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I miss the days when unprofitable companies went bankrupt.
by varjag 6y ago
I miss the days when unprofitable companies went bankrupt.
- mrweasel 6y agoAmazon isn't unprofitable, they just reinvest everything back into developing the company. Politicians just failed to take that scenario into account when designing the tax laws. I do however agree with you. There is a ton of companies that only survive because investors keep pumping money into them. If you can't turn a profit after ten years, then maybe your company shouldn't exist.
- nspattak 6y agoNo they do not necassarily reinvest everything back to the company, they just funnel the money to tax heavens: https://www.youtube.com/watch?v=d4o13isDdfY https://www.youtube.com/watch?v=d4o13isDdfY
- fyzics 6y agoWhy is reinvesting profits a bad thing. Reinvesting 1Billion into the company is more beneficial to society than paying tax on that 1 billion. Creating thousands of new jobs is much better than however the government would spend the 200M they collect in taxes.
- varjag 6y agoIf it didn't make net profit as GP suggests, it's unprofitable. If it did but shuffled the money via subsidiaries to present that it didn't, it's called tax evasion indeed.
- brainwad 6y agoThey do, when they run out of runway. But a well-calculated reinvestment strategy, like Amazon's, can have a very low burn rate and so a very long runway.
- varjag 6y agoAmazon operates for soon 3 decades on global scale, without making a profit as you say. Can't possibly imagine where that long a runway is coming from; maybe the crux here rather is some creative accounting.
- brainwad 6y agoThey made a profit globally for the last two years. But for many years they were very careful to expand neither so fast they went bankrupt, nor so slow they would waste investor money on taxes.
- lotsofpulp 6y agoIt comes from successfully expanding into more and more businesses and delivering the numbers investors desire (probably including the defined pension funds of the very countries being talked about in this thread).
- varjag 6y agoI like the phrasing, but perhaps if Amazon subsidiaries paid their due tax, they'd be a less attractive investment vehicle and would have had less capital to successfully expand.
- brainwad 6y agoThey _do_ pay their due tax. It's not tax evasion to reinvest in new business areas. Corporate income tax is levied on net profit precisely to encourage economic development in a country, instead of economic extraction.