Re:Microsoft Irish subsidiary paid zero corporate tax on £22...
by pimterry on Thursday June 03, 2021 @09:03AM
(#27380611)
> you redirect $100 million away from Microsoft's research into artificial intelligence
This confuses the issue - corporation tax has the opposite effect to this, because it only applies to profits. When profits are heavily taxed, there's a strong incentive to invest more money in R&D and longer-term internal investment (thereby avoiding corporation tax on that spending entirely) rather than reporting it as profit that's immediately distributed it to shareholders today.
There's interesting arguments about how this affects shareholders and whether it discourages external investment, but it's certainly not a drain on R&D.
This confuses the issue - corporation tax has the opposite effect to this, because it only applies to profits. When profits are heavily taxed, there's a strong incentive to invest more money in R&D and longer-term internal investment (thereby avoiding corporation tax on that spending entirely) rather than reporting it as profit that's immediately distributed it to shareholders today.
There's interesting arguments about how this affects shareholders and whether it discourages external investment, but it's certainly not a drain on R&D.