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Steel just barely makes the list of top 100 US companies by revenue at #100. https://en.wikipedia.org/wiki/List_of_largest_companies_in_the_United_States_by_re

by cwkoss 4y ago

Steel just barely makes the list of top 100 US companies by revenue at #100. https://en.wikipedia.org/wiki/List_of_largest_companies_in_the_United_States_by_revenue https://en.wikipedia.org/wiki/List_of_largest_companies_in_t... Would steel consumers be better off if the largest steel companies were broken in to smaller pieces?

spywaregorilla 4y ago
> Steel just barely makes the list of top 100 US companies by revenue at #100. What does your imagined tax bracket structure look like if the top 100 companies aren't at the highest, most painful bracket? "Barely being in the top 100" means you're enormous. > Would steel consumers be better off if the largest steel companies were broken in to smaller pieces? Well pretty much everything in the economy runs on steel, and you're proposing removing their economies of scale and taxing them on revenue. Do you think they're going to be better off? Let's imagine it's a true perfect competition world. Steel producers make basically 0 profit on average (this is not the case). Next year supply crunch. Costs go up 10%. Steel producers need to raise prices by 10% to stay profitable. But wait, now their taxes are based on their revenues, so if they raise their prices by 10%, they take on at least 10% more taxes, so now they're losing money. They'll need to raise their prices high enough to earn enough revenue to offset the increased taxes. But wait, turns out other countries make steel too, and these companies are realistic enough to tax on profits only. So now American steel is too expensive to compete. When you have high fixed costs and low variable costs, a revenue tax is brutal because you need high revenues to even begin to break a profit.
chongli 4y ago
Would steel consumers be better off if the largest steel companies were broken in to smaller pieces? This would destroy economies of scale and cause the price of steel to skyrocket. It would send the entire economy into a tailspin. Low margin, large scale businesses are highly efficient from an economic standpoint. Doing anything to hurt these businesses would be disastrous to the economy. We want to encourage efficiency, not punish it.

by cwkoss 4y ago

spywaregorilla 4y ago

> Steel just barely makes the list of top 100 US companies by revenue at #100. What does your imagined tax bracket structure look like if the top 100 companies aren't at the highest, most painful bracket? "Barely being in the top 100" means you're enormous. > Would steel consumers be better off if the largest steel companies were broken in to smaller pieces? Well pretty much everything in the economy runs on steel, and you're proposing removing their economies of scale and taxing them on revenue. Do you think they're going to be better off? Let's imagine it's a true perfect competition world. Steel producers make basically 0 profit on average (this is not the case). Next year supply crunch. Costs go up 10%. Steel producers need to raise prices by 10% to stay profitable. But wait, now their taxes are based on their revenues, so if they raise their prices by 10%, they take on at least 10% more taxes, so now they're losing money. They'll need to raise their prices high enough to earn enough revenue to offset the increased taxes. But wait, turns out other countries make steel too, and these companies are realistic enough to tax on profits only. So now American steel is too expensive to compete. When you have high fixed costs and low variable costs, a revenue tax is brutal because you need high revenues to even begin to break a profit.

chongli 4y ago

Would steel consumers be better off if the largest steel companies were broken in to smaller pieces? This would destroy economies of scale and cause the price of steel to skyrocket. It would send the entire economy into a tailspin. Low margin, large scale businesses are highly efficient from an economic standpoint. Doing anything to hurt these businesses would be disastrous to the economy. We want to encourage efficiency, not punish it.