4 ms·

You aren't paying taxes on revenue, you pay tax on profit

ncallaway 5y ago
That’s a choice, and one we could change. My company is taxed on revenue (under the Washington State B&O tax scheme, and similar local tax schemes). Taxing based on revenue is viable, it just needs to be done with a little more care up front.
- unreal37 5y ago
  Tax on revenue is just a sales tax on the consumer of that product or service. You might as just increase sales taxes and remove corporate taxes entirely.
  - ncallaway 5y ago
    In WA sales tax only applies to retail sales. Which means a revenue tax and a retail sales tax are not equivalent. For example, if a home builder is buying lumber directly from a wholesaler, they aren’t paying a sales tax. Whereas the revenue tax does catch a portion of that income. Maybe you mean we should broaden the concept of sales tax, and apply it to all transactions? That would be closer to equivalent to a revenue based tax structure, and would probably end up looking very similar to the VAT tax structure in Europe. I’m fine with a VAT tax, if we want to structure things that way. Honestly it’s a lot more paperwork to manage that way instead of revenue, but either works for me. Assuming arguendo that a sales and revenue tax were equivalent, a revenue tax would be the much simpler way to manage tax collection. Why would you ever prefer a structure that creates a tax event for every transaction, to an equivalent one that creates a single tax event per business entity?
    - throwawayboise 5y ago
      Yes, conventional sales taxes apply to the final retail sale. But in your example, a home builder buying lumber does pay sales taxes, since there is no sales tax on the sale of the finished home (at least not in my state).
  - throwawayboise 5y ago
    All taxes are ultimately paid by the consumer. In that regard, I agree just impose a national sales tax, get rid of everything else, and be done with it. Gets rid of all the complexity and games played with income taxes. Give everyone an automatic refund of $X to make it non-regressive. This could be done as a monthly payment, an "advance refundable tax credit" like the stimulous payments.
- reader_mode 5y ago
  Taxing revenue would kill small margin high input businesses, lead to double taxation, encourage vertical integration. Makes no sense outside of small business where they get a heavily discounted rate since it's usually there to save them the hassle of keeping expenses.
  - alasdair_ 5y ago
    > lead to double taxation I’m not sure why double taxation matters so much. If I get a salary then use some of that salary to get a haircut, the money is taxed twice but we think of this as normal. Human W2 taxpayers are not able to write off expenses such as driving to work (or even a home office), yet these are clearly costs of doing business. Why should corporations get additional rights that aren’t afforded to humans?
    - imtringued 5y ago
      Double taxation only matters because it complicates the tax code, there is no other justification against double taxation. For example, if you have one tax there is only one way to optimize it, if you have two taxes there are two ways to optimize it. As you add more taxes you are adding more room for loopholes. Solving the problem by taxing profit by country is just adding more room for loop holes.
    - reader_mode 5y ago
      Because if I'm Apple and sitting on billions of dollars I get to buy out my supply chain and I pay 0 tax for all components and transitions in the chain - and your random manufacturer X has to pay Qualcomm and gets taxed, who pays TSMC and gets taxed, who pay their suppliers and get taxed, etc. Then multiply this by every component at every step. This is a terrible incentive system for breeding huge vertically integrated monopolies even faster than we currently do.

That’s a choice, and one we could change. My company is taxed on revenue (under the Washington State B&O tax scheme, and similar local tax schemes). Taxing based on revenue is viable, it just needs to be done with a little more care up front.

unreal37 5y ago
Tax on revenue is just a sales tax on the consumer of that product or service. You might as just increase sales taxes and remove corporate taxes entirely.
- ncallaway 5y ago
  In WA sales tax only applies to retail sales. Which means a revenue tax and a retail sales tax are not equivalent. For example, if a home builder is buying lumber directly from a wholesaler, they aren’t paying a sales tax. Whereas the revenue tax does catch a portion of that income. Maybe you mean we should broaden the concept of sales tax, and apply it to all transactions? That would be closer to equivalent to a revenue based tax structure, and would probably end up looking very similar to the VAT tax structure in Europe. I’m fine with a VAT tax, if we want to structure things that way. Honestly it’s a lot more paperwork to manage that way instead of revenue, but either works for me. Assuming arguendo that a sales and revenue tax were equivalent, a revenue tax would be the much simpler way to manage tax collection. Why would you ever prefer a structure that creates a tax event for every transaction, to an equivalent one that creates a single tax event per business entity?
  - throwawayboise 5y ago
    Yes, conventional sales taxes apply to the final retail sale. But in your example, a home builder buying lumber does pay sales taxes, since there is no sales tax on the sale of the finished home (at least not in my state).
- throwawayboise 5y ago
  All taxes are ultimately paid by the consumer. In that regard, I agree just impose a national sales tax, get rid of everything else, and be done with it. Gets rid of all the complexity and games played with income taxes. Give everyone an automatic refund of $X to make it non-regressive. This could be done as a monthly payment, an "advance refundable tax credit" like the stimulous payments.
reader_mode 5y ago
Taxing revenue would kill small margin high input businesses, lead to double taxation, encourage vertical integration. Makes no sense outside of small business where they get a heavily discounted rate since it's usually there to save them the hassle of keeping expenses.
- alasdair_ 5y ago
  > lead to double taxation I’m not sure why double taxation matters so much. If I get a salary then use some of that salary to get a haircut, the money is taxed twice but we think of this as normal. Human W2 taxpayers are not able to write off expenses such as driving to work (or even a home office), yet these are clearly costs of doing business. Why should corporations get additional rights that aren’t afforded to humans?
  - imtringued 5y ago
    Double taxation only matters because it complicates the tax code, there is no other justification against double taxation. For example, if you have one tax there is only one way to optimize it, if you have two taxes there are two ways to optimize it. As you add more taxes you are adding more room for loopholes. Solving the problem by taxing profit by country is just adding more room for loop holes.
  - reader_mode 5y ago
    Because if I'm Apple and sitting on billions of dollars I get to buy out my supply chain and I pay 0 tax for all components and transitions in the chain - and your random manufacturer X has to pay Qualcomm and gets taxed, who pays TSMC and gets taxed, who pay their suppliers and get taxed, etc. Then multiply this by every component at every step. This is a terrible incentive system for breeding huge vertically integrated monopolies even faster than we currently do.