In some sense it is reasonable to tax companies on profit rather than revenue as there are plenty of intermediaries who are good for the economy but who make tiny margins and therefore couldn’t survive if they were taxed on revenue. On the other hand, it seems there are insufficient incentives for companies to make a profit which then gets taxed rather than stashing cash in various ways or busting back stock (I think this is taxes but less than profits but I might be wrong). It also feels reasonable to tax people on income rather than some kind of profit analogue because, frankly, many people don’t make much profit and it doesn’t really make sense to talk of profit: if people are their own shareholders then is buying a house an expense or a profit distributed to the shareholders in kind?

I worry that it can distort the way the economy works in a way that prioritises appealing to businesses as they pay less for things. For example if you want to spend $200 at a restaurant then you need to generate (say) $400 gross income which means generating (say) $1000 of value for your employer. Whereas if that employer wants to spend $200 at that restaurant then they must forego $200 of profit which means they must forgo (say) $160 of post-tax profits. This massively incentives that restaurant to appeal to companies because it is cheaper for them.

While companies are in some sense made of people, I think their spending is unrepresentative because it has less variance. Companies tend to like boring things (often there might not be much they can do about it) so if their willingness to buy things is so important, we will also get more boring things. (Consider charities: if your company decides to give 1% of profits/revenue/whatever to charity, they will probably have to give to some extremely generic charity that many people don’t particularly like. If instead they allocate that 1% between employees to choose how it is distributed, you would expect to see money going to a wider variety of charities. I claim that is better for the people in the company and for charities in general.)

It also doesn’t feel particularly capitalist that companies are incentivised to not have profits. Maybe you just think capitalism is bad but I don’t think it’s better for companies to stash profits than to give up the capital to be allocated to better things, whatever they may be.

I don’t really have a good answer. Georgism doesn’t seem like a great answer to me. Even the very wealthy don’t need to own a particularly large amount of land. The main use is for farming and it feels regressive to put almost all taxation into the price of food. It seems like too much value isn’t derived from the land itself anymore.

Taxing other exclusive rights (eg patents) from which value can be derived also doesn’t feel great as plenty of profitable businesses don’t need patents (including plenty who have many patents).

I think I’d want some kind of scheme where Amazon would have to pay an amount of tax that would feel fair to someone who ran a high-street shop, rather than paying a tax on the size of their warehouses.

Maybe the solution is a regressive tax like a high vat in combination with some measure to counter the regressiveness like UBI, but I’m not very convinced of the real-world merits of UBI.

Maybe the solution is just to have company spending dominate our economy.