What would be the equivalent corporate tax to the actual one if we tax on revenue, not profit (TOR)?
There are some interesting debates about it, with strong points in favor and against. Would it be fair that a company with losses pays taxes? On the other side, it will get rid of all the artificial "mambo-jambo" to create expenses, which are at the end frictions in the system.
Just for fun, we will try to find a very rough approximation of this corporate tax rate on revenue for the S&P 500 (there will be a big distortion caused by foreign revenue). The global sales per share of the index was 1092 (SPS) and the earnings per share 86.51 (EPS). The corporate tax rate has been going down every year thanks to the use of offshore structures (remember the recent polemic about Apple not paying too many taxes), but let say it´s 29.1% as an average for this game.
EPS=SPSxTOR TOR=7.9%
So, instead of taxing earnings at 29.1%, we could be taxing the S&P companies at 7.9% on revenue. Of course if we extend this reasoning to all US companies, the TOR should be much lower because it will include all the companies with losses, which don´t pay taxes right now.
This summer post is just for fun, so don´t take it too seriously...
There are some interesting debates about it, with strong points in favor and against. Would it be fair that a company with losses pays taxes? On the other side, it will get rid of all the artificial "mambo-jambo" to create expenses, which are at the end frictions in the system.
Just for fun, we will try to find a very rough approximation of this corporate tax rate on revenue for the S&P 500 (there will be a big distortion caused by foreign revenue). The global sales per share of the index was 1092 (SPS) and the earnings per share 86.51 (EPS). The corporate tax rate has been going down every year thanks to the use of offshore structures (remember the recent polemic about Apple not paying too many taxes), but let say it´s 29.1% as an average for this game.
EPS=SPSxTOR TOR=7.9%
So, instead of taxing earnings at 29.1%, we could be taxing the S&P companies at 7.9% on revenue. Of course if we extend this reasoning to all US companies, the TOR should be much lower because it will include all the companies with losses, which don´t pay taxes right now.
This summer post is just for fun, so don´t take it too seriously...
