Councilperson Dr. Jose Moreno proposes $1 gate tax for the DLR and other venues - Failed a second time, but still very much alive.

[October82]

Those were just a couple examples of products where a price increase could occur. In reality it would likely be smaller increases across all products sold inside the park to offset any cost. And since in most cases it would a few cents that the guest wouldn't notice when purchasing those items. And specifically it would likely be increases to merch since those items typically don't have prices rounded to the quarter like food items.

So, we're at a point where the "consumer will pay the gate tax" has become "imperceptible price differences on a large number of items"?

The important point here is the same logic applies as before. Prices are set by the market. If people would pay a higher price, Disney should already be charging that higher price. The gate tax doesn't cause the price increase.

Firms aren't always neutral actors in markets, however. So I suspect what a company like Disney will do is change their patterns of investment and marketing. In reality Disney has a monopoly on many products they sell, which gives them further power to change how pricing works overall. An example that comes to mind would be the change away from ticket books. Of course, we wouldn't see something quite that radical, but changes to what a "Disneyland ticket" actually is can increase revenues even with a gate tax. That's what we've been seeing them do with the proliferation of up-charge and premium experiences. Not raising the price of a coke or a t-shirt, but offering a new "premium" Star Wars bar.

This is all worth discussing and should be weighed against what the gate tax is meant to do. As I understand it, the point of the tax is to increase revenues for the city and recoup costs for services the city is providing to Disney without compensation. How those goals might figure against the long run impacts on tourism and Disney specifically is much more complicated.

 

[Disney Irish]

So, we're at a point where the "consumer will pay the gate tax" has become "imperceptible price differences on a large number of items"?

The important point here is the same logic applies as before. Prices are set by the market. If people would pay a higher price, Disney should already be charging that higher price. The gate tax doesn't cause the price increase.

Firms aren't always neutral actors in markets, however. So I suspect what a company like Disney will do is change their patterns of investment and marketing. In reality Disney has a monopoly on many products they sell, which gives them further power to change how pricing works overall. An example that comes to mind would be the change away from ticket books. Of course, we wouldn't see something quite that radical, but changes to what a "Disneyland ticket" actually is can increase revenues even with a gate tax. That's what we've been seeing them do with the proliferation of up-charge and premium experiences. Not raising the price of a coke or a t-shirt, but offering a new "premium" Star Wars bar.

If Disney is already charging the highest price set by the market, thus negating any potential to offset on a tax levied. Then why have prices continued to go up almost yearly on almost all prices across the resort? That means Disney isn't actually charging the higher prices, and the market can bear more, and thus Disney continues to raise prices on items. Disney has yet to find a price that is beyond what the market will bear hence why prices haven't decreased or remained stagnant. We'll see what the current economic climate does to prices, but I wouldn't expect a decrease any time soon.

Anyways we're just going to have to agree to disagree here as we're just going to go around in circles. And this gate tax is likely not to be put into place anytime soon anyways.

This is all worth discussing and should be weighed against what the gate tax is meant to do. As I understand it, the point of the tax is to increase revenues for the city and recoup costs for services the city is providing to Disney without compensation. How those goals might figure against the long run impacts on tourism and Disney specifically is much more complicated.

Actually while specific people on the city council target Disney, the tax can't be imposed on only Disney. So in fact its across all entertainment venues in Anaheim including Angels Stadium and the Honda Center. Meaning it'll actually target locals not just tourist.

 

[October82]

If Disney is already charging the highest price set by the market, thus negating any potential to offset on a tax levied. Then why have prices continued to go up almost yearly on almost all prices across the resort? That means Disney isn't actually charging the higher prices, and the market can bear more, and thus Disney continues to raise prices on items. Disney has yet to find a price that is beyond what the market will bear hence why prices haven't decreased or remained stagnant. We'll see what the current economic climate does to prices, but I wouldn't expect a decrease any time soon.

Right. And that's sort of the point here. Prices would be rising regardless. The tax is immaterial to what the price of a Disneyland ticket is to all of us that buy them. The tax is not immaterial to Disney. It changes how much of that price ends up in their pockets and how much goes to the city. So Disney has a vested interest in an outcome here, while we should be asking a different set of questions about what the pros/cons of the tax are in terms of raising revenues for the city and possibly more complicated longterm impacts.

Anyways we're just going to have to agree to disagree here as we're just going to go around in circles. And this gate tax is likely not to be put into place anytime soon anyways.

To the contrary, I've found this conversation very worthwhile.

Actually while specific people on the city council target Disney, the tax can't be imposed on only Disney. So in fact its across all entertainment venues in Anaheim including Angels Stadium and the Honda Center. Meaning it'll actually target locals not just tourist.

I've used the word "tourism" here to refer to the industry as a whole. An important part of this though is that Disney, the Angels, the Honda Center, etc. are all competing against other venues in communities not impacted by the tax. Disney is special from a local perspective in that a much larger percentage of the people visiting the resort aren't locals as compared to the Angels, Ducks, etc. I'm not sure how important or unimportant that is in the big picture though.

 

[Disney Irish]

Right. And that's sort of the point here. Prices would be rising regardless. The tax is immaterial to what the price of a Disneyland ticket is to all of us that buy them. The tax is not immaterial to Disney. It changes how much of that price ends up in their pockets and how much goes to the city. So Disney has a vested interest in an outcome here, while we should be asking a different set of questions about what the pros/cons of the tax are in terms of raising revenues for the city and possibly more complicated longterm impacts.



To the contrary, I've found this conversation very worthwhile.

I thought we moved passed the idea of it affecting just the price of a Disneyland ticket. But whatever.

I still think you're naive here if you think Disney is just going to take this on the chin and go even partially out of pocket on this or any other tax.

As for the raising revenues to the general fund, I think this is ultimately shortsighted by the proponents of this tax. Its assumes an average attendance of all venues to calculate its potential revenue. Which is laughable given the potential for limited attendance for at least the next year or possibly more. So it would likely not even bring in half of its projected $22 Million per year for years to come. So this isn't going to be the savior of the $100 Million budget shortfall that they make it out to be.

I've used the word "tourism" here to refer to the industry as a whole. An important part of this though is that Disney, the Angels, the Honda Center, etc. are all competing against other venues in communities not impacted by the tax. Disney is special from a local perspective in that a much larger percentage of the people visiting the resort aren't locals as compared to the Angels, Ducks, etc.

Look I have no real skin in this fight due to not being a Anaheim resident. However I can see the major impact to locals due to it hitting all entertainment venues that would primarily be frequented by locals. Which could drive local spending away from the very community this tax is trying to raise money for.

 

[Darkbeer1]

FYI, thanks to Federal Grants received, we (the city) are closer to a $60 Million deficit, and we are still applying for many more grants.

And the city is looking at targeted cuts to help reduce the deficit.

IMHO, the Gate Tax is being used as something to use to campaign politically, and the actual funds raised are not that important.

Getting the Resort Area back up and running, selling Angel Stadium for $325 Million, and not spend too much of it for community benefits, and targeted budget cuts will be the best ways to cut the deficit. Plus supporting the OC V!be overall plan, including the Angels part of it, to create jobs and new tax revenue. An Entertainment tax hurts that vision, since parts of it, like the outdoor amphitheater, will be taxed more.

And Anaheim is not the only venue in the area offering that type of entertainment, and it will have to compete with other venues for acts. And those groups are always looking for less exepnsive options.

 

[October82]

I thought we moved passed the idea of it affecting just the price of a Disneyland ticket. But whatever.

I still think you're naive here if you think Disney is just going to take this on the chin and go even partially out of pocket on this or any other tax.

Since I pretty much agree with the rest of your comment, without adding to the discussion we had that does seem to have run its course, I do want to just be clear in closing that I'm not saying that Disney has a choice and will decide one way or the other. What I am saying is simply that markets set prices.

 

[Disney Irish]

What I am saying is simply that markets set prices.

Which you've make clear in several of your post. And what I'm simply saying its not that simple, and you've brought up the reason why, Disney sets the prices due to being a monopoly in this market. Disney knows its market very well, better than you or I, meaning they know where they can increase prices while not knocking things too far out of equilibrium. Hence Disney can and likely will raise prices as it sees fit in order to offset any new taxes levied on it in order to maintain or even increase revenue levels. Because as mentioned there are external forces at play which prevent affecting revenue levels, Wall Street. And Wall Street is not very forgiving, so Disney will do everything to make sure they aren't upset.

The only other thing I could see Disney doing outside of raising prices, which was never brought up, would be to lower operational expenses. And that basically means cutting labor, which also means less taxes for Anaheim. So basically its either the guests get hit, or the CMs get hit, but one thing is fairly certain Disney won't go out of pocket for this or any other new Anaheim tax.

 

[No Name]

You've clicked on a thread that is obviously discussing local Anaheim politics, the title of the thread makes that plain to see.

I can completely understand not wanting politics to infiltrate every thread, but discussing the local politics in the area Disneyland resides in does have its place in relation to Disneyland in general and I can understand why some might want to take part in this discussion in the Disneyland forum section.

This forum is all but dead at this point with zero new Disneyland news to discuss and very few new posts every day, if a few people want to discuss Anaheim politics who cares? The thread is easy to ignore if that's not your thing.

I understand that and actually don’t mind politics here as long as it’s consistent. A similar argument could be made for Splash Mountain’s changes yet that was treated very differently.

 

[el_super]

You've clicked on a thread that is obviously discussing local Anaheim politics, the title of the thread makes that plain to see.

I don't think it's too much to ask that, even if the discussion is political in nature, it still somehow relates to Disneyland while on the Disneyland forum. If I wanted to read unsolicited political propaganda I'd spend more time on Facebook.

There has to be some consistency in what constitutes on-topic politics and what doesn't, because otherwise everything from Newsom's leadership to Trump would be fair game.

El Super is such a buzzkill.

That's true.

 

[el_super]

If Disney really is pricing tickets below the market price as you suggest, they should raise their prices until they reach the market price. In that case, again, the ticket tax isn't coming out of consumer's pockets any more than it otherwise would have been. It's just $1 that goes to Anaheim instead of Burbank.

I spent the time to type up this exact response before wisely checking to see if someone else had mentioned it. This is spot on.

Disney are experts at playing the game of setting price X to achieve attendance Y. The only think a ticket tax would change, would be the percentage that Disney is able to raise the price each year to achieve their target attendance.

 

[el_super]

Also his work on Beach Boulevard, Knott's, Etc. translates to the Resort District, which Mr. Vanderpool will have to get back to creating revenues by finding ways to assist the Disneyland Resort.

If we've committed to having the political debate let's have it: It would be absolutely disastrous for Anaheim if the new City Manager put Disney's priorities over the city's in order to "assist" them as you suggest. If this crisis has proven anything, it's that Anaheim absolutely has to be less reliant on entertainment in general, but Disney specifically for their revenue. While I have no doubt that Disney will eventually recover over the next few years, Anaheim won't (or at least shouldn't) need to continually ask for government welfare to cover that gap.

Hopefully the new City Manager will be a strong candidate that won't be afraid to question the direction the council makes. Of course I will point out again that Anaheim wouldn't have needed a new city manager, if not for the illicit firing of the old city manager of concerns that the council was inappropriately spending money on the visit Anaheim tourism group which has now spent some of that 6 million dollars the city of Anaheim so generously provided them, to promote Knott's Berry Farm (I guess they kinda forgot what city that's in):

Hopefully this new City Manager will stand up to the waste of spending that the last one stood up for.

 

[October82]

Which you've make clear in several of your post. And what I'm simply saying its not that simple, and you've brought up the reason why, Disney sets the prices due to being a monopoly in this market. Disney knows its market very well, better than you or I, meaning they know where they can increase prices while not knocking things too far out of equilibrium. Hence Disney can and likely will raise prices as it sees fit in order to offset any new taxes levied on it in order to maintain or even increase revenue levels. Because as mentioned there are external forces at play which prevent affecting revenue levels, Wall Street. And Wall Street is not very forgiving, so Disney will do everything to make sure they aren't upset.

So, as I mentioned, this conversation ran its course. I merely wanted to clarify the basic point because it seems that there was room for misunderstanding. I responded to each of these points earlier but since we seem to be summarizing the conversation, I'll repeat that while Disney has a monopoly on Coca-Cola products sold in its parks, it doesn't have one on amusement park tickets in Southern California, Wall Street doesn't set prices, markets do, etc. and Wall Street responds to what companies do in those markets. (believing otherwise will lose you an awful lot of money, investment firms are smarter than that).

At the end of the day, all of these claims don't reflect how real markets operate, and are really assertions that what we know about markets isn't true. If you want to assert that it really will raise prices and that we will be paying the cost, not Disney, that's fine. But that's an assertion and a questionable one. Let's be upfront about that and bring some balance to the way these conversations are had. There are already plenty of pages of corporate apologetics in this thread. We don't need more.

The only other thing I could see Disney doing outside of raising prices, which was never brought up, would be to lower operational expenses. And that basically means cutting labor, which also means less taxes for Anaheim. So basically its either the guests get hit, or the CMs get hit, but one thing is fairly certain Disney won't go out of pocket for this or any other new Anaheim tax.

This conversation was in response to several posters suggesting that Disney would raise its prices. Or more specifically that "we would be paying the tax, not Disney". The important point here is that each step that Disney might take is dependent on whether Disney is identifying existing inefficiencies given the conditions in that market. The tax isn't material to the question of whether we would be paying it or Disney would be paying it. The answer is that Disney will charge what they can, cut labor where they can, and have revenues and profits that reflect the market conditions that they operate in. They'll do this regardless of whether Anaheim imposes a tax or not. At the end of the day, Disney is the one paying the tax with a cut in the profit they would have otherwise had. Believing otherwise requires you to believe that Disney is not making as much profit as they could be, and arguing that they should be raising their prices and cutting labor anyway. No one in this thread will be paying more or less for their day at Disneyland because of this tax. If they would be, Disney should raise prices to the maximum the market will sustain, and should reduce labor costs to the lowest level that allows them to provide the product at the maximum market price. That's ECON/BUS 101.

 

[October82]

I spent the time to type up this exact response before wisely checking to see if someone else had mentioned it. This is spot on.

Disney are experts at playing the game of setting price X to achieve attendance Y. The only think a ticket tax would change, would be the percentage that Disney is able to raise the price each year to achieve their target attendance.

Yes. Another way to think about it is to ask if the tax existed for ten years before going away, would the price of a Disneyland ticket be lower in year 11?

 

[Disney Irish]

So, as I mentioned, this conversation ran its course. I merely wanted to clarify the basic point because it seems that there was room for misunderstanding. I responded to each of these points earlier but since we seem to be summarizing the conversation, I'll repeat that while Disney has a monopoly on Coca-Cola products sold in its parks, it doesn't have one on amusement park tickets in Southern California, Wall Street doesn't set prices, markets do, etc. and Wall Street responds to what companies do in those markets. (believing otherwise will lose you an awful lot of money, investment firms are smarter than that).

At the end of the day, all of these claims don't reflect how real markets operate, and are really assertions that what we know about markets isn't true. If you want to assert that it really will raise prices and that we will be paying the cost, not Disney, that's fine. But that's an assertion and a questionable one. Let's be upfront about that and bring some balance to the way these conversations are had. There are already plenty of pages of corporate apologetics in this thread. We don't need more.



This conversation was in response to several posters suggesting that Disney would raise its prices. Or more specifically that "we would be paying the tax, not Disney". The important point here is that each step that Disney might take is dependent on whether Disney is identifying existing inefficiencies given the conditions in that market. The tax isn't material to the question of whether we would be paying it or Disney would be paying it. The answer is that Disney will charge what they can, cut labor where they can, and have revenues and profits that reflect the market conditions that they operate in. They'll do this regardless of whether Anaheim imposes a tax or not. At the end of the day, Disney is the one paying the tax with a cut in the profit they would have otherwise had. Believing otherwise requires you to believe that Disney is not making as much profit as they could be, and arguing that they should be raising their prices and cutting labor anyway. No one in this thread will be paying more or less for their day at Disneyland because of this tax. If they would be, Disney should raise prices to the maximum the market will sustain, and should reduce labor costs to the lowest level that allows them to provide the product at the maximum market price. That's ECON/BUS 101.

Look I get all your points, you want to try and put this all back on the supply/demand, yield curves, market pricing and all the other stuff we learn in ECON/BUS 101. And honestly I'm not going to say your wrong, naive, but not wrong regarding Disneyland pricing. But there are real world implications to these discussions, and that is where I believe you're being naive. Saying the tax is immaterial to overall pricing of any item in Anaheim is also naive. Because as has been stated now many times this tax doesn't affect just Disneyland, its affect all entertainment venues across the city. Large and small, from the movie theater to the night club to Disneyland and other venues. Its going to affect all entertainment businesses across the city. And if you think that this tax isn't going to be paid by locals, well again I say you're being naive. Its basically going to be an additional sales tax being added to all entertainment purchases. And in the real world businesses don't typically lower the cost of goods to offset a sales tax. And we as consumers understand and accept the price of a good is not the final price. That the final price will be a higher price due to sales and other local and state taxes, because we vote it in. So in reality this is not about the price of a good, which is where you are correct in your markets discussion. Its all about the additional taxes that are added onto the price of a good at the point of sale, which Disney isn't going to absorb, and which is where you are being naive.

So while its fun to talk about ECON/BUS 101 there are real world implications to these discussions. And real people that will be affected.

 

[October82]

And in the real world businesses don't typically lower the cost of goods to offset a sales tax.

In the real world, businesses set their prices based on the price that markets will pay for the item. If they price an item too high, fewer people purchase it and they lose money. If they price an item too low, they lose money they otherwise would have made had the item had a higher price.

And we as consumers understand and accept the price of a good is not the final price.

In the real world, consumers have a fixed number of dollars that they can spend on an item. I don't get more money in my pocket when it says "sales tax not included" on the price of an item. That item does not become worth more to me than it did before I read that phrase.

That the final price will be a higher price due to sales and other local and state taxes, because we vote it in. So in reality this is not about the price of a good, which is where you are correct in your markets discussion. Its all about the additional taxes that are added onto the price of a good at the point of sale, which Disney isn't going to absorb, and which is where you are being naive.

When Disney sells a theme park ticket, there are certain costs that it takes to produce that ticket. For example, it costs money to staff the ticket booths or build and maintain attractions. The cost per ticket sold is less than the cost it takes to produce that ticket. So Disney makes a profit on that ticket. This is good. Given Disney's success over many decades, one assumes they are quite good and maximizing the number of sales and keeping their cost low in order to make the most money they can. If Disney prices a ticket higher than the market price, Disney will lose sales and money. A tax on ticket sales involves increasing the price of the ticket. So does Disney want to lose sales and money, or would they like to make the most money they can given their fixed costs? What does that mean for the difference between the total revenue from ticket sales and the costs to run their business?

So while its fun to talk about ECON/BUS 101 there are real world implications to these discussions. And real people that will be affected.

In the real world, companies like to make money. They don't like to lose money. The naive position IMHO is the one that believes that companies haven't liked money in the past but suddenly will start to do so in the future. It's a position that is rooted in a certain set of pro-business beliefs, and one that can be intuitive, but doesn't reflect reality. Saying "in the real world" does not mean that intuitive beliefs are correct. Intuitive beliefs are not less naive than the fundamentals of economics and business.

 

[Disney Irish]

In the real world, businesses set their prices based on the price that markets will pay for the item. If they price an item too high, fewer people purchase it and they lose money. If they price an item too low, they lose money they otherwise would have made had the item had a higher price.

This I agree with, but not really relevant to the discussion of a tax added onto the sale at time of purchase.

In the real world, consumers have a fixed number of dollars that they can spend on an item. I don't get more money in my pocket when it says "sales tax not included" on the price of an item. That item does not become worth more to me than it did before I read that phrase.

Yes, but that still doesn't change the fact it wasn't factored into the price of the good being sold. The consumer is still forced to pay that tax even if the price of the good didn't actually go up if they want that good. The value of a good isn't changed one way or the other by a tax.

And the very fact that you don't get more money in your pocket as the consumer because "sales tax not included" is exactly the point that is trying to be made. The consumer will be the one paying because "sales tax not included".

When Disney sells a theme park ticket, there are certain costs that it takes to produce that ticket. For example, it costs money to staff the ticket booths or build and maintain attractions. The cost per ticket sold is less than the cost it takes to produce that ticket. So Disney makes a profit on that ticket. This is good. Given Disney's success over many decades, one assumes they are quite good and maximizing the number of sales and keeping their cost low in order to make the most money they can. If Disney prices a ticket higher than the market price, Disney will lose sales and money. A tax on ticket sales involves increasing the price of the ticket. So does Disney want to lose sales and money, or would they like to make the most money they can given their fixed costs? What does that mean for the difference between the total revenue from ticket sales and the costs to run their business?

Again this I agree with, but again not really relevant to the discussion of a tax added onto the sale at time of purchase. Disney sets the price of the good, not of the tax they are legally required to charge at the time the good is being purchased.

In the real world, companies like to make money. They don't like to lose money. The naive position IMHO is the one that believes that companies haven't liked money in the past but suddenly will start to do so in the future. It's a position that is rooted in a certain set of pro-business beliefs, and one that can be intuitive, but doesn't reflect reality. Saying "in the real world" does not mean that intuitive beliefs are correct. Intuitive beliefs are not less naive than the fundamentals of economics and business.

No one is disputing companies don't like to make money. I think that is well understand, and is not even considered a new concept. And in fact its this very sentiment which is at play here. Because companies like to make money, no company is going to pay this new tax out of their pocket. It will be added to the final price of the good being sold at time of purchase just like every other tax.

 

[October82]

This I agree with, but not really relevant to the discussion of a tax added onto the sale at time of purchase.

Good, so we understand supply and demand.

Yes, but that still doesn't change the fact it wasn't factored into the price of the good being sold. The consumer is still forced to pay that tax even if the price of the good didn't actually go up if they want that good. The value of a good isn't changed one way or the other by a tax.

That's right, the value of an item is determined by the price that people in a market will pay for an item. Do consumers pay the price of an item, including tax, when they purchase that item?

And the very fact that you don't get more money in your pocket as the consumer because "sales tax not included" is exactly the point that is trying to be made. The consumer will be the one paying because "sales tax not included".

Yes, the consumer pays the price for a good or service. It seems like we agree about that. Do consumers decide what to buy based on how much profit a company will have on that item? If you go into a car dealership, do you typically spend more if the salesperson tells you that they will benefit by you paying a higher price? Or do you attempt to pay the lowest price you can for what you think the item is worth? Does it matter if the dollar in your pocket goes to the businessperson or to the state? Do you have more money in that case? Is the item worth more to you?

Again this I agree with, but again not really relevant to the discussion of a tax added onto the sale at time of purchase. Disney sets the price of the good, not of the tax they are legally required to charge at the time the good is being purchased.

True, Disney does not choose whether there is a tax. They do choose what the total price of the good is that they offer in the market. If they choose poorly, they lose money. If they choose well, they make money.

No one is disputing companies don't like to make money. I think that is well understand, and is not even considered a new concept. And in fact its this very sentiment which is at play here.

The exact position that you hold is that Disney is undervaluing tickets by selling them at their current price and should increase them to the new price regardless of whether there is a tax or not. Why wouldn't they? Under your view of decision making, Disney can set the price at a higher level with no consequences. And to support that position, you are now arguing that taxes on goods are not part of the price that consumers pay for them.

Because companies like to make money, no company is going to pay this new tax out of their pocket. It will be added to the final price of the good being sold at time of purchase just like every other tax.

A point we really haven't discussed yet is that companies don't have a "literal pocket" from which to pay or not pay from. Companies set pricing dynamically. Sometimes their profits go up, other times they go down. Operating expenses change, and sometimes tax and regulatory environments change. It's not that these things don't matter in sometimes complicated ways, but Disney won't have a choice whether to pay their taxes, and them paying their taxes doesn't a priori mean that you are paying more than you otherwise would have.

Unless, of course, as you seem to think, consumers don't actually care how much they pay for an item. Maybe that's true for you, but it's not true for me.

 

[Ismael Flores]

It’s $1 per ticket though, so I doubt that will be a breaking point for many people. Disney hasn’t seemed to find what the market is willing to pay as they raise tickets prices yearly by many dollars and people still pay it in droves (at least until all Hell broke loose this year).

It always starts small, once it is done anything is possible. It will probably end up being like those small taxes that are added to gasoline. starts off with a few cents then its a few more than we are screwed LOL

 

[Disney Irish]

Good, so we understand supply and demand.

Yes and we all understood it the first time you wrote it on the board professor.

That's right, the value of an item is determined by the price that people in a market will pay for an item. Do consumers pay the price of an item, including tax, when they purchase that item?

The final price is paid by the consumer. The price of the item is x the taxes added on at sale are y and the final price is z. x+y=z

Consumers pays the z price.

See professor I showed my work, do I get a gold star?

Yes, the consumer pays the price for a good or service. It seems like we agree about that. Do consumers decide what to buy based on how much profit a company will have on that item? If you go into a car dealership, do you typically spend more if the salesperson tells you that they will benefit by you paying a higher price? Or do you attempt to pay the lowest price you can for what you think the item is worth? Does it matter if the dollar in your pocket goes to the businessperson or to the state? Do you have more money in that case? Is the item worth more to you?

No the consumer doesn't decide what to buy based on how much profit the company will get. That is ridiculous. And is not even relevant to this discussion. Because this tax isn't going in Disney's bank account and never was.

Your example of the car dealership is also not relevant to this discussion. Because 1. you can negotiate pricing on cars, you can't in a theme park, 2. because there is a commission involved which again is not the case with a theme park, and 3. because we aren't talking about the price of the good being raised or lowered in order for the company to make a profit or not.

Let me use a better example. You stay in a hotel room. The price of the room is $200 per night. But there is an occupancy tax of 20% added to the price of the room set by the local government. So you don't pay $200 per night. You actually pay $240 per night. The price of the room didn't go up, its still $200 per night. The hotelier didn't set the price of the room based on that tax, they didn't lower the price to $160. They set it based on the market of other hotels around them since all other hoteliers also have to charge the same occupancy tax. The tax is added on at the time they collect. The consumer is stuck paying the $240 per night if they want that room. The same applies to any entertainment venue affected by this tax. They will set the price based on the market, like you keep mentioning, not based on the tax.

The exact position that you hold is that Disney is undervaluing tickets by selling them at their current price and should increase them to the new price regardless of whether there is a tax or not. Why wouldn't they? Under your view of decision making, Disney can set the price at a higher level with no consequences. And to support that position, you are now arguing that taxes on goods are not the price that consumers pay for them.

That is not what I'm saying at all. The price of the ticket is going to be set, the amount of taxes being collected is what will be going up. And that in the end the consumer is going to end up paying more. That is my whole point in this discussion. Which I think you ultimately agree with as well, if I pick up on where this post went.

A point we really haven't discussed yet is that companies don't have a "literal pocket" from which to pay or not pay from. Companies set pricing dynamically. Sometimes their profits go up, other times they go down. Operating expenses change, and sometimes tax and regulatory environments change. It's not that these things don't matter in sometimes complicated ways, but Disney won't have a choice whether to pay their taxes, and them paying their taxes doesn't a priori mean that you are paying more than you otherwise would have.

Unless, of course, as you seem to think, consumers don't actually care how much they pay for an item. Maybe that's true for you, but it's not true for me.

No duh they don't have a literal pocket, its a metaphor I figured you got that.

And yes consumers, even me, do care about what they have to pay out of their pocket, again another metaphor. And the very fact that it might come out of my own metaphorical pocket is why I'm even having this debate with you. The larger question is whether it will affect the overall attendance of not just Disneyland but of all the businesses that will be affected by this tax. And my thought it yes it will, which again is also shortsighted by the proponents of this tax.

 

[October82]

It always starts small, once it is done anything is possible. It will probably end up being like those small taxes that are added to gasoline. starts off with a few cents then its a few more than we are screwed LOL

This has to do with how sensitive to price increases consumers are. On things like gasoline, demand is only weakly impacted by changes in price. Luxury items have complicated pricing relationships, which is something that Disney exploits on ticket pricing. I would really encourage anyone who thinks gate taxes pose a serious threat of raising prices to remind themselves how much Disneyland tickets already cost.