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The other answers already provided some intuition so I will try to be slightly more technical (although not so that a non-economist would not be able to follow). tl;dr: Government cannot prevent passing tax burden just by controlling prices (at best it can mitigate it and even that at the expense of workers). Generally to prevent the passing of the burden it ...


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As a practical matter, it might exacerbate the very issue you're trying to solve. If a business only has a 5% net profit margin (i.e. $100 in revenue, and 5 in profit) -- then a 10% tax would make this 5% profit margin swing to a -5% margin. Think of a tariff. And if a business goes bankrupt and shuts down...well then that's the most inefficient solution of ...


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I don't see how the government taking X% of a business's profits is stopping the business from increasing prices (or is this just the penalty in the enforcement clause?), so I am going ignore that part. What you are describing is essentially setting prices, determining what prices a business can and cannot set. (If you merely prohibited passing on costs, ...


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