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.

If they have to spend the money in the same country as they gained the profits, that might work as intended.

Only half-ironic though. There is a problem with industries that are viable and important in the longer term, but are at risk of being shut down in shorter terms due to market fluctuation. Subsidies help them off the ground on one hand, but ossify their structure and skew the incentives (by definition) on the other hand.

https://en.wikipedia.org/wiki/List_of_largest_companies_in_t...

Would steel consumers be better off if the largest steel companies were broken in to smaller pieces?

What does your imagined tax bracket structure look like if the top 100 companies aren't at the highest, most painful bracket? "Barely being in the top 100" means you're enormous.

> Would steel consumers be better off if the largest steel companies were broken in to smaller pieces?

Well pretty much everything in the economy runs on steel, and you're proposing removing their economies of scale and taxing them on revenue. Do you think they're going to be better off?

Let's imagine it's a true perfect competition world. Steel producers make basically 0 profit on average (this is not the case). Next year supply crunch. Costs go up 10%. Steel producers need to raise prices by 10% to stay profitable. But wait, now their taxes are based on their revenues, so if they raise their prices by 10%, they take on at least 10% more taxes, so now they're losing money. They'll need to raise their prices high enough to earn enough revenue to offset the increased taxes. But wait, turns out other countries make steel too, and these companies are realistic enough to tax on profits only. So now American steel is too expensive to compete.

When you have high fixed costs and low variable costs, a revenue tax is brutal because you need high revenues to even begin to break a profit.

This would destroy economies of scale and cause the price of steel to skyrocket. It would send the entire economy into a tailspin.

Low margin, large scale businesses are highly efficient from an economic standpoint. Doing anything to hurt these businesses would be disastrous to the economy. We want to encourage efficiency, not punish it.

Will we ever live in a society where you aren't allowed to "write off" R&D/depreciation/the typical things companies use to avoid profits?

We want companies to reinvest their profits into growth to hire more employees, right?

Where do we draw the line to make it harder for them to do so?

It depends. In some countries it is easy, it others it isn’t. Depends on what can be counted as an expense and what part of that purchase can be accounted for in a given fiscal year depending on when it was purchased…

For example. Germany. If a company buys computer equipment in December, they cannot deduct 100% of the value for the fiscal year that is about to finish because that computer equipment cannot be reasonably used for the whole fiscal year. So a company can deduct 1/12th of the value. Of course the reminder can be deducted in the following year but the profit is already affected for the previous year. And don’t get me even started on advance taxes companies have to pay.