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What is a "tax write off"?
(lemmy.world)
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this post was submitted on 11 Feb 2024
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Corporate tax rate is 21%, so by subtracting $80 million from their income they get a $16.8 million discount.
That's... Not very much in this context. Makes me think that WB is penny pinching, which doesn't make too much sense. Wouldn't it be better to release the movie and profit from it than just having a 21% discount?
I don't know, just thinking loud here...
I suspect the movie would likely make a profit, bit not enough of one. They'd rather take the loss to "play it safe" and not scare away institutional investors. Or something stupid like that.
Think like a gambler. What are the odds of winning a higher sum if you play the game, vs taking the guaranteed tax savings? It'll vary case-to-case, and is ultimately a subjective decision. That said, they have a very large dataset of historical examples to draw from to inform their decisions on the likely outcomes. They don't need to make wild guesses like a bunch of amateurs on the internet would.
Also, sometimes you want your money today, and not five years down the road. Corporate structure itself does not necessarily place a strong incentive on long-term success, since ownership of shares of corporations can be so fluid and rapidly changing. If you have no strong attachment to owning part of a company in five years, you have no real reason to care about it's long term health, and you'll naturally start to prefer $5 today over $10 tomorrow.
This is the main reason corporations end up as such a pain in the ass, and require oversight from multiple directions, from consumers in the market on up to regulatory agencies that are supposed to be independent of them. Their structures do not naturally incentivize much long-term thinking beyond what might be necessary.