In a message dated 8/20/2003 4:15:07 PM Eastern Daylight Time, Leurquin, Ronald" <[EMAIL PROTECTED]> writes:
> How many businesses in MN lowered their prices last year when their property taxes > were lowered from the shifting of the taxes done by Jessie?< A quibble: Jesse didn't do it by himself; the Republican-led state house and the DFL-led state senate both passed the legislation first. Beyond that, the answer in the short term is, I don't know, and no one else does either. In the long term, the answer is, all of them. A business can take advantage of a reduction in the cost of doing business to increase profits, but if the reduction is permanent, as this tax change is, then competition will force the business to factor the change in costs into its price structure. In simpler terms, if Taco Bell doesn't lower prices, then Subway will undercut them, because Subway has had the same drop in costs. Subway will use this chance to grab a bit of market share from Taco Bell with the lower prices. Taco Bell, realizing that folks are buying fewer Gorditas, will lower its price to win folks back. So, while Taco Bell makes a bit more profit in the short run if they don't lower prices, they lose profits in the long run if they don't pass on the savings to customers. Incidentally, a small change in production costs means a lot to the big chains. Any of them will spend millions to cut the cost per meal by half a penny--because it adds up fast. --M. G. Stinnett Jordan Neighborhood TEMPORARY REMINDER: 1. Don't feed the troll! Ignore obvious flame-bait. 2. If you don't like what's being discussed here, don't complain - change the subject (Mpls-specific, of course.) ________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls
