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IANAA, but my understanding is that corporate profits are taxed, but there are many deductions available for business expenses. If you tax profits more, busines
by _huayra_ 3y ago
IANAA, but my understanding is that corporate profits are taxed, but there are many deductions available for business expenses. If you tax profits more, businesses would be less inclined to take profits, and more inclined to reinvest that in additional steps to expand the business (e.g. buying more equipment). These expenses have a multiplier expense, increasing money velocity and "pushing the gas pedal" on the economy.
- parineum 3y agoAh, I guess that makes sense but I still don't see how taking more deductions (spending) could lead to the goal of saving unless that spending was and investment like real estate.
- _huayra_ 3y agoWhoops I think I was lost in the context. I was mostly remarking on this dynamic in terms of businesses, not individuals. The dynamic doesn't work exactly for individuals (because individuals don't have "profit"), but tax incentives still rule the day in the individual side too (e.g. 1031 exchanges, 401ks, mortgage interest deduction, cap gains deductions on real estate, etc).