Re: [tlug] Yes! Another argument about the GPL! You knew you wanted it....

["Stephen J. Turnbull" <stephen@example.com>]

Curt Sampson writes:

 > Any business that collects more in VAT than it spends effectively
 > pays no VAT on anything. So even if VAT is "entirely collected from
 > businesses," isn't it fair to say that only consumers pay it?

You're forgetting that anything that increases the price to consumers
reduces quantity demanded.  That in turn induces a tradeoff to you
(the business), and you will lower your price to get *some*, but
probably not all, of that demand back.  IOW, if consumers respond to
price increases by reducing demand, you cannot pass all of the tax
through to them.

So in fact who writes the check to the government doesn't matter at
all, only the gross price paid by the consumer and the net price
received by the firm, as compared to the equilibrium price with no
tax.  Basically, the side of the market which responds less to a
change in price bears more of the burden of the tax.

Speaking of Subsidies Department
================================

Application: since Toyota was already running at capacity, the ecocar
thing cannot increase the number of Priuses sold.  Thus the consumers
will still be willing to pay the same amount, and the ecocar subsidy
is a pure windfall to Toyota, because they can raise price (ie, refuse
to discount the inflated MSRP) 1 yen for every yen of subsidy.

In practice, they have to reduce price a little, because even Japanese
people would get really pissed off if they realized that the most
profitable firm in the country was being subsidized and they weren't
getting any.  In fact, Toyota is probably being jawboned into reducing
prices significantly (viz being sold out until next April as of two
weeks ago), but I bet this nevertheless provides a healthy boost to
their bottom line.