[quote=AN]
In a growing environment where demand is increasing, I agree with you that people will absorb the higher taxes because their net is increasing. However, in a flat to declining economy, I’m not so sure they would absorb the higher taxes. My guess is, they probably would reduce their cost (lower employee’s wage or lay them off). Employers will be the last one to eat the cost. I know a few mom and pop shop owners and they’ve been telling me business suck right now. So, increasing advertisement, etc. won’t help, since their clienteles don’t have the money to spend.
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AN, your mom & pop buddies are cutting back due to business being bad, not due to taxes. You pretty much said that yourself and reiterated in paragraph above.
They will reduce their costs (e.g. firing employees) if their outlook is negative, not because the taxes are going up.
If my net is going down, then it follows that my taxes are going down too, so where does the issue of absorption of the taxes come from?
It is possible, and I am just speculating here, that your mom & pop store owners are in trouble and need somebody/something to blame. It is a lot easier to blame others/government/foreigners/taxes than for a flawed execution of business strategy. Easy for them to say, “Them taxes are killing my business” rather than “Knowing what I know now about slow demand for my product/services, I should not have made that capital investment last year”.
This is why I hate to take personal examples since it might come across as a little harsh. But we all know that “it is always somebody else’s fault” and we have played that card a few times in our lives. Maybe that explains your observations better than blaming the taxes.
