As an individual, if you spend more in a year than you earn, are you still required to pay taxes? Of course.
Whether or not a corporation is profitable is not relevant. A corporation that is consistently loss making may fold slightly more quickly - that sounds like a good thing.
But a corporation that has any control over its prices yet has low margins shouldn't be troubled by this - other competitors are likely in the same boat.
Taxing revenue instead of profit encourages high-margin businesses, which is fine by me; and it doesn't subsidize loss making - also, fine by me.
Shell companies aren't hugely problematic, but they are problematic.
Problem #1: every extra corporation is problematic, because of the built in risk-collectivization - i.e. excess profit is privatized, but excess risk is protected by bankruptcy. Having networks of cooperating corporations can make it easier to push losses onto others, which incentivizes worse than zero-sum economic behavior.
Problem #2: complexity. Complexity is bad; it simply introduces friction, and unforeseen consequences. Notably, stuff like the double irish with a dutch sandwich not only required various limitations in irish and dutch law, but also the ability to create arbitrary corporations. Each law taken by itself seems reasonable, but the interactions in combination with the complexity that shell companies enable allows for undesirable consequences.
Problem #3: Lack of transparency. It's easier to hide fraud or simple unwanted behavior when things get complicated, or even when things involve multiple jurisdictions. Economic actors - i.e. us - don't behave randomly, we look for opportunities. And people will take opportunities that are to the detriment of society, whether entirely legal or not. The ability to see those problems is critical to being able to mitigate their consequences, or solve them outright.
So yes, I do think shell companies have an intrinsic cost. I'm not sure what your background is, but to pick a simile - it's kind of like the cost of lock-free multithreading - it may appear to work, but the chaos can hide bugs that are hard to find, and hard to pin down, and fixing one may introduce another. Having decent, comprehensible abstractions helps, but legal systems aren't easily engineered top-down like that; they're evolved in each jurisdiction separately, and piece by piece, with lots of input from the very bad actors that are abusing the loopholes. It's unlikely we'll find ideal "abstractions" in that world if they even exist; so keeping things as comprehensible and simple as possible is a boon.
Shell companies without actual economic value represent complexity and are thus bad.
Whether or not a corporation is profitable is not relevant. A corporation that is consistently loss making may fold slightly more quickly - that sounds like a good thing.
But a corporation that has any control over its prices yet has low margins shouldn't be troubled by this - other competitors are likely in the same boat.
Taxing revenue instead of profit encourages high-margin businesses, which is fine by me; and it doesn't subsidize loss making - also, fine by me.
Shell companies aren't hugely problematic, but they are problematic.
Problem #1: every extra corporation is problematic, because of the built in risk-collectivization - i.e. excess profit is privatized, but excess risk is protected by bankruptcy. Having networks of cooperating corporations can make it easier to push losses onto others, which incentivizes worse than zero-sum economic behavior.
Problem #2: complexity. Complexity is bad; it simply introduces friction, and unforeseen consequences. Notably, stuff like the double irish with a dutch sandwich not only required various limitations in irish and dutch law, but also the ability to create arbitrary corporations. Each law taken by itself seems reasonable, but the interactions in combination with the complexity that shell companies enable allows for undesirable consequences.
Problem #3: Lack of transparency. It's easier to hide fraud or simple unwanted behavior when things get complicated, or even when things involve multiple jurisdictions. Economic actors - i.e. us - don't behave randomly, we look for opportunities. And people will take opportunities that are to the detriment of society, whether entirely legal or not. The ability to see those problems is critical to being able to mitigate their consequences, or solve them outright.
So yes, I do think shell companies have an intrinsic cost. I'm not sure what your background is, but to pick a simile - it's kind of like the cost of lock-free multithreading - it may appear to work, but the chaos can hide bugs that are hard to find, and hard to pin down, and fixing one may introduce another. Having decent, comprehensible abstractions helps, but legal systems aren't easily engineered top-down like that; they're evolved in each jurisdiction separately, and piece by piece, with lots of input from the very bad actors that are abusing the loopholes. It's unlikely we'll find ideal "abstractions" in that world if they even exist; so keeping things as comprehensible and simple as possible is a boon.
Shell companies without actual economic value represent complexity and are thus bad.