Income Taxes

[ekaneti]

Why do I pay income taxes when my airline is unprofitable  on an annual basis. I know that Ill get the money back next year, but I cant expand if what little money I make is taken in income taxes as soon as the game begins.

[bleedfax18]

I would think that income taxes are based on income (hence they're called like that). And you certainly do have an income when you sell seats on your planes.

[Jps]

The taxes are paid monthly to avoid a huge one- time cost once a year, which airlines might not be able to pay. The current tax system is designed to help the players stay ahead of their costs.

While the taxes will take some of your profit away for now, you will get them all back in one slump (provided that your overall profit of the year is less than you have paid taxes for), which may allow even better planning of future.
Also, if (small) taxes are keeping you from expanding much, it might be because your airline is not profitable enough to begin with...

[Dave4468]

I find the taxes can be irritating in the first few months of a game where we all operate close to edge for a while but once an airline gets going they don't really hurt.

[LemonButt]

Why do I pay income taxes when my airline is unprofitable  on an annual basis. I know that Ill get the money back next year, but I cant expand if what little money I make is taken in income taxes as soon as the game begins.

I would think that income taxes are based on income (hence they're called like that). And you certainly do have an income when you sell seats on your planes.

Selling seats (revenue) has nothing to do with income (profit).  Paying income taxes cannot make your airline go from being profitable to unprofitable.  You only pay tax on profits (total revenues - total costs).  If your profit is not positive, there are no taxes due.  If it is positive, it's a percentage of your profits, which means if you are paying 30% and you made $1 million profit, your tax is $300k and you're still left with a net profit of $700k.

If you are leveraged to the hilt with loans--you will feel pain due to taxes as loan credits/debits are not considered income/costs.  This means if you are making a profit of $1 million and you owe $1 million in the same time period for loan repayment, you're going to be taxed $300k and still owe the $1 million for a net loss of $300k.  Moral of the lesson is 10 year loans are the only loans you should be taking out to avoid accidentally bankrupting yourself

[ekaneti]

I would think that income taxes are based on income (hence they're called like that). And you certainly do have an income when you sell seats on your planes.

That's the definition of revenue not income.

[ekaneti]

Also, if (small) taxes are keeping you from expanding much, it might be because your airline is not profitable enough to begin with...

Well, that true.  I have a fleet of TU-134As