Unformatted text preview: lower dividends. Other view: Higher corporate taxes reduce retained earnings that the corp. could use to increase capital and expand production. R&D efforts may be diminished. If a corp. is not currently operating at the profit-max. position, (fear of govt. pressure, adverse public opinion), will use higher corporate taxes as “excuse” or rationale for price increases with less fear of public criticism. 62 Production Taxes and Subsidies Increased corporate income taxes may result in a decrease in supply and thus higher consumer prices....
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- Fall '10