5 ms·

You misunderstand how taxes work. Unprofitable businesses of every sort don't pay income taxes. Startups like OpenAI don't pay income taxes because they don't

You misunderstand how taxes work. Unprofitable businesses of every sort don't pay income taxes. Startups like OpenAI don't pay income taxes because they don't have income. And investors don't get a writeoff merely for investing in a nonprofit; it's not like a donation to a nonprofit (which would be deductable).

guhidalg 3y ago
> Startups like OpenAI don't pay income taxes because they don't have income. Where is my $20/month for GPT-4 going then?
- j7ake 3y ago
  To pay their expenses and salaries.
- cogman10 3y ago
  Taxes are payed on net income not on individual transactions (barring sales tax). If I make $100 in a year and spend $1000 that year, my income is ($900). How can I spend $1000? Generally through loans and bonds. How do I secure said loans? Generally simply by showing how much VC and income comes in with a business plan that banks accept. But that's the secret to the money flow. That's also partially why the collapse of SVB was such a blow to the tech industry. A LOT of loans were issued by them.
  - guhidalg 3y ago
    Ok got it got it, I was thinking revenue == income, and not income == profit. My bad, financially illiterate I guess.
- bcye 3y ago
  probably 2x that in GPU costs
- Aloisius 3y ago
  To the for-profit - which pays taxes on net income.
- baobabKoodaa 3y ago
  Revenue. Your $20/month is going on the revenue line of accounting. The income line on the accounting can be negative despite your generous $20 donation.
evanlivingston 3y ago
This is a great point but has me realizing I don't know how to square this with the idea that quite a few people are making enormous profits from unprofitable businesses. It feels like there should be a way to tax these startups that exist as vehicles for cash grabs, but are not profitable.
- theplague42 3y ago
  The individuals will get taxed on capital gains afaik. We could also tax unrealized gains (just like we do gains on property)!
- s1artibartfast 3y ago
  Do you have examples of people making enormous profits you are thinking of? If you literally mean people (as in employees, executives, ect), they already are being taxed on income. Unprofitable businesses always have expenses for labor, materials, ect. The distinction is that the company and owners arent making money, so they dont pay taxes. Those that do make money naturally do pay taxes. What is the hard part to square?

guhidalg 3y ago

> Startups like OpenAI don't pay income taxes because they don't have income. Where is my $20/month for GPT-4 going then?

j7ake 3y ago
To pay their expenses and salaries.
cogman10 3y ago
Taxes are payed on net income not on individual transactions (barring sales tax). If I make $100 in a year and spend $1000 that year, my income is ($900). How can I spend $1000? Generally through loans and bonds. How do I secure said loans? Generally simply by showing how much VC and income comes in with a business plan that banks accept. But that's the secret to the money flow. That's also partially why the collapse of SVB was such a blow to the tech industry. A LOT of loans were issued by them.
- guhidalg 3y ago
  Ok got it got it, I was thinking revenue == income, and not income == profit. My bad, financially illiterate I guess.
bcye 3y ago
probably 2x that in GPU costs
Aloisius 3y ago
To the for-profit - which pays taxes on net income.
baobabKoodaa 3y ago
Revenue. Your $20/month is going on the revenue line of accounting. The income line on the accounting can be negative despite your generous $20 donation.

evanlivingston 3y ago

This is a great point but has me realizing I don't know how to square this with the idea that quite a few people are making enormous profits from unprofitable businesses. It feels like there should be a way to tax these startups that exist as vehicles for cash grabs, but are not profitable.

theplague42 3y ago
The individuals will get taxed on capital gains afaik. We could also tax unrealized gains (just like we do gains on property)!
s1artibartfast 3y ago
Do you have examples of people making enormous profits you are thinking of? If you literally mean people (as in employees, executives, ect), they already are being taxed on income. Unprofitable businesses always have expenses for labor, materials, ect. The distinction is that the company and owners arent making money, so they dont pay taxes. Those that do make money naturally do pay taxes. What is the hard part to square?