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This is because some of the successful businesses have learnt to build on their existing success. This is an evolution of previous generation of successful comp
by hcnews 9y ago
This is because some of the successful businesses have learnt to build on their existing success. This is an evolution of previous generation of successful companies which mainly relied on working on one main idea. Now its become easier to built up on the infrastructure provided by previous generation's success.
Or atleast that's what my current thought is regarding this topic.
- opportune 9y agoIt's really shuffling money from earnings into expanding an existing company is tax-advantaged. Let's say I own 100% of ACME, which made a $100 profit last year. Rather than receive that money as dividends and then reinvest it, which causes the money to be taxed now and for it to possibly be taxed at a higher rate than capital gains, I reinvest that money into ACME. This has the effect of deferring taxation on that profit and allows it to be taxed at the same rate as capital gains at a later date