
Some Corporations Pay a Lot More Taxes Than Others - socratees
http://www.bloomberg.com/view/articles/2017-09-19/why-wal-mart-pays-a-lot-more-in-taxes-than-amazon
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grandalf
This is why corporate taxes are a dumb idea. Firms should not keep one set of
books for management accounting and another set that they use for tax
purposes.

When money is paid to an individual, tax it as income tax. Very simple. Don't
give firms an incentive to act as tax shelters or tax avoiders.

Think about all the legal fees that have been spent by the firms on that list
to avoid and reduce corporate taxes. It's outlandish.

Not only do the complicated tax avoidance schemes waste lots of money getting
created/maintained, they also drastically reduce transparency and make
auditing the company (by regulators, shareholders, etc.) far more subjective
and complex.

There is no issue of fairness, since all the firms can conceivably do any of
the avoidance schemes any of the others are doing if it offers positive ROI.
The issue is that so much time, money, and energy is spent on corporate
taxation that should be spent on things that benefit society.

~~~
danmaz74
Yes, and what happens when those corporations keep hundreds of billions in
profits in the bank for years - see eg Apple?

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grandalf
If shareholders do not demand the money as a dividend and prefer instead to
have it kept in the company's control, then so be it.

Shareholders in Apple want Apple to be able to make big investments or
acquisitions and are willing to let the money sit there rather than take it as
a dividend. This would not be true for most firms.

~~~
jib
It sure would be in Jib Inc, the company that will launch about 5 minutes
after no corporate taxes and will handle all of my personal finances. :)

I'd pay myself a very basic salary, and if I needed emergency cash I could
always borrow against my holdings in Jib Inc until I could adjust my salary
appropriately.

That would let me defer paying tax indefinitely on anything that I don't need
for day to day living, and I would be able to play the margins on a number of
major expenses as well, with very little overhead work, since I dont need to
worry about taxes for corporate income anymore.

~~~
woah
That's called "piercing the corporate veil" and nobody is going to fall for
it.

~~~
dmoy
Ya if you make a one person company to avoid taxes, the second the irs looks
at it you're gonna have a bad time. This is already true today, and would be
especially more true if they drastically lowered corporate taxes.

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m777z
This is because some corporations make a lot more profit than others.

"Amazon's corporate income tax bill is so small, though, because its corporate
income (aka profit) is so small. Wal-Mart's pretax income since 2008 has
totaled $209 billion, Amazon's less than $11 billion. So while Amazon's rise
to fifth-biggest market cap in the world on the strength of such small
earnings is a fascinating and perhaps disturbing phenomenon, it doesn't
necessarily signal a problem with our system of corporate taxation."

~~~
quuquuquu
The author is acting like this wasn't an intended phenomenon. I don't
understand the mental gymnastics required to NOT see this.

Bezos decided, "we need to grow, and to grow we need equipment and real
estate, so I'm going to spend the profits on those assets, since we will get
more bang for our buck than just holding onto after-tax cash."

A corporation doesn't just accidentally conduct business that way lol, for
better or worse.

~~~
benmmurphy
I didn't think you could spend revenue directly on assets without booking it
as profits and paying tax on it. My understanding was you can discount part of
the cost of an asset each year against revenue but not all at once.

~~~
gnicholas
Depends on what you're spending on. If you're spending on capital equipment,
it's depreciated and spread over many years. But if it's discounting your
sales so that you have razor-thin profit margins, then you're just cutting
your income which directly cuts your current-year taxes.

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paulsutter
Walmart has high taxes(profit) because it has run out of ideas. Amazon has low
taxes(profit) because it reinvests almost everything it makes.

> Wal-Mart's pretax income since 2008 has totaled $209 billion, Amazon's less
> than $11 billion.

Of course many unprofitable companies invest poorly, but Amazon's massive
sustained growth indicates they've invested well.

~~~
adventured
No, Walmart has always been a careful, profitable business by necessity
(thanks to extremely low margins). It's not just because they ran out of ideas
to fund in the last ten or N years.

For most of their early existence, they didn't have bubbly capital markets to
ride as Amazon did during the dotcom bubble and presently. What made Amazon
possible turned out to be a very short-term fluke of history that Bezos took
great advantage of. He needed to thread the needle and did just that. Amazon
nearly collapsed into insolvency specifically because rather than rely on a
profitable business they were leaning on funding to subsidize their vast red
ink (as eg Uber is currently). That's an approach Walmart never had the option
of taking, and in the decades since they've also never had the luxury of
routinely being valued at 200x earnings. Amazon isn't a special alien
organism, they're one part retailer (boring old retail), one part platform for
distribution (eg retail and media), one part software company (cloud etc);
they are particularly good at what they do.

Walmart pays high taxes because they generate most of their income in the
United States market. Which is the same reason that Delta has a high corporate
income tax, and the same reason Whole Foods does. It's the reason Foot Locker
paid a 34% corporate income tax rate last year.

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pwaivers
Is there any way to determine how much Amazon employees, contractors, and
third-parties have paid in taxes? Even if Amazon only pays 1.4 billion itself,
doesn't the company still contribute to government taxes paying employees and
buying other goods, which are then taxed in turn?

~~~
ams6110
Of course it does. They also collect sales taxes in all (or nearly all?)
states now based on customer address, so they contribute to state revenues as
well.

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sethev
It's hard to imagine a tax that would be sensitive to this difference unless
it was a tax on market cap, which would be very odd because shareholders are
the owners. So it would be a tax on one entity for the value of assets owned
by another.

~~~
creaghpatr
Startup stock options, if you exercise before a liquidity event, are given a
cap gains tax based on the de facto market cap.

~~~
chimeracoder
> Startup stock options, if you exercise before a liquidity event, are given a
> cap gains tax based on the de facto market cap.

That's not really the same thing. ISOs are taxed (as _income_ ) because you're
purchasing something for below-market price, so the difference between the
market price and the price you pay is income. If you hold onto it for long
enough, you may then be able to qualify for capital gains tax when you sell
it, but that's different.

And in addition, that's the individual who's being taxed on it (the value of
their own income).

If you think of how this works similarly for publicly-traded companies, it's
easier to understand.

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quuquuquu
Amazon decided to "re-invest" all profits back into equipment and etc for the
business. Thus there are very few profits to tax.

Wal-Mart decided to what, I guess keep all the cash on hand or something. I
didn't look up their 10K or 10Qs, but that's what I assume is happening.

I'm glad Amazon doesn't pay that much in taxes. 609B in tax money per year
goes to the US Military, which has been responsible for more death and
destruction on this planet than could ever be imagined previously.

So, thank you Amazon for making sure the warmongers don't get too drunk off of
your success.

~~~
theandrewbailey
A lot more tax money goes to non-military parts of the government[0], like
welfare and education. I'm not happy that Amazon doesn't pay its fair share.

[0] [https://www.usafacts.org/government-
finances/spending](https://www.usafacts.org/government-finances/spending)

~~~
cjarrett
Seems bizarre to only think taxes go into the Military Industrial Complex. I
mean, sure they take their cut--but I'd like to think that our taxes go
towards maintaining our civil society as well!

Edit: Seems very much cutting off your nose to spite your face, if one is
'happy' a corporation isn't paying taxes

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quuquuquu
Per my other comment, the military's cut is 16% of 3.8 trillion.

Energy, Environment, and Science take a combined 2%.

Social Security and Medicare take a combined 60% (!), which are funded by
entirely separate taxes (payroll taxes). Amazon still pays those.

Trust me, you don't want a corporation paying income taxes.

It just results in dead Iraqis and global surveillance.

