In response to my piece today calling for the abolition of the corporate income tax, I’ve received a half-dozen remarks to the effect that “taxes on businesses are nothing more than a pass-through to the consumer,” citing Milton Friedman’s famous observation that corporations aren’t taxpayers but tax-collectors.
But it is not the case that corporate taxes are necessarily passed on to consumers; it’s a bit more complicated than that.
But customers are not the only party doing business with Walmart. There are the employees, obviously; changing jobs is more difficult than changing where you buy your bananas, so some costs might be passed on to them.
But the more likely target would be the companies behind Walmart’s inventory. Everything on the shelves at Walmart is made by another company, and many of those companies rely on Walmart for a very large share of their sales. About 26 cents of every dollar the J.M. Smucker Company does in sales comes from Walmart. And while Walmart might not be able to charge customers more for a pound of Folger’s coffee, it might very well be able to pay Smucker less for it, or to renegotiate various aspects of its relationship in a way that is more advantageous to itself.