5 ms·

We know (in general) that Amazon makes no profit. However, there should still be a way to make Amazon pay for the value it gains from being based in a modern so

We know (in general) that Amazon makes no profit. However, there should still be a way to make Amazon pay for the value it gains from being based in a modern society.

nickpp 6y ago
How about the value modern society gains from having Amazon in it?
- CJefferson 6y ago
  I'm willing to bet Amazon gains a lot more value from society than society gains from Amazon.
  - prepend 6y ago
    Let’s bet then. I think society gains more because of secondary effects that multiply up and down the supply chain. I think the difference is that the value for Amazon is focused on one company while the value for society is spread across 7 billion people.
    - CJefferson 6y ago
      I think we might be using different definitions of words. In my mind, without 'society', there would be no police, no hospitals, no public education, no roads. In my mind, these are all part of what we get by being in a society. Amazon is welcome to try to function in countries with no functioning government, but I suspect they would have limited success.
      - prepend 6y ago
        I agree with you there in that Amazon needs society and government provided functions in order to operate. But I think that the main benefit of society is that it provides an environment that allows members to contribute and make it better. So while society provides safety, etc people and companies add to it with additional value. This value gets taxed (to support society) and the remaining value builds and compounds. So at a macro level any persisting organization contributes more to society than they gain or society would crumble. By definition the growth in society is driven by people making it better. And people work on stuff like corporations. On the micro level, it’s hard to figure out the exact net contribution from individual persons and companies, but Amazon is obviously a huge company paying out returns and the second order effects from how they’ve driven e-commerce, cloud, and logistics make me think they’ve helped many others beyond just customers and shareholders. That being said, maybe taxes should be changed. But they are currently paying everything required of them and monetarily generate lots of revenue for government (eg, corporate income taxes, sales tax, property tax, tariffs, capita gains paid by shareholders, and income tax paid by employees, etc)
      - unishark 6y ago
        Amazon's competitors get those benefits too, so they can't make profit from it. They have to cut their prices relative to what they'd charge in that hypothetical anarchy where they need to provide everything themselves in order to operate. For example they can use clean water provided by their city, so that may save them the price of producing clean water themselves. But the competition gets that city water too, so amazon can't profit from the savings of not cleaning water, or competition will undercut them. They have to pass the savings on to customers. The only benefits they can really profit from are things no one else can get, which generally only amount to corruption for anything I can think of. I'm sure there's some, of course.
philwelch 6y ago
Amazon is a legally fictitious straw man created as a mechanism for millions of shareholders to employ thousands of workers to deliver goods and services to paying customers. Every Amazon shareholder and employee who makes enough money through this arrangement pays income taxes, or perhaps capital gains taxes. If you want to uphold the principle that Jeff Bezos should pay more taxes than Grandma, don’t tax Jeff Bezos and Grandma’s pension fund at the same rate. That’s what corporate taxes effectively do.
- arcticbull 6y ago
  Thing is capital gains literally never have to be realized. You can borrow against your equity position on margin (currently 0.75% for large withdrawals) and pay off the interest with dividends. Source: i do this.
  - philwelch 6y ago
    That seems like a much fairer and easier loophole to fix than trying to tax unprofitable corporations to penalize them for reinvesting in themselves.
    - arcticbull 6y ago
      Good luck passing a wealth tax, but I'm all for it.
toast0 6y ago
If it makes no profit, what value is it gaining? There's value in the stock, but that's taxed as stockholders sell and realize the capital gains.
prepend 6y ago
That value is taxed as capital gains when shareholders sell their shares. This seems really basic in that society already has a way for Amazon to pay. And we’ve had it for decades. It’s curious to hear statements like this that make me think there’s some problem to be solved. Do you think capital gains should be higher? Do you want to shift the method of taxation from personal income taxes to somewhere else?
- CJefferson 6y ago
  I'm not a deep expert in these areas, but one current problem seems to be money slowing down -- what often happens is people buy Amazon stock and sit on it. Amazon makes more sales, their stock price goes up, those with Amazon stock get richer (which they can often leverage into things like loans, without ever selling the stock), and at no point is some of that money taken to help fund general government. When the rules were set up this wasn't the intention, and there might have to be changes. To be fair to Amazon, their problems are not as serious as many other companies which make it look like they make zero profit in some countries by "paying" themselves in another.
  - prepend 6y ago
    I’m not a tax expert either but I think the rules were set up exactly with the intention as you describe. My understanding is that capital gains taxes are intended to grow capital with the goal of a larger payout in the future as capital is reinvested. It’s purposely not intended to be a real-time tax on gains because future taxes will be greater. For example, if there’s $100 in profit today and it’s paid out as a dividend then that’s $15 in tax revenue. But if that $100 is invested in the company, it compounds at some rate (say 5% although this varies by company and Amazon is much more efficient) so in 10 years that $100 becomes $162 (1.05^10*100) and if cashed out then as dividend results in $24.3 in tax revenue. Theoretically if you think the government can invest and get a return greater than within individual companies then capital gains doesn’t make sense, but that’s an argument for economists. But wanted to share that the goal of capital gains is to maximize tax revenue through efficient incentives.
    - 6y ago

We know (in general) that Amazon makes no profit. However, there should still be a way to make Amazon pay for the value it gains from being based in a modern society.

nickpp 6y ago

How about the value modern society gains from having Amazon in it?

CJefferson 6y ago
I'm willing to bet Amazon gains a lot more value from society than society gains from Amazon.
- prepend 6y ago
  Let’s bet then. I think society gains more because of secondary effects that multiply up and down the supply chain. I think the difference is that the value for Amazon is focused on one company while the value for society is spread across 7 billion people.
  - CJefferson 6y ago
    I think we might be using different definitions of words. In my mind, without 'society', there would be no police, no hospitals, no public education, no roads. In my mind, these are all part of what we get by being in a society. Amazon is welcome to try to function in countries with no functioning government, but I suspect they would have limited success.
    - prepend 6y ago
      I agree with you there in that Amazon needs society and government provided functions in order to operate. But I think that the main benefit of society is that it provides an environment that allows members to contribute and make it better. So while society provides safety, etc people and companies add to it with additional value. This value gets taxed (to support society) and the remaining value builds and compounds. So at a macro level any persisting organization contributes more to society than they gain or society would crumble. By definition the growth in society is driven by people making it better. And people work on stuff like corporations. On the micro level, it’s hard to figure out the exact net contribution from individual persons and companies, but Amazon is obviously a huge company paying out returns and the second order effects from how they’ve driven e-commerce, cloud, and logistics make me think they’ve helped many others beyond just customers and shareholders. That being said, maybe taxes should be changed. But they are currently paying everything required of them and monetarily generate lots of revenue for government (eg, corporate income taxes, sales tax, property tax, tariffs, capita gains paid by shareholders, and income tax paid by employees, etc)
    - unishark 6y ago
      Amazon's competitors get those benefits too, so they can't make profit from it. They have to cut their prices relative to what they'd charge in that hypothetical anarchy where they need to provide everything themselves in order to operate. For example they can use clean water provided by their city, so that may save them the price of producing clean water themselves. But the competition gets that city water too, so amazon can't profit from the savings of not cleaning water, or competition will undercut them. They have to pass the savings on to customers. The only benefits they can really profit from are things no one else can get, which generally only amount to corruption for anything I can think of. I'm sure there's some, of course.

philwelch 6y ago

Amazon is a legally fictitious straw man created as a mechanism for millions of shareholders to employ thousands of workers to deliver goods and services to paying customers. Every Amazon shareholder and employee who makes enough money through this arrangement pays income taxes, or perhaps capital gains taxes. If you want to uphold the principle that Jeff Bezos should pay more taxes than Grandma, don’t tax Jeff Bezos and Grandma’s pension fund at the same rate. That’s what corporate taxes effectively do.

arcticbull 6y ago
Thing is capital gains literally never have to be realized. You can borrow against your equity position on margin (currently 0.75% for large withdrawals) and pay off the interest with dividends. Source: i do this.
- philwelch 6y ago
  That seems like a much fairer and easier loophole to fix than trying to tax unprofitable corporations to penalize them for reinvesting in themselves.
  - arcticbull 6y ago
    Good luck passing a wealth tax, but I'm all for it.

toast0 6y ago

If it makes no profit, what value is it gaining? There's value in the stock, but that's taxed as stockholders sell and realize the capital gains.

prepend 6y ago

That value is taxed as capital gains when shareholders sell their shares. This seems really basic in that society already has a way for Amazon to pay. And we’ve had it for decades. It’s curious to hear statements like this that make me think there’s some problem to be solved. Do you think capital gains should be higher? Do you want to shift the method of taxation from personal income taxes to somewhere else?

CJefferson 6y ago
I'm not a deep expert in these areas, but one current problem seems to be money slowing down -- what often happens is people buy Amazon stock and sit on it. Amazon makes more sales, their stock price goes up, those with Amazon stock get richer (which they can often leverage into things like loans, without ever selling the stock), and at no point is some of that money taken to help fund general government. When the rules were set up this wasn't the intention, and there might have to be changes. To be fair to Amazon, their problems are not as serious as many other companies which make it look like they make zero profit in some countries by "paying" themselves in another.
- prepend 6y ago
  I’m not a tax expert either but I think the rules were set up exactly with the intention as you describe. My understanding is that capital gains taxes are intended to grow capital with the goal of a larger payout in the future as capital is reinvested. It’s purposely not intended to be a real-time tax on gains because future taxes will be greater. For example, if there’s $100 in profit today and it’s paid out as a dividend then that’s $15 in tax revenue. But if that $100 is invested in the company, it compounds at some rate (say 5% although this varies by company and Amazon is much more efficient) so in 10 years that $100 becomes $162 (1.05^10*100) and if cashed out then as dividend results in $24.3 in tax revenue. Theoretically if you think the government can invest and get a return greater than within individual companies then capital gains doesn’t make sense, but that’s an argument for economists. But wanted to share that the goal of capital gains is to maximize tax revenue through efficient incentives.
  - 6y ago