i'm curious, what do you think would actually happen if we taxed corporate revenue instead of profits?
the effect of a particular tax can be pretty hard to figure out. just because the tax is levied against a certain company or individual doesn't necessarily mean they actually bear the burden of that tax; depending on the situation, they may be able to pass off the burden to someone else entirely. in general though, you can think of taxes as discouraging a particular activity/transaction.
if you directly slap a tax on revenue, you are basically putting the brakes on all economic activity. low margin businesses are probably hit harder than higher margin businesses, but keep in mind that the profitability of the average business varies a lot by industry, so you run the risk of putting entire sectors underwater. unless they are able to pass the tax on to their customers, a grocery store is going to be hit a lot harder by this tax than a semiconductor company, and people are going to be less likely to invest in them. taxing corporate profit is somewhat perverse in the same way, since it serves to discourage efficient allocation of capital, but it does have the nice side effect that it increases the incentivize for companies to spend more tax free dollars on things like employee benefits and wages.
in my opinion, we should probably not tax corporations at all. ultimately all corporate revenue turns into either income for employees or capital gains for investors, so just tax these (progressively) and hike the rates. while we're at it, let's also eliminate as many personal tax credits and deductions as possible.
> in my opinion, we should probably not tax corporations at all. ultimately all corporate revenue turns into either income for employees or capital gains for investors, so just tax these (progressively) and hike the rates.
This sounds reasonable to me As long as the money doesn’t disappear to another country.
the effect of a particular tax can be pretty hard to figure out. just because the tax is levied against a certain company or individual doesn't necessarily mean they actually bear the burden of that tax; depending on the situation, they may be able to pass off the burden to someone else entirely. in general though, you can think of taxes as discouraging a particular activity/transaction.
if you directly slap a tax on revenue, you are basically putting the brakes on all economic activity. low margin businesses are probably hit harder than higher margin businesses, but keep in mind that the profitability of the average business varies a lot by industry, so you run the risk of putting entire sectors underwater. unless they are able to pass the tax on to their customers, a grocery store is going to be hit a lot harder by this tax than a semiconductor company, and people are going to be less likely to invest in them. taxing corporate profit is somewhat perverse in the same way, since it serves to discourage efficient allocation of capital, but it does have the nice side effect that it increases the incentivize for companies to spend more tax free dollars on things like employee benefits and wages.
in my opinion, we should probably not tax corporations at all. ultimately all corporate revenue turns into either income for employees or capital gains for investors, so just tax these (progressively) and hike the rates. while we're at it, let's also eliminate as many personal tax credits and deductions as possible.