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Isn't this also because of tax considerations ? If you make a profit you have to pay taxes, so its better to inflate expenses as much as possible. However this
by thecleaner 6y ago
Isn't this also because of tax considerations ? If you make a profit you have to pay taxes, so its better to inflate expenses as much as possible. However this argument gives some credibility to the business models of these companies.
- exclusiv 6y agoSpending a dollar to save 21 cents isn't very wise. The only case for not showing a profit is to invest in R&D, expansion, etc for the long term. In addition, if they were merely inflating expenses, then they'd be able to adjust and have plenty cash. This doesn't seem to be the case.
- dehrmann 6y agoThat's like saying "would you rather get $10 and pay $3 in taxes, or would you rather lose $1?" I think the option investors want is $200 in 5 years, and spending gross margin on growth might get you there faster.
- mrlala 6y agoDoes that actually make sense to you?
- hogFeast 6y agoThis site is pure gold. Gold.
- mdoms 6y agoNo one ever went poor paying tax.
- marcosdumay 6y agoI'm out on a tangent, but that is too broad a statement. There exist constant taxes over non-liquid assets. I am pretty sure we'll people that have been bankrupt over then if we look. They just aren't a problem for people with money (top of middle class or above).
- redis_mlc 6y agothecleaner is mostly correct. One of the reasons Amazon spent so much over the years was to reduce the amount paid in taxes. So instead of "inflate expenses" it's really "reinvest". For example, there are specific tax credits for R&D, which can include software if documented properly.