Taxing corporate top lines instead of bottom lines

[manifold]

Might it make more sense to tax businesses on their top line sales/revenue rather than their bottom line profit?


Seems to me it would be simpler, making it more difficult to successfully evade. And when I say it would be simpler, that is a massive understatement. The complexity, and therefore opportunities for obfuscation, in calculating profit is truly astounding. In the current landscape, revenue recognition (which is only one component of profit) has grown fairly complex all by itself. But if businesses had to pay a tax directly linked to every dollar of revenue, the incentives to inflate the books would likely be mitigated by the incremental cost and the incentive to deflate the books to avoid the tax would be mitigated by not wanting to report poor performance. Oh, and by the way, a well run, profitable and honest corporation would welcome this because it would save them a lot of money in tax attorneys, accountants and time.

Discuss

PS: Just to state the obvious for those who require it, the rate structure would be a lot lower than the current rates on corporate profit.

 

[Ravi]

So if I have 100,000 in revenue at a 10% tax rate I'd have to pay $10,000 in taxes.

If it cost me 80,000 to get 100,000 in revenue, half of my profit (20,000) would go to taxes. As it stands now, if the tax rate were 10% my tax burden would be $2,000.

This is the nuttiest idea you've had yet.

 

[manifold]

Once again demonstrating you're an abject failure in simple mathematics.

PS: The PS in the OP was for you.

 

[GHook93]

Um NO! It would prohibit most start up companies and create even more incentive to go over seas! Why not, not tax corporations, income, capital gains (stocks) or payroll at all and tax output aka the Fair Tax! That would give our corporations a huge advantage in the global market, even our depleted manufacturing sector.

Might it make more sense to tax businesses on their top line sales/revenue rather than their bottom line profit?

Seems to me it would be simpler, making it more difficult to successfully evade. And when I say it would be simpler, that is a massive understatement. The complexity, and therefore opportunities for obfuscation, in calculating profit is truly astounding. In the current landscape, revenue recognition (which is only one component of profit) has grown fairly complex all by itself. But if businesses had to pay a tax directly linked to every dollar of revenue, the incentives to inflate the books would likely be mitigated by the incremental cost and the incentive to deflate the books to avoid the tax would be mitigated by not wanting to report poor performance. Oh, and by the way, a well run, profitable and honest corporation would welcome this because it would save them a lot of money in tax attorneys, accountants and time.

Discuss

PS: Just to state the obvious for those who require it, the rate structure would be a lot lower than the current rates on corporate profit.

 

[manifold]

Define "output" please.

 

[eagleseven]

This plan would kill entrepreneurship as we know it.

Most start-ups take several years to actually show a profit. So, you would be demanding young companies pay taxes on money they don't have...which would effectively bankrupt them.

With taxes on raw revenues, say goodbye to innovation and rapid economic growth.

 

[manifold]

This plan would kill entrepreneurship as we know it.

Most start-ups take several years to actually show a profit. So, you would be demanding young companies pay taxes on money they don't have...which would effectively bankrupt them.

With taxes on raw revenues, say goodbye to innovation and rapid economic growth.

Bullshit.

Venture capitalists will still invest in companies with a solid business plan. A variable cost on revenue for tax is just that, another variable cost of doing business.

 

[Soggy in NOLA]

Dumbfuck thread alert!

 

[manifold]

I guess you retards don't much care for sales taxes either. What I'm talking about is conceptually the EXACT same thing.

 

[Valerie]

Taxing Corporate Income in the 21st Century

Most countries levy taxes on corporations, but the impact - and therefore the wisdom - of such taxes is highly controversial among economists. Does the burden of these taxes fall on wealthy shareowners, or is it passed along to those who work for, or buy the products of, corporations? Can a country with high corporate taxes remain competitive in the global economy? This book features state-of-the-art research by leading economists and accountants that sheds light on these and related questions, including how taxes affect corporate dividend policy, stock market value, avoidance, and evasion. The studies promise to inform both future tax policy and regulatory policy, especially in light of the Sarbanes-Oxley Act and other actions by the Securities and Exchange Commission that are having profound effects on the market for tax planning and auditing in the wake of the well-publicized accounting scandals in Enron and WorldCom.

• Accessible collection on the advantages and disadvantages of taxing corporations on their income; US-focused • Contributors, including the co-editors, are internationally known • For audiences in law, political science, and business as well as finance and economics

Taxing Corporate Income in the 21st Century - Cambridge University Press

 

[Soggy in NOLA]

This retard doesn't care much for taxes PERIOD.

 

[Soggy in NOLA]

Seems to me the only people in love with taxes are thos who don't pay them... the Barney Frank's, Charlie Rangle's and the Geithner's of the world.

 

[manifold]

This retard doesn't care much for taxes PERIOD.

I guess you don't much care for roads, bridges, law enforcement and national defense either then.

 

[GHook93]

Define "output" please.

Basically a sales tax! I am not opposed to a large sales tax if there is no income, corporate, payroll or capital gains taxes.

 

[manifold]

Define "output" please.

Basically a sales tax! I am not opposed to a large sales tax if there is no income, corporate, payroll or capital gains taxes.

Then we are in violent agreement.

 

[Ravi]

Sales tax is paid by the end user.

 

[manifold]

Sales tax is paid by the end user.

Wrong. It's often passed on to the end user but the responsibility (and liability) has always stayed with the merchant.

 

[manifold]

Sales tax is paid by the end user.

Wrong. It's often passed on to the end user but the responsibility (and liability) has always stayed with the merchant.

Notwithstanding the State of Massachusett's unconstitutional attempts to get residents to pay a Mass state sales tax on out of state purchases.

 

[Ravi]

Sales tax is paid by the end user.

Wrong. It's often passed on to the end user but the responsibility (and liability) has always stayed with the merchant.

The merchant collects it and the merchant turns it over to the state, but the consumer pays it. It's actually a crime, in my state at least, for the merchant to pay the sales tax.

 

[manifold]

I doubt any such law exists, but even if it did it would be virtually unenforcable. Whatever you get from the consumer can easily be represented to include both a selling price component and a tax component.