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I'm not usually very pro corporate taxes. I think (with some caveats) that it is generally better to tax the owners of businesses than the businesses themselves

I'm not usually very pro corporate taxes. I think (with some caveats) that it is generally better to tax the owners of businesses than the businesses themselves. However, in order to counter the unfair advantages of overly large companies and promote competition (in tech, in finance or elsewhere) wouldn't it make sense to make corporate taxes slightly progressive where the larger a business is (by revenues), the higher the tax rate? Is there an obvious flaw to this approach? Why don't I see anyone ever suggesting it?

winstonewert 9y ago
As with all progressive taxation schemes, it tends to have problems because those people who you are trying to tax more heavily have the best resources to restructure their affairs to avoid the taxation.
- BenoitEssiambre 9y ago
  But that's true of any tax. I don't think it is specific to progressive ones. To me, the fact that larger entities are better at avoiding paying part of their taxes is an additional argument to make them start at a higher rate.
  - winstonewert 9y ago
    Yes, but its worse with progressive ones. A progressive tax increases the per-dollar incentive to find a loophole as the amount of money increases. Furthermore, by taxing different businesses at different rates it creates just the sort of loopholes that such avoidance takes advantage of. (I.e. a large business will try to find a way to count as two smaller businesses)
Eridrus 9y ago
It's not really obvious that we should prefer small companies to large companies.
- TulliusCicero 9y ago
  Notably, it's potentially easier to hold large companies to account compared to a bunch of small ones equivalent in total size. For example, bad news about Uber discourages people using Uber all over the world. Bad news about some taxi's behavior only discourages using taxis (or a particular taxi provider) for that one city, usually. In other words, large companies are more susceptible to reputational threat, which is is why, for example, they tend to be more careful about what their employees say online. If an employee of a random 10-man startup says something racist online, that's nowhere near as big of a deal as if an identified Googler says something really racist online.

winstonewert 9y ago

As with all progressive taxation schemes, it tends to have problems because those people who you are trying to tax more heavily have the best resources to restructure their affairs to avoid the taxation.

BenoitEssiambre 9y ago
But that's true of any tax. I don't think it is specific to progressive ones. To me, the fact that larger entities are better at avoiding paying part of their taxes is an additional argument to make them start at a higher rate.
- winstonewert 9y ago
  Yes, but its worse with progressive ones. A progressive tax increases the per-dollar incentive to find a loophole as the amount of money increases. Furthermore, by taxing different businesses at different rates it creates just the sort of loopholes that such avoidance takes advantage of. (I.e. a large business will try to find a way to count as two smaller businesses)

Eridrus 9y ago

It's not really obvious that we should prefer small companies to large companies.

TulliusCicero 9y ago
Notably, it's potentially easier to hold large companies to account compared to a bunch of small ones equivalent in total size. For example, bad news about Uber discourages people using Uber all over the world. Bad news about some taxi's behavior only discourages using taxis (or a particular taxi provider) for that one city, usually. In other words, large companies are more susceptible to reputational threat, which is is why, for example, they tend to be more careful about what their employees say online. If an employee of a random 10-man startup says something racist online, that's nowhere near as big of a deal as if an identified Googler says something really racist online.