=+12.10 Policy Application: Taxes on Firms: There are several ways in which governments tax firms, including taxes

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=+12.10 Policy Application: Taxes on Firms: There are several ways in which governments tax firms, including taxes on labor, capital, or profits. As we will see in Chapter 19, it is not at all immediately clear whether taxes on labor or capital are paid by firms even when tax laws specify that firms will pay them. For now, we will simply assume that we know that some share of taxes on inputs are real costs to firms. It is also not clear that governments can easily identify economic profit of firms, or that price-taking firms usually make such profits (as we will see in Chapter 14). Again, we will simply assume these issues away for now.

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