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> At Google's size, there are extra accounting processes that you should follow. I've always assumed when I see an ad for Google Chrome in the sponsored sectio

by mcny 9y ago

> At Google's size, there are extra accounting processes that you should follow. I've always assumed when I see an ad for Google Chrome in the sponsored section in Google web search that it is money coming out of Google Chrome's marketing budget. So, it should technically count as revenue for Google web search. Which is why I think corporate taxes on profit is silly. Taxes should be based on revenue, not on profit. That you choose to reinvest all of your profits back into the company should be immaterial. If a corporation has 1% of its revenue as profit vs another corporation has 25% of revenue as profit is not our problem.

adanto6840 9y ago
One arm of Google paying another arm of Google money should end up being a zero sum game when it comes to profits. For a global corporation, it may (and likely does, potentially advantaged even) have tax implications -- but from a general profit/loss perspective it's still basically zero sum (though may actually cost them money in lost revenues/inventory in practice, which presumably gets booked as a liability if it's without compensation).
deleted 9y ago
[deleted]
nothrabannosir 9y ago
> That you choose to reinvest all of your profits back into the company should be immaterial. But a guiding principle of taxes is: discouraging unwanted behaviour (or encouraging, through tax cuts / subsidies). We want to encourage corporations to invest, i.e. "putting the money back into the economy". Keep buying those new machines, upgrading your assembly line, upgrading your fleet of cars, for ever increasing efficiency and economic activity. If you're talking about one company investing buy buying products from itself (like Google is, here), then hopefully the money one branch deducts from its revenue becomes additional profits for the other branch of the same company. Sure, in theory, practice and theory are equal. In practice, they're not. Tons of loopholes exist around just this aspect of accounting and tax law. But there is at least a theoretical reason to tax profits, over revenue.
IanCal 9y ago
> Taxes should be based on revenue, not on profit. This means that every layer in a series of transactions to the customer would add costs. Great for the biggest companies who can do everything in house, terrible for smaller companies acting in a chain. A massive company who buys raw materials and produces everything in house and sells for £1000 would pay tax on revenue of £1000 per widget. A series of small companies may have: Refinery: revenue £100 Part production: revenue £200 Construction: revenue £300 Wholesaler: revenue £400 Brick and mortar store: revenue £500 Now the massive company pays tax on £1000 but this series of companies pays tax on £1500.
- mijamo 9y ago
  Now I wonder if we could fix that by taxing only the difference. And we could call it Value Added Tax!
  - mcny 9y ago
    Hm... I am reading the replies and yet again I've grossly oversimplified the problem in my head :(
tyingq 9y ago
"Taxes should be based on revenue, not on profit" Net margin varies wildly by industry. That would be hard to implement in a way that wasn't slanted to disproportionately reward high margin industry...further increasing their margins.

by mcny 9y ago

adanto6840 9y ago

One arm of Google paying another arm of Google money should end up being a zero sum game when it comes to profits. For a global corporation, it may (and likely does, potentially advantaged even) have tax implications -- but from a general profit/loss perspective it's still basically zero sum (though may actually cost them money in lost revenues/inventory in practice, which presumably gets booked as a liability if it's without compensation).

deleted 9y ago

[deleted]

nothrabannosir 9y ago

> That you choose to reinvest all of your profits back into the company should be immaterial. But a guiding principle of taxes is: discouraging unwanted behaviour (or encouraging, through tax cuts / subsidies). We want to encourage corporations to invest, i.e. "putting the money back into the economy". Keep buying those new machines, upgrading your assembly line, upgrading your fleet of cars, for ever increasing efficiency and economic activity. If you're talking about one company investing buy buying products from itself (like Google is, here), then hopefully the money one branch deducts from its revenue becomes additional profits for the other branch of the same company. Sure, in theory, practice and theory are equal. In practice, they're not. Tons of loopholes exist around just this aspect of accounting and tax law. But there is at least a theoretical reason to tax profits, over revenue.

IanCal 9y ago

> Taxes should be based on revenue, not on profit. This means that every layer in a series of transactions to the customer would add costs. Great for the biggest companies who can do everything in house, terrible for smaller companies acting in a chain. A massive company who buys raw materials and produces everything in house and sells for £1000 would pay tax on revenue of £1000 per widget. A series of small companies may have: Refinery: revenue £100 Part production: revenue £200 Construction: revenue £300 Wholesaler: revenue £400 Brick and mortar store: revenue £500 Now the massive company pays tax on £1000 but this series of companies pays tax on £1500.

mijamo 9y ago
Now I wonder if we could fix that by taxing only the difference. And we could call it Value Added Tax!
- mcny 9y ago
  Hm... I am reading the replies and yet again I've grossly oversimplified the problem in my head :(

tyingq 9y ago

"Taxes should be based on revenue, not on profit" Net margin varies wildly by industry. That would be hard to implement in a way that wasn't slanted to disproportionately reward high margin industry...further increasing their margins.