4 ms·

Isn't the simple solution to just not give away all of your revenue before you pay your taxes? The two constants are death and taxes, if you don't have the rev

by jakear 3y ago

Isn't the simple solution to just not give away all of your revenue before you pay your taxes? The two constants are death and taxes, if you don't have the revenue to pay them at your current burn rate, you either find a way to burn less or your company just isn't viable.

vikramkr 3y ago
The idea of corporate taxes is to tax profits, not revenue
- jakear 3y ago
  Which just ends up with corporate accountants structuring the books to minimize "profit". I for one can't find it in me to get all that upset about startups paying their fair share of taxes instead of artificially inflating salaries to consume all of their "revenue", thereby hoarding talent away from the labor pool that would likely better serve the country as a whole by working in... really anything besides risky chronically unprofitable startups.
  - vikramkr 3y ago
    What's wrong with paying employees more? Income tax is a thing and that's on revenue, not profit. You'll get a bigger cut of that then other expenses. And a bigger cut of that than equity comp and share buybacks where that's cap gains. Income is great!
    - jakear 3y ago
      Are you arguing the government is actually getting less tax this way?
      - vikramkr 3y ago
        For the economic activity that happened this year, yeah they get more by forcing people to delay recognizing expenses, which is essentially an interest free loan for the irs that they don't have to pay back if the lender goes bankrupt. But this doesn't actually create a new nominal tax increase, in nominal dollars its a wash, and so the question is if the interest free loan is worth the decrease that would result from companies finding more tax efficient ways to pay employees and any decrease in future economic activity this will cause. Corporate tax and cap gains tax are likely lower than the income tax bracket those revenues would have gone to as income.
  - bcrosby95 3y ago
    Why are you so hostile to startups? Maybe if you could articulate what small software companies are actually abusing when they offset their revenue with wages like literally every other industry out there I could start to understand your viewpoint. But without that you just seem like you have a chip on your shoulder. You do understand that if this law were applied to any industry it would similarly kill small companies in those? Like if restaurants had this rule for wages it would devastate smaller, family run restaurants.
    - jakear 3y ago
      I'm simply stating the idea the P's present of "How terrible is this? I made 1,000,000, spent 1,000,000, but now I don't have money for taxes!" is quite literally a lesson any kid should have learned when they first went to the store to buy a $5 candy with a $5 bill and learned the way of the world. Given restaurants aren't in the business of R&D I don't see why you're trying to make an argument based on applying R&D tax law to them. It's disingenuous, at best.
      - deleted 3y ago
        [deleted]

by jakear 3y ago

vikramkr 3y ago

The idea of corporate taxes is to tax profits, not revenue

jakear 3y ago
Which just ends up with corporate accountants structuring the books to minimize "profit". I for one can't find it in me to get all that upset about startups paying their fair share of taxes instead of artificially inflating salaries to consume all of their "revenue", thereby hoarding talent away from the labor pool that would likely better serve the country as a whole by working in... really anything besides risky chronically unprofitable startups.
- vikramkr 3y ago
  What's wrong with paying employees more? Income tax is a thing and that's on revenue, not profit. You'll get a bigger cut of that then other expenses. And a bigger cut of that than equity comp and share buybacks where that's cap gains. Income is great!
  - jakear 3y ago
    Are you arguing the government is actually getting less tax this way?
    - vikramkr 3y ago
      For the economic activity that happened this year, yeah they get more by forcing people to delay recognizing expenses, which is essentially an interest free loan for the irs that they don't have to pay back if the lender goes bankrupt. But this doesn't actually create a new nominal tax increase, in nominal dollars its a wash, and so the question is if the interest free loan is worth the decrease that would result from companies finding more tax efficient ways to pay employees and any decrease in future economic activity this will cause. Corporate tax and cap gains tax are likely lower than the income tax bracket those revenues would have gone to as income.
- bcrosby95 3y ago
  Why are you so hostile to startups? Maybe if you could articulate what small software companies are actually abusing when they offset their revenue with wages like literally every other industry out there I could start to understand your viewpoint. But without that you just seem like you have a chip on your shoulder. You do understand that if this law were applied to any industry it would similarly kill small companies in those? Like if restaurants had this rule for wages it would devastate smaller, family run restaurants.
  - jakear 3y ago
    I'm simply stating the idea the P's present of "How terrible is this? I made 1,000,000, spent 1,000,000, but now I don't have money for taxes!" is quite literally a lesson any kid should have learned when they first went to the store to buy a $5 candy with a $5 bill and learned the way of the world. Given restaurants aren't in the business of R&D I don't see why you're trying to make an argument based on applying R&D tax law to them. It's disingenuous, at best.
    - deleted 3y ago
      [deleted]