Fundamental lack of understanding

Democrats in California really don’t get economics:

California lawmakers are targeting the expected windfall that companies in the state would see under the federal tax overhaul with a bill that would require businesses to turn over half to the state.

There are two problems with this approach. First, taxes are a cost of doing business. Profit is the margin added to cost that allows a business to keep doing business. So if California raises costs by confiscating federal tax money businesses would have saved under the new federal tax plan, those businesses will simply calculate their prices based on the higher cost — and pass the increase on to consumers.

In other words, the citizens of California would pay the new state tax, not businesses.

Second, the California assembly assumes that business owners will just sit there and take it, which is observably not the case.

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