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I think my point is that the cost of integrating the work of many into a small business are going to drop. I believe (and am probably alone in this belief :-))
by stretchwithme 16y ago
I think my point is that the cost of integrating the work of many into a small business are going to drop.
I believe (and am probably alone in this belief :-)) that there is still an inherent tax advantage to having everything in one entity that probably outweighs the disadvantages of coordinating a large group.
A group of 100 members trades internally without paying taxes on these transactions, but everything between independents has some tax effects for at least one side.
If this advantage were removed by some kind of tax reform, I suspect corporations would be smaller on average.
Getting back to the entrepreneur, even if there are many standard-izable things in a process, there are costs to outsourcing those things. Automation of physical logistics may greatly reduce these costs, making it possible to focus on just the unique value one can add and be rewarded.
- tsotha 16y agoWhere I live you only pay sales taxes at the retail level - companies earlier on in the supply chain don't pay anything. I think that's pretty standard, actually, and for the reasons you discussed. Or were you talking about some other kind of tax?
- stretchwithme 16y agobingo. Companies that only trade with companies still pay income taxes on their profits, at least here in the US. Not sure how big an effect this is or it has been studied at all. I guess the costs of doing business with another entity should also be considered and maybe they are more significant. Just having to evaluate vendors, do POs, trying to collect, etc, are also costs avoided inhouse.