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If you want companies to hold more inventory (complete or not), a good first move would be to stop taxing them for it. After doing that, we could look at whethe

by nickff 5y ago

If you want companies to hold more inventory (complete or not), a good first move would be to stop taxing them for it. After doing that, we could look at whether additional regulatory measures were required. If you want them to in-house more production, allow all of them to write-off 100% of capital equipment purchases in the first year.

jxramos 5y ago
curious, who's taxing for inventory?
- R0b0t1 5y ago
  It's property so basically everyone
  - jxramos 5y ago
    so just property tax then, like an empty warehouse holds the same tax burden as one filled to capacity with inventory? I thought someone was suggesting more than property tax.
    - R0b0t1 5y ago
      What is in the warehouse is property also
    - nickff 5y ago
      Corporations are taxed on assets that they accrue (increases in total holdings are taxed as 'profit'). This applies to inventories, capital assets, and real estate. This taxation is why corporations often prefer to lease rather than own, and why they often pay out dividends rather than using the money to collect assets.
      - jxramos 5y ago
        wow, I never knew that. I always perceived inventories as risks companies took assuming they'd be able to sell it all or at the least would be able to liquidate it at cost if it came to it. Sounds like the books are already negative just taking on inventory from the get go above production and shipping and whatever else.
        nickff 5y ago
        If you sell the inventory at a loss, you can 'write off' the 'lost value', which reduces your profits on paper in that fiscal year (and the corresponding taxes), but you did already pay taxes on holding that inventory. These taxes reduce the amount of money you can spend on capital equipment, inventories, and facilities, which reduces your maximum rate of growth. All of these are the reasons that software businesses are so heavily advantaged by the tax code. They don't have to pay taxes on (much) capital equipment or inventories, and the smaller facilities are also beneficial from a tax perspective.
        OldTimeCoffee 5y ago
        >These taxes reduce the amount of money you can spend on capital equipment, inventories, and facilities, which reduces your maximum rate of growth. I mean, yes, but not really. They're not a meaningful portion of their revenues. Typically it's around 1% of the acquisition cost of the item inclusive of any fees required to get it in your inventory. This is akin to complaining about paying BWC taxes which are about 1% of your payroll. If they're a real hardship to your business, your business has more problems than holding excess inventory.
        nickff 5y ago
        I’m not sure where you’re getting your “1%” from, but corporations are liable for full income tax (21% in the USA), on the (depreciated) increase in the value of their assets.
        OldTimeCoffee 5y ago

by nickff 5y ago

jxramos 5y ago

curious, who's taxing for inventory?

R0b0t1 5y ago
It's property so basically everyone
- jxramos 5y ago
  so just property tax then, like an empty warehouse holds the same tax burden as one filled to capacity with inventory? I thought someone was suggesting more than property tax.
  - R0b0t1 5y ago
    What is in the warehouse is property also
  - nickff 5y ago
    Corporations are taxed on assets that they accrue (increases in total holdings are taxed as 'profit'). This applies to inventories, capital assets, and real estate. This taxation is why corporations often prefer to lease rather than own, and why they often pay out dividends rather than using the money to collect assets.
    - jxramos 5y ago
      wow, I never knew that. I always perceived inventories as risks companies took assuming they'd be able to sell it all or at the least would be able to liquidate it at cost if it came to it. Sounds like the books are already negative just taking on inventory from the get go above production and shipping and whatever else.
      - nickff 5y ago
        If you sell the inventory at a loss, you can 'write off' the 'lost value', which reduces your profits on paper in that fiscal year (and the corresponding taxes), but you did already pay taxes on holding that inventory. These taxes reduce the amount of money you can spend on capital equipment, inventories, and facilities, which reduces your maximum rate of growth. All of these are the reasons that software businesses are so heavily advantaged by the tax code. They don't have to pay taxes on (much) capital equipment or inventories, and the smaller facilities are also beneficial from a tax perspective.
        OldTimeCoffee 5y ago
        >These taxes reduce the amount of money you can spend on capital equipment, inventories, and facilities, which reduces your maximum rate of growth. I mean, yes, but not really. They're not a meaningful portion of their revenues. Typically it's around 1% of the acquisition cost of the item inclusive of any fees required to get it in your inventory. This is akin to complaining about paying BWC taxes which are about 1% of your payroll. If they're a real hardship to your business, your business has more problems than holding excess inventory.
        nickff 5y ago
        I’m not sure where you’re getting your “1%” from, but corporations are liable for full income tax (21% in the USA), on the (depreciated) increase in the value of their assets.
        OldTimeCoffee 5y ago