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Depends on the profit margin of the company. 2% revenue tax equals 8% of the profit for a company with 25% margin. For a company with 5% margin, 2% of revenue e
by andruby 9y ago
Depends on the profit margin of the company. 2% revenue tax equals 8% of the profit for a company with 25% margin. For a company with 5% margin, 2% of revenue equals 40% of profit.
This is my biggest problem with a revenue tax. It disproportionately punishes “high volume, low margin” business models over “low volume, high margin”
- julbaxter 9y agoBut one can argue that his biggest problem with a profit tax is that it disproportionately punishes “low volume, high margin” business models over “high volume, low margin”.
- andruby 9y agoDoes it? Profit is what determines the value to shareholders (of mature steady companies). 10% profit tax is the same amount for comapnies with the same amount of profit.
- charlesdm 9y agoI guess the country where the actual profit is booked (i.e. Ireland) will allow these payments to be deducted from the gross profit, before taxing. But you're right. A business selling airline tickets online from Ireland, running on razor thin margins, will pay a lot of tax. A business selling software licenses at 90% margin will pay very little.