Comment on Is it really possible to tax the rich?

• FourPacketsOfPeanuts@lemmy.world ⁨5⁩ ⁨weeks⁩ ago

  Yes, tax havens are a problem

  I’d almost say that companies should be taxed not on profits but on revenue

  This is what sales tax is though. Tax collected at the point of sale (ie revenue). You can collect it direct from companies instead but all you’d see is the ‘sales tax’ line of your shopping cart go higher.

  Profit is taxed instead of revenue (in general) because companies operate on wildly different margins (the difference between revenue and profit). So let’s ignore the fact it would get passed directly onto consumers and assume a revenue tax is borne by the companies… Say your revenue tax was 2% you might have a negligible effect on Apple, they have a large gap between their revenue and costs so they just absorb this as a tiny dent on profits, Tesla might be hit moderately hard (the amount of profit they turn compared to revenue is smaller so a revenue tax makes a much larger impact on profit), and it may have a catastrophic impact on Starbucks (very small gap between revenue and expenses so decreasing revenue via a 2% tax almost completely eradicates profits).

  I’m making up which company’s which just to illustrate that a revenue tax doesn’t land equally across companies. Some industries are low margin some are high margin and a revenue tax disproportionally clobbers low margin industries. Which might not be the effect we wanted. So it’s better to tax profit.

  This does create issues where companies deliberately don’t turn a profit because they aggressively reinvest in expansion and acquisition.

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  • Badeendje@lemmy.world ⁨5⁩ ⁨weeks⁩ ago

    Except in this case the tax is levied across the entire value chain. But yes, this would favor high margin business over low margin ones. But isn’t the current system doing that too? Investors throw money at high margin companies while not so much at low margin ones.

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