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If Microsoft and Walmart pay a fixed tax rate on earnings they don't have a tax incentive to become Walsoft: if their earnings are simply added their tax won't

by kgwgk 4y ago

If Microsoft and Walmart pay a fixed tax rate on earnings they don't have a tax incentive to become Walsoft: if their earnings are simply added their tax won't change. Unless I completely misunderstood your point you want Microsoft to pay a higher rate because its margin 67/205 = 33% is higher and Walmart to pay a lower rate because its margin 14/573 = 2% is lower. How much would Walsoft pay on its $81bn profit given its 10% margin? It depends on the link between margins and tax rates. However, one may imagine that it could be less than what Microsoft alone pays on its $67bn profit given its 33% margin.

pg_1234 4y ago
It's up to the state what you charge at each percent. You don't need to give a discount for lower margins, you can't simply up the rate at higher margins i.e 1% above current base for every 10% margin above 0. Also the point is to disincentivise gouging, Walmart doesn't need to be given a lower rate just because Microsoft is charged more. As to corporate mergers, if the state feels it is a tax dodge it can either veto the merger, or stipulate that each part be taxed as an independent entity. Not to mention that Microsoft would probably prefer to reduce it's margins by just charging less (slashing revenues by 20% should more than halve the tax burden and likely strengthen it's market hold) or pour profits into R&D than to merge with a less profitable company. And that's before you get into the mess that a giant tech/retail merger would entail.
- kgwgk 4y ago
  > As to corporate mergers, if the state feels it is a tax dodge it can either veto the merger, or stipulate that each part be taxed as an independent entity. It's ad-hoc regulations all the way down... > And that's before you get into the mess that a giant tech/retail merger would entail. Why? That seems less problematic from a regulatory point of view than a tech-tech or retail-retail merger. If a tech-retail entity is problematic in itself maybe they should force the break up of Amazon - or at least tax each part separately, right?

by kgwgk 4y ago

pg_1234 4y ago

It's up to the state what you charge at each percent. You don't need to give a discount for lower margins, you can't simply up the rate at higher margins i.e 1% above current base for every 10% margin above 0. Also the point is to disincentivise gouging, Walmart doesn't need to be given a lower rate just because Microsoft is charged more. As to corporate mergers, if the state feels it is a tax dodge it can either veto the merger, or stipulate that each part be taxed as an independent entity. Not to mention that Microsoft would probably prefer to reduce it's margins by just charging less (slashing revenues by 20% should more than halve the tax burden and likely strengthen it's market hold) or pour profits into R&D than to merge with a less profitable company. And that's before you get into the mess that a giant tech/retail merger would entail.

kgwgk 4y ago
> As to corporate mergers, if the state feels it is a tax dodge it can either veto the merger, or stipulate that each part be taxed as an independent entity. It's ad-hoc regulations all the way down... > And that's before you get into the mess that a giant tech/retail merger would entail. Why? That seems less problematic from a regulatory point of view than a tech-tech or retail-retail merger. If a tech-retail entity is problematic in itself maybe they should force the break up of Amazon - or at least tax each part separately, right?