Episode 239: Who Ultimately Pays a Tax?
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Is the Government Taxing the Consumers?
In Mississippi, for example, they have a 7% sales tax on food, 7%. If you've got a 2% profit margin, where are you getting the money to pay 7% in sales tax? The market is going to sort out who pays the tax. Let me give you another example that goes in the other direction. Imagine a retailer who sells diamond jewelry. Typical profit margin here is above 40%. I think it's like 42% on average. And consumers regard this diamond jewelry as a luxury. It doesn't matter what politicians say about who they're collecting the tax from.
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