Why High Tax Rates Benefit the Super Rich (video)

We remember when Phillip-Morris tobacco and food company lobbied Congress to raise taxes on cigarettes. Did they do this out of a concern for the poor?  No.  Did they do it out of a sense of patriotism? No. 

They did it to destroy their competitors. Phillip-Morris is such a huge operation that their economy of scale makes them profitable. They can make products cheaper than almost anyone. So when tobacco taxes are raised Phillip-Morris can pay the tax without changing the price, their smaller competitors can’t absorb the tax and must raise their price this knocking them out of several markets. 

Phillip-Morris is big enough that they can but other tax breaks and favorable regulations to make up for the tobacco tax somewhere else while their smaller competitors do not have such an option. 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s