Apple, Google, Bringing Low-Pay Support Employees In-House

jfruh writes One of the knocks against Silicon Valley giants as "job creators" is that the companies themselves often only hire high-end employees; support staff like security guards and janitors are contracted out to staffing agencies and receive lower pay and fewer benefits, even if they work on-site full time. That now seems to be changing, with Apple and Google putting security guards on their own payroll.

Comments

"taxes are write-off expenses"

[iceperson]

I see this argument all the time about charitable contributions. "Yeah, sure he gave a million bucks, but it's just a tax write off..."

In what world are tax deductions 1 to 1 with tax liability? That's certainly not how the math ever works out on my taxes. $5k in deductions saves me less than $1k in taxes.

I'm not saying that the parent was right and that taxing services is enough incentive to hire your own people, but the idea that if you can write something off on your taxes means it's "free" is simply silly...

Re:"taxes are write-off expenses"

[beelsebob]

When it comes to goods and service taxes, or VAT etc, almost always. That's the point of said value added taxes - you pay tax only on the value you add, so any costs are 100% deductible against any gains.

Re:"taxes are write-off expenses"

[Your.Master]

You're thinking of income tax deductions. Value-added taxes aren't the same thing at all, and percentages don't enter into it.

If you have a value-added tax of, say, 10%, the total money collected by the government on the sale of a final good is 10% of the final good's value. And ultimately the person who pays that money is the end consumer.

How do you figure out what a final good is? In a value added tax, the answer is you charge the tax on *every* sale, but when it comes time to give the taxes to the government, you pay the difference between the tax you collected on your Widget, and the tax you paid on the various goods and services devoted to making that widget.

So company A sells a GrappleGrommet for $50 before tax (for the sake of argument, it was made from nothing of substance), to company B, who tools it up and resells it to the end user for $100 before tax as a Widget. GST is 10%.

Company A charges $55: $50 plus $5 GST. The $5 GST is handed to the government, and they keep the $50 that was the price before taxes. So in a sense, they didn't really pay any tax at all, Company B did.

Company B charges $110: $100 plus $10 GST. They only have to remit $5 GST to the government, because they deduct the $5 they already paid to company A. So having paid $55 to Company A, and $5 to the government, that's $60 out, and $110 in, for a net profit of $50. That's exactly the same amount as if there was no 10% tax in this scenario*, so in a sense they didn't really pay any tax at all, the customer did.

End-user pays $110, and they have a Widget representing $100 of value aside from taxes, which they consume and never sell. They were the one who truly "paid" the $10 GST, it just happened that all of it flowed through Company B to get there, and half of it also flowed through Company A.

The Government has received $10 total, which is, unsurprisingly, 10% of the final good's value.

There are other sales taxes on final sales that try to define the final sale by defining what is and is not a retailer and wholesaler etc., and maybe that's what you're used to. Value added taxes are actually a rather elegant solution in theory, but they can generate a lot of paperwork in order to match the taxes you paid to the taxes you collected.

Or you might be imagining that sales taxes go to non-final sales, which is really uncommon because that leads to multiple taxation and discourages specialization and componentization in businesses.

* I'm ignoring the fact that taxes can affect setting prices for the sake of exposition.