5 ms·

Consolidation of our economy has been disastrous. Is this a good argument for a straight revenue tax on companies over a certain market cap? Incentivize then to

by erentz 7y ago

Consolidation of our economy has been disastrous. Is this a good argument for a straight revenue tax on companies over a certain market cap? Incentivize then to break themselves up? E.g. companies over $100b pay a 5% revenue tax. Over $500b pay a 10% revenue tax.

Guest42 7y ago
This structure seems to perpetuate the cycle.
- erentz 7y ago
  True it does. Maybe it’s useful as a final tool to encourage break up such as now, when whatever tools were meant to be discouraging consolidation fails. Saves years of hearings and court battles trying to use legal means to do it. Still need to strong regulatory oversight to prevent anti competitive behavior and killer acquisitions etc.
thaumasiotes 7y ago
> Is this a good argument for a straight revenue tax on companies over a certain market cap? Incentivize then to break themselves up? This exists for many giant companies; it's called "sales tax". (Of course, sales taxes apply equally to small companies, so the incentive to break yourself up isn't there.)
- klyrs 7y ago
  Sales tax is paid by the consumer.
  - thaumasiotes 7y ago
    As a matter of economics, that sentence is nonsense. Tax incidence is determined by elasticity of supply and demand, and has nothing to do with the logistics of which person gives money to which other person. This is the perspective that matters; you can easily observe for yourself that two taxes on gross revenue will have exactly the same effects if the only difference between them is that one is called "sales tax" and one is called "revenue tax". As a matter of logistics, your claim isn't nonsense. But it is quite obviously false. The consumer gives money to the merchant. The merchant gives money to the government. As a matter of legislation, it is, once again, plainly false. Here's the beginning of the California law imposing the state sales tax ( https://www.cdtfa.ca.gov/lawguides/vol1/sutl/6051.html https://www.cdtfa.ca.gov/lawguides/vol1/sutl/6051.html ): > For the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of 2½ percent of the gross receipts of any retailer (emphasis mine) And the law _must_ be stated that way, because if a vendor is selling something for $100 + sales tax, the customer pays $100 ("no tax"), and the vendor accepts it, the customer hasn't violated the law. The vendor is allowed to charge whatever price he wants. It's the vendor's responsibility to pay tax on the $100 of gross receipts he just received. There is no framework in which "sales tax is paid by the consumer" is true. What were you thinking?
    - SilasX 7y ago
      I read the parent as saying "sales tax is incident on the consumer" which is mostly true, and not refuted by anything you posted. Why do you think sales tax can't be incident on the consumer as you imply here: >There is no framework in which "sales tax is paid by the consumer" is true.
      - thaumasiotes 7y ago
        I'm reading klyrs' comment that way because he responded to my comment. I pointed out that many giant companies already face a straight tax on their revenue, called "sales tax". In order to make klyrs' response relevant, I'm interpreting it as the nonsensical objection that sales tax is different because it is a tax on "consumers", while a revenue tax would be a tax on "companies". The objection is nonsensical because, as I point out in my reply, you're collecting the same money from the same people. If you want to interpret him as commenting that the ratio of elasticity of demand to elasticity of supply is very low, you then need to explain how that observation fit into the conversation. > Why do you think sales tax can't be incident on the consumer as you imply here: >> There is no framework in which "sales tax is paid by the consumer" is true. In the tax incidence framework, in order for the tax to fall entirely on the consumer, elasticity of demand would need to be 0. The easy point is that this is never the case. But the better point is that in this framework, you don't assign taxes to a single party, and therefore "sales tax is paid by the consumer" is a conceptual error.
        SilasX 7y ago
        Timeout. You just replied and exhaustively dug up a citation to refute every apparent interpretation of a comment.. But the moment I point out the obvious, charitable interpretation you missed, suddenly, you can't google? This seems like bad faith. You're apparently willing to research every claim, as long as doing so makes someone else look wrong, but not when there might be an actual reasonable meaning of what someone else said.[1] And then, again, you misinterpreted me to make my claim trivially false. I said that it's "mostly true" that the sales tax is incident on consumers, and then you "misread" me as saying that the burden falls "entirely" on the consumer, thus creating the much higher burden of proving an elasticity of 0? That's really not how to have a productive conversation. If you or other readers still want to go that route, then here you go: a (summary of an) OECD working paper that shows that sales taxes in practice are mostly incident on consumers: https://taxfoundation.org/new-oecd-study-reviews-research-bears-burden-business-taxes/ https://taxfoundation.org/new-oecd-study-reviews-research-be... In any case, as fate would have it, the original commenter was harboring the confusion you suspected about the distinction between physically paying the tax, vs bearing its economic burden: https://news.ycombinator.com/item?id=22787539 https://news.ycombinator.com/item?id=22787539 But still, if you're going to be charitable, be charitable. If you're going to research every possibility, research every possibility. Don't suddenly lose this ability when it might not make someone else wrong. [1] i.e. "paid by" being a casual way to say "economically incident on".
  - missedthecue 7y ago
    As are nearly all taxes. My locality recently enacted a "hotel tax". Do you think that money comes from the coffers of the business, or does the price of hotel rooms rise to pay the tax? Of course it's the latter. Same with the gasoline tax, tariffs, value added tax, cigarette and alcohol tax, the list goes on.
- deleted 7y ago
  [deleted]
missedthecue 7y ago
"Consolidation of our economy has been disastrous." Disastrous? Were we better off in the days of Sears and Barnes and Noble? Companies like Walmart with $500 billion in revenue have margins of about 3%. A 10% revenue tax must increase prices, or Walmart would lose money on each transaction. What you're promoting is a tariff on goods bought from big companies. Tariffs are bad. They are regressive and anti-consumer
- deleted 7y ago
  [deleted]
- Supermancho 7y ago
  > They are regressive and anti-consumer Thats a perspective, not a universal fact. They are effective and useful from a political perspective, which may be beneficial to consumers long term. Alternate levers being circumstantial.
  - missedthecue 7y ago
    It's a fact that they are regressive. That is in no way an opinion. Someone making $1 million per year and someone making $20,000 per year both pay the same tariff. There is no discrimination between earners like there is with progressive taxes. They are anti-consumer in the sense that they raise prices without offering more or better goods in return. Sure you may try to muscle in some roundabout logic that concludes that tariffs will punish the consumer into using their money the way you want them to, such as buying overpriced goods from domestic producers, but history has shown again and again that only free trade produces net benefits. Tariffs just obsfucate the damage. For instance, the EU guarantees European farmers a certain minimum price for agricultural goods. This price is 200% above market price. The effect is that every European consumer has reduced purchasing power because they must pay 200% more than they need to for food, African farmers are kept in poverty because they can't sell their goods to EU consumers, and the only people who win is the extremely small percentage of people in the EU who farm. In this way, they are factually anti consumer.
    - 7y ago
twblalock 7y ago
Large companies are handling the fallout from the pandemic better than most other American institutions, and we would be a lot worse off dealing with the coronavirus pandemic if they had been broken up. For example, most of the US population is currently under lockdown, most local businesses are closed, and households are dependent on delivery services for many products. A weak, broken-up set of former Amazon companies would have less capacity to provide such services, or even to survive.
- Retric 7y ago
  It’s not size but industry that’s determining who’s hurt and who hardly notices. Starbucks and United Airlines have been hit much harder than many small tech companies that have seen minimal impact.
  - twblalock 7y ago
    No company of any size can do well when the government orders it to stop doing business. It doesn't tell us much about small versus big. Most Starbucks stores were ordered to close by the government, and the government has advised against (and in some cases banned) air travel. Of course those companies are suffering. Furthermore, I'd argue that Starbucks is more likely to survive this than local cafe chains, and United is more likely to survive than regional discount airlines. Smaller tech companies are already seeing the impact from the pandemic, and they will soon see more impact. Tech employees can work from home, so the companies are still producing things. However, most tech companies will have dramatic drops in revenue for the next few quarters and larger ones are more likely to be able to stick it out until the economy recovers.
    - Retric 7y ago
      To clarify, it’s not just government orders in play. Size can have some positive knock on effects, but it’s far less import than often portrayed. High end/home toilet paper is in increased demand because people are using fewer public toilets which use the cheaper bulk toilet paper. Inversely, Starbucks voluntarily closed many stores because they served areas like collages that where going to be devoid of people. So, while there is plenty of spin around both topics the reality is significantly different from how things things are being reported.

by erentz 7y ago

Guest42 7y ago

This structure seems to perpetuate the cycle.

erentz 7y ago
True it does. Maybe it’s useful as a final tool to encourage break up such as now, when whatever tools were meant to be discouraging consolidation fails. Saves years of hearings and court battles trying to use legal means to do it. Still need to strong regulatory oversight to prevent anti competitive behavior and killer acquisitions etc.

thaumasiotes 7y ago

> Is this a good argument for a straight revenue tax on companies over a certain market cap? Incentivize then to break themselves up? This exists for many giant companies; it's called "sales tax". (Of course, sales taxes apply equally to small companies, so the incentive to break yourself up isn't there.)

klyrs 7y ago
Sales tax is paid by the consumer.
- thaumasiotes 7y ago
  As a matter of economics, that sentence is nonsense. Tax incidence is determined by elasticity of supply and demand, and has nothing to do with the logistics of which person gives money to which other person. This is the perspective that matters; you can easily observe for yourself that two taxes on gross revenue will have exactly the same effects if the only difference between them is that one is called "sales tax" and one is called "revenue tax". As a matter of logistics, your claim isn't nonsense. But it is quite obviously false. The consumer gives money to the merchant. The merchant gives money to the government. As a matter of legislation, it is, once again, plainly false. Here's the beginning of the California law imposing the state sales tax ( https://www.cdtfa.ca.gov/lawguides/vol1/sutl/6051.html https://www.cdtfa.ca.gov/lawguides/vol1/sutl/6051.html ): > For the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of 2½ percent of the gross receipts of any retailer (emphasis mine) And the law _must_ be stated that way, because if a vendor is selling something for $100 + sales tax, the customer pays $100 ("no tax"), and the vendor accepts it, the customer hasn't violated the law. The vendor is allowed to charge whatever price he wants. It's the vendor's responsibility to pay tax on the $100 of gross receipts he just received. There is no framework in which "sales tax is paid by the consumer" is true. What were you thinking?
  - SilasX 7y ago
    I read the parent as saying "sales tax is incident on the consumer" which is mostly true, and not refuted by anything you posted. Why do you think sales tax can't be incident on the consumer as you imply here: >There is no framework in which "sales tax is paid by the consumer" is true.
    - thaumasiotes 7y ago
      I'm reading klyrs' comment that way because he responded to my comment. I pointed out that many giant companies already face a straight tax on their revenue, called "sales tax". In order to make klyrs' response relevant, I'm interpreting it as the nonsensical objection that sales tax is different because it is a tax on "consumers", while a revenue tax would be a tax on "companies". The objection is nonsensical because, as I point out in my reply, you're collecting the same money from the same people. If you want to interpret him as commenting that the ratio of elasticity of demand to elasticity of supply is very low, you then need to explain how that observation fit into the conversation. > Why do you think sales tax can't be incident on the consumer as you imply here: >> There is no framework in which "sales tax is paid by the consumer" is true. In the tax incidence framework, in order for the tax to fall entirely on the consumer, elasticity of demand would need to be 0. The easy point is that this is never the case. But the better point is that in this framework, you don't assign taxes to a single party, and therefore "sales tax is paid by the consumer" is a conceptual error.
      - SilasX 7y ago
        Timeout. You just replied and exhaustively dug up a citation to refute every apparent interpretation of a comment.. But the moment I point out the obvious, charitable interpretation you missed, suddenly, you can't google? This seems like bad faith. You're apparently willing to research every claim, as long as doing so makes someone else look wrong, but not when there might be an actual reasonable meaning of what someone else said.[1] And then, again, you misinterpreted me to make my claim trivially false. I said that it's "mostly true" that the sales tax is incident on consumers, and then you "misread" me as saying that the burden falls "entirely" on the consumer, thus creating the much higher burden of proving an elasticity of 0? That's really not how to have a productive conversation. If you or other readers still want to go that route, then here you go: a (summary of an) OECD working paper that shows that sales taxes in practice are mostly incident on consumers: https://taxfoundation.org/new-oecd-study-reviews-research-bears-burden-business-taxes/ https://taxfoundation.org/new-oecd-study-reviews-research-be... In any case, as fate would have it, the original commenter was harboring the confusion you suspected about the distinction between physically paying the tax, vs bearing its economic burden: https://news.ycombinator.com/item?id=22787539 https://news.ycombinator.com/item?id=22787539 But still, if you're going to be charitable, be charitable. If you're going to research every possibility, research every possibility. Don't suddenly lose this ability when it might not make someone else wrong. [1] i.e. "paid by" being a casual way to say "economically incident on".
- missedthecue 7y ago
  As are nearly all taxes. My locality recently enacted a "hotel tax". Do you think that money comes from the coffers of the business, or does the price of hotel rooms rise to pay the tax? Of course it's the latter. Same with the gasoline tax, tariffs, value added tax, cigarette and alcohol tax, the list goes on.
deleted 7y ago
[deleted]

missedthecue 7y ago

"Consolidation of our economy has been disastrous." Disastrous? Were we better off in the days of Sears and Barnes and Noble? Companies like Walmart with $500 billion in revenue have margins of about 3%. A 10% revenue tax must increase prices, or Walmart would lose money on each transaction. What you're promoting is a tariff on goods bought from big companies. Tariffs are bad. They are regressive and anti-consumer

deleted 7y ago
[deleted]
Supermancho 7y ago
> They are regressive and anti-consumer Thats a perspective, not a universal fact. They are effective and useful from a political perspective, which may be beneficial to consumers long term. Alternate levers being circumstantial.
- missedthecue 7y ago
  It's a fact that they are regressive. That is in no way an opinion. Someone making $1 million per year and someone making $20,000 per year both pay the same tariff. There is no discrimination between earners like there is with progressive taxes. They are anti-consumer in the sense that they raise prices without offering more or better goods in return. Sure you may try to muscle in some roundabout logic that concludes that tariffs will punish the consumer into using their money the way you want them to, such as buying overpriced goods from domestic producers, but history has shown again and again that only free trade produces net benefits. Tariffs just obsfucate the damage. For instance, the EU guarantees European farmers a certain minimum price for agricultural goods. This price is 200% above market price. The effect is that every European consumer has reduced purchasing power because they must pay 200% more than they need to for food, African farmers are kept in poverty because they can't sell their goods to EU consumers, and the only people who win is the extremely small percentage of people in the EU who farm. In this way, they are factually anti consumer.
  - 7y ago

twblalock 7y ago

Large companies are handling the fallout from the pandemic better than most other American institutions, and we would be a lot worse off dealing with the coronavirus pandemic if they had been broken up. For example, most of the US population is currently under lockdown, most local businesses are closed, and households are dependent on delivery services for many products. A weak, broken-up set of former Amazon companies would have less capacity to provide such services, or even to survive.

Retric 7y ago
It’s not size but industry that’s determining who’s hurt and who hardly notices. Starbucks and United Airlines have been hit much harder than many small tech companies that have seen minimal impact.
- twblalock 7y ago
  No company of any size can do well when the government orders it to stop doing business. It doesn't tell us much about small versus big. Most Starbucks stores were ordered to close by the government, and the government has advised against (and in some cases banned) air travel. Of course those companies are suffering. Furthermore, I'd argue that Starbucks is more likely to survive this than local cafe chains, and United is more likely to survive than regional discount airlines. Smaller tech companies are already seeing the impact from the pandemic, and they will soon see more impact. Tech employees can work from home, so the companies are still producing things. However, most tech companies will have dramatic drops in revenue for the next few quarters and larger ones are more likely to be able to stick it out until the economy recovers.
  - Retric 7y ago
    To clarify, it’s not just government orders in play. Size can have some positive knock on effects, but it’s far less import than often portrayed. High end/home toilet paper is in increased demand because people are using fewer public toilets which use the cheaper bulk toilet paper. Inversely, Starbucks voluntarily closed many stores because they served areas like collages that where going to be devoid of people. So, while there is plenty of spin around both topics the reality is significantly different from how things things are being reported.