2 ms·
Well, you have to remember that taxes affect the expected outcome, as they reduce the upside of a positive outcome. Taxes do not mitigate the losses from a fail
by nickff 6y ago
Well, you have to remember that taxes affect the expected outcome, as they reduce the upside of a positive outcome. Taxes do not mitigate the losses from a failure, and most people do not have the resources to sustain failures (without severe negative consequences).
By reducing the expected outcome of a new venture, taxes discourage marginal entrepreneurs from starting businesses.
- jakelazaroff 6y agoOP's point is that corporate taxes don't work like that. As a business owner, you can avoid taxes by reinvesting in your business, capturing the positive outcome by way of valuation. If corporate taxes are lower, owners are incentivized to extract profits rather than reinvesting them.
- nickff 6y agoWell, OP is very bad at finance, and his points only apply to certain investments. For instance, most jurisdictions treat capital equipment as retained earnings (it gets more complicated when you get to devaluation and re-sale, but those only matter if the business survives).