Perhaps it's time we think of a tax tier for large companies that generate over $1B in revenues. This tax would apply on gross revenues, not on profit, to close potential loop holes, and it should reflect the social and environmental impact that company ($1B+) has on society.
Large companies ($1B+) that have a negative impact on the environment and society, should pay more taxes to disincentivize the harmful behaviour. On the other hand companies that have a positive impact on the environment and the society should pay less.
Also, any billionaire person who labels themselves as a philanthropist should pay double digit % taxes. After all, through taxes we contribute to public good, infrastructure, social support and public institutions. Privately controlled investment funds labeled as charities don't count. Everyone knows.
That would heavily penalize high-revenue low-profit-margin industries, such as retail. What's the point? Amazon would split off its profitable parts (AWS/services), which would make the barely profitable parts of Amazon worse for everyone.
As far paying taxes: All these billionaires aren't really making that much money, they're mostly owning stuff that may or may not appreciate. The fact that it does appreciate is now mostly a function of monetary policy. If you want to tax that, you really need a wealth tax, which is essentially confiscatory. Good luck keeping that capital ashore.
Lastly, even if you did somehow manage to keep billionaires around and tax them, it's not really that much revenue. You might as well not bother with it. It sounds unfair, and it is, but "worse is better" in this case.
> Amazon would split off its profitable parts (AWS/services), which would make the barely profitable parts of Amazon worse for everyone.
Okay but how is that actually bad?
The barely profitable parts of Amazon, ie the retail operation, are already pretty comprehensively lousy. Making it unprofitable to more or less monopolize retail, the way Amazon does now, seems like it would open competition back up among ecommerce business on a smaller scale. As I've discovered since quitting Amazon myself, with platforms like Stripe and Shopify, human-scale
ecommerce no longer needs to be - or is! - the patchwork headache we all remember unfondly from 2005. The experience at point of sale is consistent, reliable, quick, and pleasant. The money goes to support small businesses, rather than being shoveled directly into the flaming mouth of Mammon. And while it does take a little longer for shipments to arrive, that's actually also a net good because almost nothing actually needs the kind of unsustainable next-day Prime treatment that Amazon's retail operation insists on by default. Without Amazon's perverse incentives toward counterfeit garbage, the rate at which I've had what I get match what I order has so far been 100%. And without Amazon Logistics involved, I can be fairly confident besides that whoever did the work of delivering that order probably was not denied the basic human dignity of access to toilet facilities because of rampant Taylorism or for any other reason.
You've really made a remarkably strong case for the thing you're arguing against! I doubt that's what you wanted, but I appreciate it all the same.
I used "monopolize" loosely, sure. Maybe they don't entirely, but they clearly want to.
(And don't they? How much of b2c ecommerce are they? - how has the pandemic affected their share? You seem to have readier access to that data than I do!)
Maybe they do want to monopolize, but I'm pretty sure that they couldn't, what with Walmart, Target, eBay, Ali Express, and other major global players in the space. Amazon's want is largely irrelevant to a conversation like this.
Sure I can! You're quibbling over my choice of a single, admittedly inexact but contextually plain, word, rather than engage at all with the actual point I made. I'm just trying to meet you where you are.
> a single, admittedly inexact but contextually plain, word
Within the context of a policy discussion, a monopoly versus oligopoly is a pretty material difference. Every growing business at some level “wants” to monopolise their niche.
You make some good points, however every company should find a way to be sustainable and pay their fair share of taxes to society. If that's really not possible, then perhaps that business should go bankrupt. Breaking monopolies and monopoly-like structures will create many opportunities for SMEs / SMBs to flourish.
> All these billionaires aren't really making that much money
I'm sorry, I can't tell if what you are saying is sarcastic, naive or perhaps you work as an Amazon Ambassador (throwaway account, 3 mo. old?).
What's the alternative? Don't tax corporations, allow them to form monopolies and starve SMBs? Don't tax billionaires, allow them to hoard power and give them a free pass on everything? Trust that somehow power cannot corrupt them?
> You make some good points, however every company should find a way to be sustainable and pay their fair share of taxes to society. If that's really not possible, then perhaps that business should go bankrupt.
This sounds nice in theory, but in practice there is always the option to just not do business. You can get away with high taxes if you have something to offer in return, but at some point you just damage or destroy the economy.
> Breaking monopolies and monopoly-like structures will create many opportunities for SMEs / SMBs to flourish.
Fair enough, but as a consumer, perhaps I would prefer not to shop at the SMB equivalent of Amazon? Perhaps I like the fact that AWS is cross-subsidizing my deliveries?
Amazon isn't really much of a monopoly if you consider that it really competes on price and there isn't much of a barrier of entry to their market. They have little competition because it's not profitable, not because they're so powerful. Of course Amazon knows this, which is why they attempt to build a moat with regulation and taxation.
> I'm sorry, I can't tell if what you are saying is sarcastic, naive or perhaps...
Perhaps you did not quite understand what I am saying: These people are not earning money, they own assets. Owning assets can earn you money, such as dividends or rent. Those are already taxed. However, the reason why people find themselves on top of the "richest people" lists is usually not because they earned income from assets, but because the assets they own appreciated in value.
In general, you don't tax that appreciation because the asset price could drop just as well - if the Fed didn't bail out the market every time. You tax the profits gained from selling those assets. If you never sell your assets because you are already a billionaire and don't need cash, you don't get taxed. This is not really much of a tax revenue loss, because if you taxed, say, unrealized stock gains, you would massively suppress the value of stocks. Such hypothetical tax revenue just doesn't exist, at least not in the amount that you may imagine.
> What's the alternative? Don't tax corporations...
Yes. Corporate tax does nothing but make the country less interesting from a business perspective, for what little revenue it creates.
> ...allow them to form monopolies and starve SMBs?
That is orthogonal, in fact SMBs would profit the most from reductions in corporate tax.
> > ...allow them to form monopolies and starve SMBs?
> That is orthogonal, in fact SMBs would profit the most from reductions in corporate tax.
Is it possible that this is the root of the issue? Filing corporate taxes is 10x as complicated (and expensive) as even the more complicated end of personal returns. I've got 1099 income, sole-prop and LLC, schedule C, home office deductions, business car lease, backdoor Roth, business and personal itemized deductions, etc. I pay maybe $200/yr to my CPA for all the paperwork and filing, sometimes as much as $300.
In the past I was a partner in an S corp. We paid $5k+ every year for all the paperwork.
Reductions in corporate taxes would be beneficial to smaller shops for sure, but simplification might be the best thing for everyone. Corporate income is going to get taxed twice most of the time anyway (once at the corp, and again when it passes to someone as income) so there seems to be little need to incentivize anything other than reinvestment which already happens by it not getting taxed as income. A simple progressive tax structure based on profit with little that can be deducted outside of actual reinvestment would simplify things greatly.
Unless you have specific information, that "Amazon is doing this for evil" narrative is really forced.
If nothing else, I'd expect the tax increase to take the form of "same tax, but we take bigger numbers", so the cost of paperwork for small businesses would remain exactly the same.
Jeff Bezos sold over $10 billion in Amazon stock last year, they absolutely are making that much money. This whole 'net worth isn't liquid' meme is incredibly damaging and overstated.
Yes, in that instance, he made money, but also paid taxes on that. He probably wouldn't have sold if he didn't think it would be wise to diversify a little after such a huge price jump. Or maybe he just wanted to buy something ridiculous, who knows.
In general, the super-rich don't need to sell, which is why they don't need to pay taxes. If you want to change that, you need a wealth tax, with all its problems. That's my point.
He did pay taxes, but probably at a lower rate than an average doctor. The preferential treatment of capital gains over wages is a huge giveaway to Bezos.
For Amazons customers, yes - but competing offerings might be better off - by creating a gap in the market that might be filled by more motivated businesses.
"I think people would be made worse off if Amazon's retail operations were to be made worse (or shut down in the limit case).
"
Maybe short term but the in the long term I think everybody would be better off with more smaller competitors instead of a few dominant ones. Same for Apple. I don't think their size is good for the economy or technology in the long run.
One person's undercutting is another person's competition.
There's nothing wrong or anti-competitive about undercutting another retailer. At some point, you can get into anti-competitive predatory pricing or "dumping", but I don't think anyone is credibly arguing that Amazon is dumping product below their cost.
There are good answers to the tax exile argument, but this ain't one. A tax whose only purpose is to drive the people who would pay the tax away is a bad tax.
the biggest impact of such for such corporations is the removal of the foreign income tax credit as is also makes it somewhat uneconomical to attempt pet to doge taxes vis the high tech gambits of underpricing a virtual IP and selling it to another controlled corporation to hide revenue in at the lower tax rate
In fact is has been recommended by most economists
I don't see how taxing foreign income would work. A corporation would just spinoff foreign business to avoid it. If you tax those it'd just reincorporate offshore. The USA simply can't tax the foreign income of a foreign company.
If any nation on Earth can pull this off (or a wealth tax for that matter), it's the USA. The reach of the US financial system is immense: blocking off access or otherwise making life miserable for companies that attempt to offshore operations on paper is certainly something the US could do if it has the political will.
In 2010 Congress passed FATCA [1], which forced financial institutions in foreign countries to give up information on assets held by US nationals in their borders. This was extraordinarily unpopular with other countries: I'm in Canada, and the amount of negative press was astounding. In addition to privacy concerns (the law applied to dual-citizens, including "accidental Americans" who didn't know they held US citizenship), implentation proved to be very expensive for foreign banks.
However, the US played hardball: if a financial institution was non-compliant with the provisions of FATCA, the US government took 30% of any payments made to them as tax. There was tons of grumbling, but foreign financial institutions went ahead and implemented it.
To add insult to injury, the US is itself not compliant with FATCA, as the information sharing is supposed to be reciprocal if a foreign country signs a reciprocal treaty. That has not happened.
Access to the US financial system is an extraordinarly big stick when the US government chooses to wield it. It's often said that preventing offshoring or creating a wealth tax is impossible without global buy in. Really, the US could do it if it wanted to. It would not be popular, but FATCA shows there's precedent.
> In 2010 Congress passed FATCA [1], which forced financial institutions in foreign countries to give up information on assets held by US nationals in their borders.
With the unintended side effect that it can make it incredibly hard, if not impossible, for an American citizen to open a bank account in another country. Even if she's a resident in that country.
It'll still only work if tax policy is globalized. As long as there are tax havens this cannot operate. And the appeal of being a tax haven for small nations is incredible.
In most places (e.g. Luxembourg, Basel, Lichtenstein, ...) the "pick your favorite tax scheme" game is tolerated (in Basel you can have your pick of 3 tax schemes. Anything agricultural goes for the French scheme, most of the rest, especially medical technology, for the Swiss one, Car companies like their German tax (I'm guessing to avoid import tax)). And while not quite as impactful, it's still tolerated at e.g. the French-German border.
And of course there is the "European exception". EU countries each have their tax policy set so "their" company doesn't get taxed. Even the EU proper has such a company (Airbus). But individual countries do as well: the Netherlands has Shell, France has Total, Belgium has lots of government non-government companies (e.g. Sita, Eurocontrol, BICS, who are "Belgian" but multinationals ...). The incumbent telecom is usually beneficiary of such schemes as well, as well as large medical concerns.
And I would like to point out: one thing FATCA (+the preexisting international income tax the US has) has done is make it much more difficult, much less worth it, for US citizens to work abroad. Do we really want that ?
We should make corporate income taxes progressive. Small businesses should pay little to no tax, megacorps should be taxed strongly enough to encourage spinning off other companies rather than the current strategy of "acquire everything to squelch competition and maximize power". This concentration of power diffuses responsibility and allows megacorps to do evil profitably: a dozen independent amazon subsidiaries would have a much harder time lobbying in lockstep and would likely compete against each other - improving prices for consumers and labor conditions. Free market maximalists should welcome this increased competition.
Let's tax the economy of scale and force companies who are not able to utilize economy of scale well to split into multiple smaller companies.
Or just introduce higher regulations, including the degree to which a corp can compete across different industries.
For example, I sometimes thing large corporations can beat out smaller competition purely because they have/can afford a large legal/patent dept, that smaller single-industry players do not.
There should also probably be more rules wrt competition - allowing private interests to control TLD/DNS, protocols, Operating systems/ecosystems, hardware specs/compliance, the EM spectrum and other common utilities/services has allowed an extreme bent towards monolithic companies - force theses large corps to spin off internal services!
> On the other hand companies that have a positive impact on the environment and the society should pay less.
Just have a carbon tax. Setup a general scheme for SMBs, and allow larger corps to setup their own if they can do it more efficiently (regulate that, of course).
I agree. Sheer size should be discouraged. These big corporations lead to a business monoculture and hinder innovation by killingn off or buying promising new ideas.
Large corporations and billionaires also have an outsize influence on politics at the expense of small business and regular people. They shape the world to their advantage.
Large companies ($1B+) that have a negative impact on the environment and society, should pay more taxes to disincentivize the harmful behaviour. On the other hand companies that have a positive impact on the environment and the society should pay less.
Also, any billionaire person who labels themselves as a philanthropist should pay double digit % taxes. After all, through taxes we contribute to public good, infrastructure, social support and public institutions. Privately controlled investment funds labeled as charities don't count. Everyone knows.