Reply to post: Taxing revenue is inherently unfair

European nations told to sort out 'digital tax' on tech giants by end of year

DougS Silver badge

Taxing revenue is inherently unfair

Compare Google, Apple, and Amazon. Rounding off for simplicity, they have gross margins of 60%, 40% and 20% respectively. That means one out of every five dollars of revenue is margin for Amazon, but two out of every five for Apple and three out of every five for Google.

A 3% tax on revenue therefore hits Amazon 3x as hard as it hits Google. How is that fair? I get that the EU wants to do something about companies finding ways to skirt taxes, but this seems like a really bad way to go about it.

The worst part is that companies like Google or Facebook that have very high margins because every additional ad they sell has near zero cost associated with it, are the ones who are most easily able to game the system and move costs to high tax areas and profits to low tax areas. The worst abusers will be hurt the least by this tax! It is pretty hard for Amazon to shift costs, since if you buy a TV for €1000 that cost them €800, they can't shift that cost elsewhere.

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