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Which is why you lower the corporate tax rate. This gives companies more leverage to use the investment money they get. They can purchase assets, fund R&D, buy
by nemo44x 9y ago
Which is why you lower the corporate tax rate. This gives companies more leverage to use the investment money they get. They can purchase assets, fund R&D, buy smaller promising companies, and hire more labor.
Right now they will use any savings to buy back stock - that's the rational thing to do and makes the investors happy. But if we tax investment income progressively then buying back stock is great for the US Treasury - someone has to sell that stock to the company buying it back and it's taxed more!
It becomes more reasonable to reinvest that money from a corporate perspective. This is what the investors will want done.
- WalterBright 9y ago> Right now they will use any savings to buy back stock It seems you imagine that isn't actual investment. Of course it is, just like anyone else buying stock is investing the money.
- mdemare 9y agoNo, actually this is not investment. It’s returning money to shareholders who may decide to invest, or they may not.
- WalterBright 9y agoThe money gets spent or invested. Not hoarded. Invested money gets spent as well. After all, companies do not sell shares unless they intend to spend the proceeds. It's the whole point.