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> Money that you spend on buying software, hiring etc isn’t generally taxable anyway. A business is generally taxed on income, not revenue. But reducing my qua

> Money that you spend on buying software, hiring etc isn’t generally taxable anyway. A business is generally taxed on income, not revenue. But reducing my quarterly and annual tax liabilies allows me to spend more on these things because there is more cash for the business at the end of the day.

rsynnott 9y ago
This assumes that you need to take out a constant amount of after-tax profit, which may be the case for some types of small business. However, it would be possible, and perhaps more appropriate, to introduce some form of tax credit to deal with that; this would be far, far cheaper. It’s hard to overemphasise how expensive the proposed plans are. You’re looking at adding over a trillion to the deficit. Bush’s tax cuts are estimated to have cost about 1.5 trillion... for his entire term (plus a trillion or so make in Obama’s term when he was forced to extend most of them).
deleted 9y ago
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astrodust 9y ago
If you're growing your company based on cash-flow you're slowly strangling your company to death. If it's profitable, leverage it. You don't have to go nuts and borrow millions, but if you can generate a better return on debt than the interest rate, which shouldn't be too hard given today's interest rates, you can build your business faster. If you're aggressively expanding your company you'll be channelling any profits back into it, so you're going to barely break-even from a tax perspective and your tax payments will be negligible. If you're doing this and not seeing the right tax benefits already, get a better accountant.
- nodesocket 9y ago
  I've seen this "get a better accountant" argument posted on HN quite a bit. But, aren't liberals outraged about the tax loopholes for the "weathly"? We shouldn't need the loopholes, just reduce the rates.
  - rsynnott 9y ago
    No, not in this case. It’s very deliberate that companies pay tax on profit, not revenue; it’s not really a loophole. This gives the company an incentive to put the money into growth rather than taking profit and paying dividends, especially when it’s smallish. You could theoretically have a system where companies pay tax on revenue, but realistically it’d cause massive upheaval and greatly disincentivise starting new businesses and growing current ones.
  - enraged_camel 9y ago
    No. Hiring competent accountants to help you run your company more efficiently is good. What people have an issue with is when the ultra-rich hire accountants who specialize in tax avoidance.
  - astrodust 9y ago
    You should pay your fair share of tax. You shouldn't pay way more tax than you need to just because you're doing your own accounting badly or because your accountant is a moron. A good accountant will do a lot more than deal with taxes. They'll point out how you can better finance your operation, how you can capitalize on assets you have to save on interest costs. Managing cash-flow, expenses and accounts receivable is a very important job. If nobody's paying attention to this you can run your company aground without even knowing it. So what I mean is if your accountant can't handle basic tax code, your accountant needs to be fired and replaced because you're probably getting killed in other departments as well.

rsynnott 9y ago

This assumes that you need to take out a constant amount of after-tax profit, which may be the case for some types of small business. However, it would be possible, and perhaps more appropriate, to introduce some form of tax credit to deal with that; this would be far, far cheaper. It’s hard to overemphasise how expensive the proposed plans are. You’re looking at adding over a trillion to the deficit. Bush’s tax cuts are estimated to have cost about 1.5 trillion... for his entire term (plus a trillion or so make in Obama’s term when he was forced to extend most of them).

deleted 9y ago

[deleted]

astrodust 9y ago

If you're growing your company based on cash-flow you're slowly strangling your company to death. If it's profitable, leverage it. You don't have to go nuts and borrow millions, but if you can generate a better return on debt than the interest rate, which shouldn't be too hard given today's interest rates, you can build your business faster. If you're aggressively expanding your company you'll be channelling any profits back into it, so you're going to barely break-even from a tax perspective and your tax payments will be negligible. If you're doing this and not seeing the right tax benefits already, get a better accountant.

nodesocket 9y ago
I've seen this "get a better accountant" argument posted on HN quite a bit. But, aren't liberals outraged about the tax loopholes for the "weathly"? We shouldn't need the loopholes, just reduce the rates.
- rsynnott 9y ago
  No, not in this case. It’s very deliberate that companies pay tax on profit, not revenue; it’s not really a loophole. This gives the company an incentive to put the money into growth rather than taking profit and paying dividends, especially when it’s smallish. You could theoretically have a system where companies pay tax on revenue, but realistically it’d cause massive upheaval and greatly disincentivise starting new businesses and growing current ones.
- enraged_camel 9y ago
  No. Hiring competent accountants to help you run your company more efficiently is good. What people have an issue with is when the ultra-rich hire accountants who specialize in tax avoidance.
- astrodust 9y ago
  You should pay your fair share of tax. You shouldn't pay way more tax than you need to just because you're doing your own accounting badly or because your accountant is a moron. A good accountant will do a lot more than deal with taxes. They'll point out how you can better finance your operation, how you can capitalize on assets you have to save on interest costs. Managing cash-flow, expenses and accounts receivable is a very important job. If nobody's paying attention to this you can run your company aground without even knowing it. So what I mean is if your accountant can't handle basic tax code, your accountant needs to be fired and replaced because you're probably getting killed in other departments as well.