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Comment by crazygringo | Hacker News Reader

Revenue isn't taxed. Profit is.

I suppose you could tax a proportion of your profit at a higher rate, according to the proportion of your revenue that came from advertising.

But advertising isn't a "free cash stream that can be bolted on everywhere". It's part of a business model that either is sustainable or isn't.

If you taxed it that much higher, a lot of businesses would simply go out of business, because people aren't willing to pay a subscription instead. Especially businesses that survive on a lot of users who use something only occasionally. Is that really what you want? Think carefully about how much journalism would be even further eroded...

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I understand that, and I kind if alluded to this being a concept less than a well thought out policy. If it was strictly profit, then all expenses of the business would be written against advertising and miraculously there would be 0 profit. My general point is that advertising revenue is insanely easy to get, especially with auctions and technology from google. Some of the problems and perverse incentives: - negative engagement in media - advertising screens at gas stations - popups everywhere - hardware devices you own display ads - software you purchase has ads - streaming services you bought without ads have ads added later

You all participate in society, so you get it. Advertising has become a tragedy of the commons and 2nd order effects are things like negative engagement and body dysmorphia. There needs to be a vice tax for advertisements to stop them from being bolted on everywhere. Lobbyists, smart policy makers, economists and lawmakers can come together to find the right mix. However, we should disincentivize it AND use it to make up for budget shortfalls.

Sales taxes are taxes on revenue, and they could certainly be advertisement-specific.

You can tax anything, even beards. Advertising is a business model, but it's a bad one that poisons the social environment. Advertisers are economically incentivized to lie and to push the common denominator ever lower. It is cancer.

I think in case of ad companies you could tax the revenue directly. They are strongly vertically integrated so there's really very little reason to track their profit rather than total sales.

The only reason you tax profits rather than revenue is that you want to avoid killing businesses that do useful things why operating at low margins.

Margins in advertising are huge and what those company do is pure detriment to all market actors on average.

Wouldn't that effectively create a massive moat for high efficiency advertisers? The consequences of such a thing sound systematically perversely centralizing. Sort of like how if you were to ban all advertising tomorrow, it would strongly favor incumbents who have the most 'cached' advertising in human memory.

There's absolutely nothing wrong with that. Advertisement is pure waste for the economy. You want to make it highly efficient. If you can make it even more efficient than the free market by itself does, you should.

There cpuld be harmful substance tax, akin to alcohol.

If corporations are indeed people, why isn't their income taxed?

They can have the mortgage interest deduction, just like me! I'm a people too!

Also:

>Is that really what you want?

Kinda

Because the actual value corporations provide is only in their profit. Whereas the economic value individuals provide is measured by their compensation. It's completely incoherent to tax a corporation based on revenue. If profit margins are an average of 5%, what exactly would you want the tax rate on revenue to be that wouldn't immediately put out of business nearly every corporation on earth?

And if individuals got to deduct everything they spend money on, then everyone would be incentivized to spend their entire paycheck every year and never save money for retirement or anything.

So the reasons we tax corporations on profit and individuals on income doesn't just make sense logically from a point of measuring economic value, but is also literally the only practical mechanism.

And just to check, you really want most of journalism to go out of business?

Capex and opex create value the same way an individual buying a house (capex) or a happy meal (opex) creates value.

>And just to check, you really want most of journalism to go out of business?

This is bullshit concern trolling.

But if you demand an answer: yes. "JoUrNaLiSm" probably bears half of the fault for getting us to where we are today.

The vast majority of "JoUrNaLiSm" nowadays is just copying and pasting tweets, putting "slams" in the title, and adding commentary anyways.

Low value. Sad. Many such cases.

> Revenue isn't taxed. Profit is

What about VAT ?

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