4 ms·

I don't think that solves anything, it creates a whole host of problems, and of course, the notion of the government taking a % ownership of every business is a

by jariel 7y ago

I don't think that solves anything, it creates a whole host of problems, and of course, the notion of the government taking a % ownership of every business is a kind of ideology I don't need to describe. Governments don't want a stake in future profits, they want to tax income. Dividends payouts are taxed 'again' at the time of payout. Share buybacks are taxed 'again' as capital gains and FYI that has nothing to do with the corporate tax rate, that's part of personal income. Your Amazon example is flawed: If Amazon is worth $100B it's because people think they will eventually have $100B in the bank. Or a financial equivalent of cash flows. Either way, it means people assume profits. If that's true, then the taxable income will also be there, in which case they'll have to make $150B in income, then pay tax THEN have the $100B in the bank (or financial equivalent). So the government 'taking an equity stake' at formation, and sitting on the stock is moot: they already get a 'stake' of the income stream that forms the basis of that valuation. That Amazon pays no tax is not such a bad thing - it means they're making $0, which means the surpluses are going to their suppliers, customers or employees etc. All of whom are taxed for those surpluses (except for consumers).

projektfu 7y ago
I have absolutely no reason to invest in Amazon if I think that there will never be a profit share in it for me. Amazon could sit on a lot of cash and then eventually spend it all down, go bankrupt, and leave the shareholder with nothing. If I figured that would be the case, then I would be only speculating that I could get out of it before that happened. Speculation is not an investment. On the other hand, if the share price has increased because the company is more valuable, then the government shares have also increased. If there is, in the future, a 1% quarterly dividend, then the government will partake in a 1% dividend on its higher-valued shares as well. The federal government doesn't need to pull in all the money now. It has a large ability to borrow where it needs and corporate taxes make only a fraction of tax revenue. The current problem is that, in theory, it is worth it for a company to pay accountants and lawyers $99M to reduce the tax bill $100M. Economists call that waste. I'm pretty sure just about everyone else thinks it's problematic to create industries that get rich off of nothing but moving money around to avoid paying taxes. The whole problem is that the public is not getting a "stake" of the income stream. The law says we do but in practice we do not because the money is being very cleverly moved around. Arguing that there should be no corporate income tax is a different thing. This discussion is about how to collect such a tax.
- cma 7y ago
  Could be like the overseas holdout stuff though. Don’t pay a dividend or buyback ever, but spend money lobbying on a one time holiday where a big dividend will be paid to everyone but the government share holder, or paid to them at a reduced rate. Eventually an admin comes in and makes it happen like Trump with the overseas money tax holiday. Holding out makes more sense than ever paying out.
  - projektfu 7y ago
    Would you be willing to invest in a company that refused to pay a dividend until an unpredictable event in the future? Perhaps, but it wouldn't make a lot of sense.
    - cma 7y ago
      Many did exactly that for the overseas tax repatriation.
- jariel 7y ago
  >>>>>> "Amazon could sit on a lot of cash and then eventually spend it all down, go bankrupt, and leave the shareholder with nothing." "On the other hand, if the share price has increased because the company is more valuable, then the government shares have also increased" These two statements are completely contradictory. >>>>>>> "The current problem is that, in theory, it is worth it for a company to pay accountants and lawyers $99M to reduce the tax bill $100M. " This is not remotely true. First, complicated taxation is the decision of the government, not the industry. Second, Amazon's low tax burden is not a function of $99M in lawyers, it's a function of the fact they don't make any profits. "The whole problem is that the public is not getting a "stake" of the income stream." This is again, is not true. The public is absolutely getting a stake of Amazon's income stream. The problem (as some see it) is that Amazon has very little income. Amazon, as it stands today is like a non-profit NGO. They make very little money. Their surpluses are given away to some other part of the value chain: suppliers, customers or employees.
  - 7y ago

by jariel 7y ago

projektfu 7y ago

I have absolutely no reason to invest in Amazon if I think that there will never be a profit share in it for me. Amazon could sit on a lot of cash and then eventually spend it all down, go bankrupt, and leave the shareholder with nothing. If I figured that would be the case, then I would be only speculating that I could get out of it before that happened. Speculation is not an investment. On the other hand, if the share price has increased because the company is more valuable, then the government shares have also increased. If there is, in the future, a 1% quarterly dividend, then the government will partake in a 1% dividend on its higher-valued shares as well. The federal government doesn't need to pull in all the money now. It has a large ability to borrow where it needs and corporate taxes make only a fraction of tax revenue. The current problem is that, in theory, it is worth it for a company to pay accountants and lawyers $99M to reduce the tax bill $100M. Economists call that waste. I'm pretty sure just about everyone else thinks it's problematic to create industries that get rich off of nothing but moving money around to avoid paying taxes. The whole problem is that the public is not getting a "stake" of the income stream. The law says we do but in practice we do not because the money is being very cleverly moved around. Arguing that there should be no corporate income tax is a different thing. This discussion is about how to collect such a tax.

cma 7y ago
Could be like the overseas holdout stuff though. Don’t pay a dividend or buyback ever, but spend money lobbying on a one time holiday where a big dividend will be paid to everyone but the government share holder, or paid to them at a reduced rate. Eventually an admin comes in and makes it happen like Trump with the overseas money tax holiday. Holding out makes more sense than ever paying out.
- projektfu 7y ago
  Would you be willing to invest in a company that refused to pay a dividend until an unpredictable event in the future? Perhaps, but it wouldn't make a lot of sense.
  - cma 7y ago
    Many did exactly that for the overseas tax repatriation.
jariel 7y ago
>>>>>> "Amazon could sit on a lot of cash and then eventually spend it all down, go bankrupt, and leave the shareholder with nothing." "On the other hand, if the share price has increased because the company is more valuable, then the government shares have also increased" These two statements are completely contradictory. >>>>>>> "The current problem is that, in theory, it is worth it for a company to pay accountants and lawyers $99M to reduce the tax bill $100M. " This is not remotely true. First, complicated taxation is the decision of the government, not the industry. Second, Amazon's low tax burden is not a function of $99M in lawyers, it's a function of the fact they don't make any profits. "The whole problem is that the public is not getting a "stake" of the income stream." This is again, is not true. The public is absolutely getting a stake of Amazon's income stream. The problem (as some see it) is that Amazon has very little income. Amazon, as it stands today is like a non-profit NGO. They make very little money. Their surpluses are given away to some other part of the value chain: suppliers, customers or employees.
- 7y ago