Evidence receipt / prediction
Published · transcript-backedRaj Chetty: prediction
24 May 2017 Conversations with Tyler Raj Chetty on Teachers, Social Mobility, and How to Find Answers to Big Questions
“Companies recognize that, when the tax is added at the end, it’s in their favor because consumers don’t cut back on demand as much as if the tax was included in the price, and that would force companies to basically cut prices and bear some of the costs of the tax.”
Source trail
Everything needed to verify it.
- Speaker
- Raj Chetty
- Attribution
- Verified speaker
- Claim type
- prediction
- Recorded
- 24 May 2017
- Publisher
- Conversations with Tyler
Transcript context
…The suppliers would favor the add-on. Yeah, yeah. Well, the suppliers definitely favor the add-on. I think the nature of the value-added tax in Europe, which is levied at various parts of the production process, makes it a little bit more difficult or cumbersome to levy the taxes and add-on at the end. It’s not that you can’t do it, but just when you think about the mechanics of it, it’s more natural to build it in along the way. In the US, we have the sales tax as opposed to a value-added tax, so you can see why it might be natural to just add it at the end. Companies recognize that, when the tax is added at the end, it’s in their favor because consumers don’t cut back on demand as much as if the tax was included in the price, and that would force companies to basically cut prices and bear some of the costs of the tax. This paper — coming back to your earlier question — the way I started thinking about it, is just walking around in the real world. If you think about how people react to taxes, economists like to make the assumption that everybody pays attention to every tax in the economy. Right.…
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