It’s weird that individuals are taxed on revenue but corporations are (usually?) taxed on profit.
To solve this, in most countries, companies are taxed VAT instead, so intead of taxing the total value of product at every step, you are only taxing the value the company adds in the process.
Effectively the government is taxing the total value of the product at a fixed rate once but that tax is being split among the companies which helped supply that product proportionally to the value added by each company.
there are 2 taxes.
direct and indirect.
direct taxes are paid by recipient themselves. (income tax is an example. a person/corp pays a tax on "net income after deductions" at whatever percentage)
indirect taxes are "collected" by the taxpayer but the person who ultimately buys a product pays it as the cost of product is inclusive of this indirect tax. VAT or GST or whatever. a business who is registered for indirect tax collects it from the customer and pays it to government. this indirect tax is not shown in their profit and loss account because for a business, they are just an intermediary.
direct tax OTOH, is shown in p&l because it there is PBT>tax>PAT.
Yes, and that’s why it’s weird that the most important resource for most big corporations is taxed like that. All the human labor gets taxed based on revenue and not profit, unlike all the other raw materials.
It's assumed that corporations spend as little as possible on operations. Individuals obviously don't. Whereas a corporation wouldn't rent employees 500 sqft / person, individuals regularly rent/purchase that density for themselves. Similarly, while a corporation might buy a Camry and run in into the ground, some individuals will buy a new BMW every 3 years.
Corporations also don't have a motive to exist beyond profits. If you tax revenue and make profits untenable, then corporations simply will not exist. Individuals on the other hand try not to die.
The curve used to shape the tax rate as company size grows could be tuned to mitigate many of the potential negative side effects of this.
In my misspent youth, I worked on a 10% project that helped consolidate and free-up racks of servers so that they could be physically forklifted between space leased/owned by different subsidiaries of one of the world's 5 largest corporations (by market cap). I heard through the grapevine that the main reason for this arrangement was so that these subsidiaries qualified for small business discounts on electricity, and they wanted to keep physical separation in different parts of the datacenters to bolster the case that the various subsidiaries were in fact separate entities.
When you adjust taxes and rates based on company size (or things correlated with company size), you need to be careful about subsidiary loopholes.
What does it help Apple that they have hundreds of billions of dollars sitting somewhere in their offshore accounts if they cannot use that money?
Having these monopolies (defining loosely - whether one company or a 2 or 3 or 4) is the main deficiency of capitalism.
Unfortunately, breaking up monopolies or increases taxes is exceedingly difficult to do as large companies and their lobbying congress prevents it in most cases.
A ridiculous assumption. Corporations are incredibly wasteful and tend to solve problems by piling money on them until they’re fixed.