Question

Explain the possible effects of corporate taxes on product prices

Answer 1

Answer - If the taxes are imposed upon the corporate profits , or the rate of the existing taxes are increased , these taxes just like the sales tax are passed on to the consumers. The consumers then will have to pay the higher prices. These taxes are just like the cost to the companies and thus are to be recovered from the charging of the increased prices. The little of the imposition also depends upon the elasticity of demand , but in some or the other way , the increased corporate taxes are passed on to the buyers , or the quality of the service or the size of the product is reduced in order to cover this increased cost of tax.