Sunday, April 13, 2014

"Screwed Either Way"

In response to my post regarding Charter Communications tax-cut-by-initiative scheme, Rep. Mike Miller comments via Twitter, “It seems the taxpayer is screwed either way via either higher taxes or higher cable bills.”   Mike has a point, but I think it’s a little more complicated than he thinks it is, and since I can’t explain myself in 140 characters, I’ll make a few points here.

Mike seems to be saying that Charter will be able to pass on to its subscribers all of the tax increase it’s looking at, and of course Charter wants you to think that too. But it’s unlikely. Who will actually end up paying the taxes – subscribers, employees, suppliers, owners – is a puzzle that economists love to play with, but suffice it to say that economic analysis tells us that it is unlikely to be just the subscribers. Some of the taxes are going to come out of Charter’s bottom line. If Charter could easily and painlessly shift the taxes onto its customers, why would it be making all this effort to engineer a tax cut for itself?

Another thing: not all taxpayers are Charter customers.  For those who aren’t, Charter’s gambit, if successful, will mean all pain and no gain.

And finally: if Charter succeeds in offloading its taxes onto everybody else, the impact on individual taxpayers is going to vary widely; some taxpayers are going to see their taxes go up more than their cable bill goes down (remember, we don’t really know how much that will be and it's zero for folks who don’t have cable) and others will see their cable bill drop more than their tax bill goes up. Cable customers receiving services from Charter have to expect to pay some of the company’s taxes. But why the taxpayers in general should foot the bill is a mystery to me.

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