8 ms·

>so it makes sense you don't pay taxes until you make back that $100m you lost LOL. You losing money with your business is no excuse to not pay taxes on profit

>so it makes sense you don't pay taxes until you make back that $100m you lost LOL. You losing money with your business is no excuse to not pay taxes on profits you make after losing money. Just because you lost money doesn't mean you dont make profits until you earned back that money. Taxes should be paid every time you make money in the country your business operates in. Simple as that. Everybody benefits off of tax money.

greyw 1mo ago
I dont know a single country that doesnt allow losses to be offset from future profits. Not a single one! It discourages investments in your country.
- sevenzero 1mo ago
  So I'll expect not having to pay VAT next time I buy from a franchised business operating in my country given that all of them usually make little to no profits officially.
  - greyw 1mo ago
    The equivalent would be not having to pay taxes if you dont earn money (or lie about it which the franchise business might be doing legally or illegally). Fortunately its quite rare to have a job that results in negative income. Unfortunately, VAT is a consumption tax that has little to do with the company. Your gov thinks you need to pay it because you consume. Are you paying a consumption tax on investments? No that would be really dumb
  - bluecalm 1mo ago
    VAT and income tax are completely different taxes. One is a tax on income. The other is a consumption tax - like a sale tax but with additional accounting steps.
Leif24 1mo ago
> Just because you lost money doesn't mean you dont make profits until you earned back that money. Taxes should be paid every time you make money in the country your business operates in. Over what timescale? For instance, if the first month I operate my business I have a loss of $50,000 (have to buy initial supplies and equipment, hire employees, etc.), but in the second month sales start taking off and I net $20,000 do I (a) have a total loss of $30,000 and pay no tax or (b) owe taxes on the $20,000 in month two? This can be extended, e.g. profit and loss can be calculated on a weekly, daily, or even hourly basis. In the extreme case, this is no longer a tax on profit but on revenue (which essentially runs any business that has a smaller margin than the tax rate out of business since every dollar of revenue coming in results in more tax liability than the business actually nets). Before you say "obviously profit and loss should be calculated in a yearly cadence" I would note that the choice of a year is fairly arbitrary and this taxation scheme would greatly disincentive any sort of capital allocations that would take more than a year to payoff (as a small example, would incentive leasing equipment annually vs. buying outright).
- sevenzero 1mo ago
  Timescale has nothing to do with this though. You're Starbucks, you sell me a cup of coffee, you make profit from that cup of coffee, you pay taxes on that singular profit. What your companies bank account states is not what I care about as tax collector. The profits you make have nothing to do with the equipment you bought earlier to even start the business. Otherwise you could simply: Buy expensive stuff -> even out with profits, buy expensive stuff again, even out with profits and never pay taxes.
  - Leif24 1mo ago
    What do you mean by "make profit from that cup of coffee"? A cup of coffee is hot bean water in a cup - is profit simply the price Starbucks charges minus the cost of (water + bean + cup)? What about the cost of energy to heat the water? What about the fractional cost of the machine that actually puts the water and beans together to brew the coffee (you could do some sort of analysis based on purchase price / total number of coffees made over useful lifetime)? What about the small fraction of time the barista spends making and handing the coffee to you? What about the wear and tear on the machine (e.g. it breaks down X% of the time and costs $Y on average to fix) - does that factor into this "profit" you keep talking about? What about the rent on the building? If none of that matters, then you should spin up a competitor where you simply stand on a street corner hand your customers a cup, cold water, and some raw beans - I don't think you'll take too many of Starbucks customers. All of these factors, and many more play into the "profit" of an operation like Starbucks, so how do you determine what the real true profit of that one cup of coffee is? It is much simpler to simply say "Hey, just hand over x% of profits at the end of the year" with some reasonable guidelines as to how accounting should be done (see stuff like GAP for example) than to sit down and determine what the individual "profit" is for every single individual cup of coffee sold at every single Starbucks location. >Otherwise you could simply: Buy expensive stuff -> even out with profits, buy expensive stuff again, even out with profits and never pay taxes. Yep, you could do this. Only problem is, uh, you never make any money. If you're running a hobby or something, that's fine, but most people owning business want to realize some profit... If course there are still shenanigans you can pull between different tax districts, but someone somewhere needs to realize a profit at some point - otherwise they are running a jobs program and not a business.

greyw 1mo ago

I dont know a single country that doesnt allow losses to be offset from future profits. Not a single one! It discourages investments in your country.

sevenzero 1mo ago
So I'll expect not having to pay VAT next time I buy from a franchised business operating in my country given that all of them usually make little to no profits officially.
- greyw 1mo ago
  The equivalent would be not having to pay taxes if you dont earn money (or lie about it which the franchise business might be doing legally or illegally). Fortunately its quite rare to have a job that results in negative income. Unfortunately, VAT is a consumption tax that has little to do with the company. Your gov thinks you need to pay it because you consume. Are you paying a consumption tax on investments? No that would be really dumb
- bluecalm 1mo ago
  VAT and income tax are completely different taxes. One is a tax on income. The other is a consumption tax - like a sale tax but with additional accounting steps.

Leif24 1mo ago

> Just because you lost money doesn't mean you dont make profits until you earned back that money. Taxes should be paid every time you make money in the country your business operates in. Over what timescale? For instance, if the first month I operate my business I have a loss of $50,000 (have to buy initial supplies and equipment, hire employees, etc.), but in the second month sales start taking off and I net $20,000 do I (a) have a total loss of $30,000 and pay no tax or (b) owe taxes on the $20,000 in month two? This can be extended, e.g. profit and loss can be calculated on a weekly, daily, or even hourly basis. In the extreme case, this is no longer a tax on profit but on revenue (which essentially runs any business that has a smaller margin than the tax rate out of business since every dollar of revenue coming in results in more tax liability than the business actually nets). Before you say "obviously profit and loss should be calculated in a yearly cadence" I would note that the choice of a year is fairly arbitrary and this taxation scheme would greatly disincentive any sort of capital allocations that would take more than a year to payoff (as a small example, would incentive leasing equipment annually vs. buying outright).

sevenzero 1mo ago
Timescale has nothing to do with this though. You're Starbucks, you sell me a cup of coffee, you make profit from that cup of coffee, you pay taxes on that singular profit. What your companies bank account states is not what I care about as tax collector. The profits you make have nothing to do with the equipment you bought earlier to even start the business. Otherwise you could simply: Buy expensive stuff -> even out with profits, buy expensive stuff again, even out with profits and never pay taxes.
- Leif24 1mo ago
  What do you mean by "make profit from that cup of coffee"? A cup of coffee is hot bean water in a cup - is profit simply the price Starbucks charges minus the cost of (water + bean + cup)? What about the cost of energy to heat the water? What about the fractional cost of the machine that actually puts the water and beans together to brew the coffee (you could do some sort of analysis based on purchase price / total number of coffees made over useful lifetime)? What about the small fraction of time the barista spends making and handing the coffee to you? What about the wear and tear on the machine (e.g. it breaks down X% of the time and costs $Y on average to fix) - does that factor into this "profit" you keep talking about? What about the rent on the building? If none of that matters, then you should spin up a competitor where you simply stand on a street corner hand your customers a cup, cold water, and some raw beans - I don't think you'll take too many of Starbucks customers. All of these factors, and many more play into the "profit" of an operation like Starbucks, so how do you determine what the real true profit of that one cup of coffee is? It is much simpler to simply say "Hey, just hand over x% of profits at the end of the year" with some reasonable guidelines as to how accounting should be done (see stuff like GAP for example) than to sit down and determine what the individual "profit" is for every single individual cup of coffee sold at every single Starbucks location. >Otherwise you could simply: Buy expensive stuff -> even out with profits, buy expensive stuff again, even out with profits and never pay taxes. Yep, you could do this. Only problem is, uh, you never make any money. If you're running a hobby or something, that's fine, but most people owning business want to realize some profit... If course there are still shenanigans you can pull between different tax districts, but someone somewhere needs to realize a profit at some point - otherwise they are running a jobs program and not a business.