Post #24276 by albaby1 on the US Policy board

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Sure there is. Subsidies are indirect wealth transfers because the price of the good being subsidized...inevitably rises in accordance with the $ amount of the subsidy itself.

If you subsidize the purchase of a good, the price net of the subsidy falls. If the subsidy is given to the producer, the nominal price falls; if it's given to the buyer, the nominal price might rise but the net price falls. So when Trump proposes subsidizing waiters and waitresses by making their tips tax free (for example), the price that employers have to pay for their labor will fall by some amount. The workers will sell their labor for a lower price, because the subsidy makes up for it.

LOL, Ford jacked up the price MORE than the amount of the subsidy.

The subsidy was there when it was priced at $40K. The subsidy was there when it was priced at $48.5K. So how did the subsidy raise the prices?

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