Showing posts from October, 2014

Why make a profit?

Many have criticized for being unprofitable since inception. If you ask me, they're just being ultra-efficient . Take a look at this chart: Amazon's revenue has grown exponentially, but they've always kept their net profit/loss pretty close to zero. You see, the taxation system in most countries is actually a bit paradoxical . The purpose of a corporation (as defined by law) is to generate a profit , but that is also what is taxed. So if you make a profit, you lose a good chunk of it to taxes . On the other hand, if you re-invest those would-be-profits back into your business for growth, you get to keep it all . Meanwhile, massively profitable companies like Apple and Google end up engaging in complicated IP licensing schemes in tax havens to lower their taxes. Of course, a flat tax could put an end to some of these complex games...