Why make a profit?


Many have criticized Amazon.com 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...

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