sardia wrote:Corrupt user,
I have 0$in profit in the UK because I spent my entire budget paying licensing fees to parent company in Ireland, which I happen to be the sole shareowner. You are free to tax my 0$ in profit at whatever rate you want. Not having any profit in the UK where the taxes were higher was a coincidence, scouts Honor.
No, you tax the Irish company's profits, not the subsidiary.
Tyndmyr wrote:Just changing rates doesn't mitigate that.
It means the vertical monopoly only gets taxed once, whereas specialist industries are being taxed at each layer.
Whatever the rate is, it means that some companies are getting taxed many, many times less than others.
Inducing monopolies is bad.
Companies X is a mining company, Y is a smelting company, Z is an auto plant. X sells ore for $10,000, has $8000 in labor cost. Y buys $10,000 of ore, has $8000 in labor cost, sells steel for $20,000. Z buys $20,000 of steel, has $8000 in labor cost, sells a car for $30,000. Each company has $2000 in profit, and they pay 1/3 to the government, or $2000. X Y and Z merge into XYZ. The company now has $24,000 in labor costs, and $6000 profit. The tax rate is still 1/3, and the government still collects $2000.
Am I missing something? If there's sales tax involved, then yes, XYZ has an advantage over X Y and Z because by "selling" to themselves they avoid sales tax, but it's not income tax that's the problem here.