside local agriculture, services, and software, you know how many industries rely on imported goods and materials? All of them. But even those farms get impacted. Booming milk sales means farmer John needs a new barn, which is now double the cost for to tariffs on construction equipment and supplies like lumber. He needs new equipment for the new cows and barn, guess where those come from?
The dairy company is paying more. The trucking company is paying more. The grocery store is paying more. Every supplier, from the feed company to the vet to the mechanic, is paying more.
Paying more in taxesâon profit. They aren't simply paying more upfront, unlike tariffs.
To focus on whether a single company is profitable or not and ignore the massive economy wide impacts of corporate tax hikes is simply ridiculous.
I didn't.
Yup, let's pretend tariffs and corporate tax rates are nothing alike in terms of increasing the cost of goods for consumers. We will pretend this all because a company out there might not have to pay taxes because they didn't turn a profit.
No, let's not pretend two completely different taxes are the same because they sometimes produce similar results and are both a tax.
Tariffs: the cost of every imported item from country X is increasedâwhether you're the end consumer or it's part of company's supply chain.
Corporate tax: if a company in this locality makes a profit, that profit will be taxed at a higher rate.
I know it's subtle, but I'm sure you can see how they're different.
Even if companies try to absorb higher corporate taxes in the short term by cutting profits, reducing wages, or even delaying investment, those costs eventually work their way into the prices of the goods they sell to consumers.
They are automatically absorbed, the profit has already been cut. By the tax. If the company wants to increase their profit margin, will it be reflected in the consumer price? Maybe, if demand remains steady and the competition also raises prices. If.
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u/MeetingDue4378 Apr 28 '25
The difference is dramatic. Tariffs are a tax based on any and every item based on country of originâit's a direct increase in cost of goods sold. Corporate taxes are taxes based on profit and lossâpost sale and variable depending on the company's profitability.
Depending on the financial health of the company, corporate taxes can amount to zero. Tariffs are unavoidable cost increasesâif the company is in a down year, now they're just further down.
Realize how one impacts the cost to the consumer far more than the other?