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The only way to stop this, is to create income (eg. 1-2%) based tax regulations instead of profit based. No way to cheat.

arsome 5y ago
Some industries are very low margin while others are extremely high, I don't think this is viable without breaking a huge chunk of the economy.
- manquer 5y ago
  Depends on how it is structured. One way for example could be akin to a cash (and equivalents) tax on holding large amounts. It would incentize spending the cash in r&d , acquisitions , dividends etc. Low margin companies will not be too badly affected
  - eloff 5y ago
    That's not a revenue tax anymore. That just forces companies to minimize their cash stockpiles through investment, inventory, dividends, etc. How does that make the tax system fairer?
    - manquer 5y ago
      All those categories have already taxes associated with them Expenses -( VAT/GST etc) R&D/salaries - income tax for employees Divendent - income and other taxes Acquisitions/investments - seller pays capital gain tax etc Disincentizing savings to boost the economy is not only applicable for regular people it also applies for companies. Low interest rates are really today applicable for us. Companies with billions of dollars are getting enough returns to keep cash rather than spend it.
sdljfjafsd 5y ago
As other people have pointed low margin businesses like fintech would get skewered with this. For example, payment processing companies recognize the value of the transaction as revenue even though their cut is 1-2%. You would shift the gaming of system from happening on the net income level to gaming of the system happening on the revenue level.
em500 5y ago
Most countries already levy VAT/sales tax. But almost everybody believes that those are all paid by consumers while corporate taxes are all paid by business owners (mental picture: Bezos/Gates/top hat wearing Monopoly dude, not poor old lady drawing on small pension).

arsome 5y ago

Some industries are very low margin while others are extremely high, I don't think this is viable without breaking a huge chunk of the economy.

manquer 5y ago
Depends on how it is structured. One way for example could be akin to a cash (and equivalents) tax on holding large amounts. It would incentize spending the cash in r&d , acquisitions , dividends etc. Low margin companies will not be too badly affected
- eloff 5y ago
  That's not a revenue tax anymore. That just forces companies to minimize their cash stockpiles through investment, inventory, dividends, etc. How does that make the tax system fairer?
  - manquer 5y ago
    All those categories have already taxes associated with them Expenses -( VAT/GST etc) R&D/salaries - income tax for employees Divendent - income and other taxes Acquisitions/investments - seller pays capital gain tax etc Disincentizing savings to boost the economy is not only applicable for regular people it also applies for companies. Low interest rates are really today applicable for us. Companies with billions of dollars are getting enough returns to keep cash rather than spend it.

sdljfjafsd 5y ago

As other people have pointed low margin businesses like fintech would get skewered with this. For example, payment processing companies recognize the value of the transaction as revenue even though their cut is 1-2%. You would shift the gaming of system from happening on the net income level to gaming of the system happening on the revenue level.

em500 5y ago

Most countries already levy VAT/sales tax. But almost everybody believes that those are all paid by consumers while corporate taxes are all paid by business owners (mental picture: Bezos/Gates/top hat wearing Monopoly dude, not poor old lady drawing on small pension).