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Example: My company makes 100M in revenue. To sell my goods, my cost is 99M, I only have 1M in profit. If I were taxed on my 100M revenue, I would just lose mon
by wpasc 9y ago
Example: My company makes 100M in revenue. To sell my goods, my cost is 99M, I only have 1M in profit. If I were taxed on my 100M revenue, I would just lose money and my business would have no point and I would have to close even though I am profitable. If it costs me 99M to sell 100M worth of goods, why wouldn't I be taxed on the 1M?
Why should two companies who have 100M in revenue at 99M costs vs 15M costs to pay the same taxes?
- DoveBrown 9y agoA reason to not take on your profit is that your "cost of sales" can be a pretty nebulous concept. How much of your 99M costs is licensing to entities you control in other jurisdictions? I understand why it is fairer have it be profit, but profit in the modern accounting world seems to be a strange thing. A good accountant can make your profit be anything you like, so it doesn't make sense to tax based on the idea that company has bad accountants. Generally it is harder for accountants to change revenue figures (other than defer into different years). The rules lawyering as to what is a legitimate cost is huge.
- lifeisgood99 9y agoWhy are individuals taxed on revenue then? A person making 100K but spending 99K of it as "costs" will have the same tax bill as a person making 100K but with 15K of "costs". I know individuals also have deductible items, but things like food or rent are often not deductible but take a big part of our costs.