EA looking to get billion dollar tax break

Discussion in 'Frontpage news' started by Hilbert Hagedoorn, Jul 31, 2019.

  1. Backstabak

    Backstabak Master Guru

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    The reason is they can still get what is essentially an interest free loan. Naturally the effect is what you describe further, that the point of the company is the perpetual increase in profit of the shareholders with zero long term plans. Because why would anyone care about it ? Once the company isn't as profitable, they just sell their shares and invest elsewhere.
     
  2. Loobyluggs

    Loobyluggs Ancient Guru

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    Let's talk about Amazon for a sec, just to illustrate my point with a fine-feathered seasoning of duck...

    May 15, 1997 is when the IPO went up - and at that point, Amazon was a very profitable and revenue rich company...so again, why float if the point was to get investment...investment that any bank would have given them; and, investors in general would have been happy to do?

    The answer is very simple: greed.

    If you have a profitable and revenue-rich company, you do NOT need to float. Ever.

    If someone were to float for genuine reasons (cash injection to expand) the MO of that company should be to delist as soon as possible. Just as, if you have a mortgage, you goal should be to pay off the mortgage in the shortest period of time as possible.
     
  3. Backstabak

    Backstabak Master Guru

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    Sure, but this way you get someone else's money that you can use, which is always great.
     
  4. Loobyluggs

    Loobyluggs Ancient Guru

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    ...but the long term cost to undoing the stiching is greater than the intrinsic cost.

    Pay a mortgage off in 12 months, and you save many % points over 25 years, versus taking a mortgage for 25 years and the bank owning it (and some might say 'you') for that duration.

    The cost of floating from a market valuation (again amazon is a very good example) is deep into the billions, and may even pop over 1Trn in cost(s) to undo, because you gotta pay off the shareholders in full - hence my comment to delist as soon as humanly possible if a company does float.

    It's not someone else's money to pi55 up the wall, it's money you owe, and with every % point increase; you owe even more.
     

  5. XP-200

    XP-200 Ancient Guru

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    Yeap, the Uk is also rife with it from billion bounds companies to MPs to celebs, they are all at it, and thankfully for them those sitting in Westminter had years ago placed these loopholes into place to make their tax evasion legal, the last major one was put through in 2013 to allow multinationals to shift tax offshore, which means once we are out of the EU there will be no one investagting this in the UK anymore.......strange timing right. lol
     
    Last edited: Aug 2, 2019
  6. deefop

    deefop Member Guru

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    Good for them.
    Taxation is theft.
     
  7. tsunami231

    tsunami231 Ancient Guru

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    corruption at is best
     
  8. Backstabak

    Backstabak Master Guru

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    Sure, from a pov of a company you are right. But behind that company are individual people who own those shares and will simply sell them and go away once it doesn't make them enough profit, none of them needs to even consider the long term.
     
  9. Loobyluggs

    Loobyluggs Ancient Guru

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    The majority of shares are owned by banks and investment funds, not individuals - and, I think you might be forgetting (appologies if not) that the market capitalisation of a firm is based on revenue, and the profits are just ancilliary to the value of the share, not the profits of the share.
     
  10. Backstabak

    Backstabak Master Guru

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    Maybe I'm the stupid here, but I do think that a lot of investors, regardless of who they are, just invest money into business and expect a certain return. When the company dips below that return, they sell and invest elsewhere. That's why I all of these companies don't really care about long term profits and just maximize the sort term return.
     

  11. Loobyluggs

    Loobyluggs Ancient Guru

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    If you did that, you would be liable to pay probably the highest amount of capital gains tax, depending on which country you did that in. AFAIK, all countries have some form of CGT for selling stocks and shares.
     
  12. D3M1G0D

    D3M1G0D Ancient Guru

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    That's not investing, that's trading. Investors ignore short-term noise and focus on long-term results.
     
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  13. rl66

    rl66 Ancient Guru

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    I work and have my main bank in what some call "fiscal paradise", the main reason that company install themself in place like that is because there is too much tax to be happy to go to work.
    I when was in france around 47% of what i should earn goes directely in direct tax, then come indirect tax around 21%, then collecting indirect tax (free work for the state), then fonctinal tax... and the list is endless and we were around 5% left on ultra good month.
    At the end you work hard for few benefit, and the customer who have the same problem that you isn't happy because you have to kept the price high to keep marging a few (because we don't work for free).
    Also Switzerland, Luxemburg, Andorra, Monaco, Ireland are more friendly but everything is clear, controled and legal... this is why more and more company do this and i don't blame them (they are not parasite as i have seen) too much tax kill the reason to have tax.
     

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