[mabbo]

It's an intriguing concept.

What effect would a tax purely on size (income rather than profit) have on the world economy, if everyone were to adopt such policies? It would discourage large companies and encourage small ones.

It seems like employees do better when there is a bigger and more diverse marketplace for work, ie, many smaller companies. So they would win out, hopefully.

Customers may or may not do better. It would encourage companies to keep prices low to reduce gross income, and give an advantage to incumbents in the same marketplace. But one Amazon with it's fulfillment centers, delivery networks, etc, is more efficient than two overlapping half-sized Amazons. Twice the delivery trucks means twice the delivery costs and pollution.

Overall I'd be for such a system, provided it were not too onerous and didn't target specific companies.

[stickfigure]

It would not select against size. It would select against low margins.

Google and Apple would be fine. Amazon would be toast. Your local supermarket would be toast (avg grocery store margins are 1%). Any startups that are just scraping by, no matter how small, would be toast.

You would basically crank up the difficulty level of business across the board. This would generally help successful incumbents by making life punishingly difficult for challengers, who have to climb up through a period of unprofitability.

It is a terrible idea.

[yxhuvud]

Supermarkets would just raise the prices though. It is not as if people can choose not to buy food.

[friedman23]

>What effect would a tax purely on size (income rather than profit) have on the world economy, if everyone were to adopt such policies? It would discourage large companies and encourage small ones.

How so? Your argument makes 0 sense because the tax is proportional regardless of size. What it will encourage is high margin business and it will discourage low margin business. Larger businesses are able to increase their margins because of increased efficiencies.

[mabbo]

No, taxes are based on profits. I work for Amazon, which notoriously has nearly zero profit most years. The company pours money into investments instead. That's how it's gotten so big.

What I'm saying is that if there were a small additional tax on giants based purely on their company value or gross sales, it would 'level the playing field' for incumbents who don't have the efficiencies of scale that the big companies have, which I think is beneficial to society.

[TorKlingberg]

The opposite: It would encourage larger companies, because trade between companies is taxed but not "trade" within a company.

[jopsen]

It seems more like companies would have stronger incentives to keep the profit margin high..

I would be concerned if low profit margins is a problem.. companies with a low profit margin is the reason we can afford so much stuff.