ding, ding, ding, we have a winner! wal-mart ain't gonna raise it's prices due to a property tax freeze for the elderly.

but i will say that the revenue lost due to the tax freeze will have to be made up somewhere else. Or, gawd forbid, the county government could look for ways to reduce the budget. I would for just once love to hear a politician say their main goal is to reduce the budget. the closest was clinton/gore reinventing government, but we know that was a passing fancy too.

It’s simple economics. If you do not believe that businesses pass on tax increases to their customers in the form of higher prices, you obviously know little about business. The objective of a business is to make money. If my taxes go up (i.e. the cost of my inputs increase) and I don’t raise my prices, my profit will decrease. Am I going to absorb this loss or am I going to make it up? ANY business is going to make it up else where. How do they do it? They either increase prices or decrease other costs. Since you cannot decrease a fixed cost over the short-run, the only alternative is to decrease a variable cost. The most expensive variable cost is labor. The only way to decrease labor cost is to cut wages or decrease the labor force (i.e. lay people off).

It doesn’t make sense to decrease labor costs to offset small increases in fixed costs over the short-run because such cuts result in significant decreases in production. Therefore, the only other logical way to offset a profit loss is to increase revenue. Thus, the most economic option is to raise prices.

This is what happens. It’s not rocket science; however, it’s not open to debate either. It’s just fact.

The comment that Wal-mart is not going to raise its prices because of a tax increase is really an ignorant thing to say.

Lester