Corporate tax rate, coming to a town near you - sm Posted: Dec 1st, 2017 - 1:05 am
The city next to mine has a 2% higher sales tax than we do. They have one car dealership. We have 10. Why is that?
People know they can drive 10 minutes in any direction and save hundreds on a car purchase. Those few percentage points have increased the car dealership's cost of doing business in that city.
You're probably thinking, wait a minute. This is a sales tax paid by the consumer. That's not increasing the car dealership's costs. Oh but it is. They have to discount their cars and offset the extra tax just to get people to buy them. They also have to advertise more because everyone knows there's a higher sales tax there and won't naturally consider buying a car from them. I would imagine their salespeople make less in commission and take home pay due to the reduced prices and fewer sales.
All of that is just for them to stay competitive with the dealerships in my town.
The same thing happens when the US has a higher corporate tax rate than other countries. The increased costs imposed by the government always trickle down to employees and consumers, resulting in lower wages and higher costs.
Why doesn't the lone car dealership move? I suspect they're trapped. They probably own the lot and the building. They'd have to sell it to move. But no one will buy it because of the unfriendly business environment. They're limping along probably hoping the tax rate changes before they go bankrupt.
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