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Those future earnings from present investments, when finally realized, will be taxed unless the corporate income tax is eliminated.
by atdrummond 5y ago
Those future earnings from present investments, when finally realized, will be taxed unless the corporate income tax is eliminated.
- nostrademons 5y agoBut someone who sells a security backed by the cash flows from those future investments is receiving cash before the cash flows have materialized (or been taxed). There's also no guarantee that they will ever be taxed. Take, for example, a startup that continually reinvests all profits in additional R&D, sales, and marketing, gets increasing large revenue streams, but then sells the whole company to a bigger one before ever realizing a GAAP profit. Capital gains tax is Uncle Sam's way of taking a cut on all the intermediate owners who benefit from the business reinvestment but know how to turn profits into larger market share.