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HEY, NEW YORK TIMES: 'REVENUE' ISN'T THE SAME AS 'INCOME'

August 15, 2008

The GAO study on corporation taxes is turning out to be a rich source of unintended humor. The latest is this correction to a New York Times article (via Power LIne):

An article on Wednesday about a Government Accountability Office study reporting on the percentage of corporations that paid no federal income taxes from 1998 through 2005 gave an incorrect figure for the estimated tax liability of the 1.3 million companies covered by the study. It is not $875 billion. The correct amount cannot be calculated because it would be based on the companies paying the standard rate of 35 percent on their net income, a figure that is not available. (The incorrect figure of $875 billion was based on the companies paying the standard rate on their $2.5 trillion in gross sales.)

For the benefit of newspaper writers everywhere, we will explain the Times' error.

"Revenue" is what you sell something for. For example, when the Des Moines Register sells a paper for 50 cents 75 cents per copy, that increases their "revenue" by 75 cents.

"Expenses" are the costs of a business. For a newspaper, these include the cost of the newsprint and the cost of severance payments to all of the reporters who are being laid off because people aren't taking the newspaper anymore (UPDATE, 8/19/08: for example, this).

"Income" is what is left of the "revenue" after all of the "expenses" are paid. For the newspaper industry, this is largely a historical concept. When expenses are bigger than revenue, that is a "loss." That's a bad thing.

In short,

Revenue - Expenses = Income.

"Income" taxes are paid on the "income," not the "revenue."

You know, this level of business knowledge could explain a lot about why the newspaper business is struggling.

Related: MATH IS HARD

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