Yawn. We are talking 39% vs. 36%.
Yes an 8 and a third percent increase in the amount of taxes paid on the marginal dollar. That provides a disincentive at the margin. 60% or more would provide a much large one, but its not like there is some magic threshold, below which there is no effect and all the sudden there is a massive one. Each small increase, each percent, or even less, puts a new group of people at the margin.
GM has 171.86B ttm revenue. If it could have increased its prices by 3% (all prices, including services and financing, anything it makes revenue from) it could have reduced its loss by over $5bil. Why didn't it do this? Because it would have decreased sales. 3 percent is enough to make people at the margin change. Sure it wouldn't have meant that no GM cars where sold, but it likely would have reduced sales enough that their would have been no clear net benefit, and quite possibly a noticeable additional loss.
People might look at any sort of situation, and say "I wouldn't change if it cost me 3% more", and maybe they are right, that only means they are not at the margin at the current price levels. But someone else will be. And as prices increase, eventually they will be at the margin where another 3% increase gets them to move from buying a car or expanding their business, to not doing so. |
