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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 eve

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.
- projektfu 7y ago
  We're not talking about Amazon specifically. The issue is profits hidden to the tax man that can still be paid out as profit to the investors. I mentioned Amazon solely to talk about a company that doesn't return much profit but may in the future. The corporate income tax isn't touching them anyway. But a company like Apple, which has hidden a lot of its profit in schemes that pass money through other countries, would have less incentive to do that sort of thing if it didn't reduce the effective tax. Investors wouldn't be happy if Apple's tax machinations also reduced their returns. This plan just makes it so that the public gets a percentage of the same returns the investors get.
  - jariel 7y ago
    "The issue is profits hidden to the taxman that can still be paid out as profit to the investors. " This is specifically an issue of international repatriation and has little to do with anything else really - and your OP doesn't really aim at that. Amazon is a poor example because they're not in the business of fancy IP arbitrage: this is what Apple, Google and FB do. Less so Amazon. But the problem is that US taxation with respect to repatriation is messed up. 1) US corporate tax is very high - the highest in the developed world. 2) US expects companies to pay 'full tax' when repatriated money, even already taxed money. Every other country just expects a 2-5% repatriation tax. The US tax system is not designed for globalism. What the US and the world need to do is find a new harmony which will entail: 1) Lower US corporate taxes 2) Close all the special loopholes 3) Get rid of double-taxation on remuneration 3) Especially for digital and IP - taxes need to be paid in the local state where business is done. FB is selling ads and consumers are consuming them in France, then a good chunk of taxes need to go there. Same for Google. The US is going to have to eat this or face punitive war forever from EU and other nations.

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.

projektfu 7y ago
We're not talking about Amazon specifically. The issue is profits hidden to the tax man that can still be paid out as profit to the investors. I mentioned Amazon solely to talk about a company that doesn't return much profit but may in the future. The corporate income tax isn't touching them anyway. But a company like Apple, which has hidden a lot of its profit in schemes that pass money through other countries, would have less incentive to do that sort of thing if it didn't reduce the effective tax. Investors wouldn't be happy if Apple's tax machinations also reduced their returns. This plan just makes it so that the public gets a percentage of the same returns the investors get.
- jariel 7y ago
  "The issue is profits hidden to the taxman that can still be paid out as profit to the investors. " This is specifically an issue of international repatriation and has little to do with anything else really - and your OP doesn't really aim at that. Amazon is a poor example because they're not in the business of fancy IP arbitrage: this is what Apple, Google and FB do. Less so Amazon. But the problem is that US taxation with respect to repatriation is messed up. 1) US corporate tax is very high - the highest in the developed world. 2) US expects companies to pay 'full tax' when repatriated money, even already taxed money. Every other country just expects a 2-5% repatriation tax. The US tax system is not designed for globalism. What the US and the world need to do is find a new harmony which will entail: 1) Lower US corporate taxes 2) Close all the special loopholes 3) Get rid of double-taxation on remuneration 3) Especially for digital and IP - taxes need to be paid in the local state where business is done. FB is selling ads and consumers are consuming them in France, then a good chunk of taxes need to go there. Same for Google. The US is going to have to eat this or face punitive war forever from EU and other nations.