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But most businesses need those profits to expand and innovate. If they require a certain level of profits to accomplish those goals then the recourse is to rais
by talmand 13y ago
But most businesses need those profits to expand and innovate. If they require a certain level of profits to accomplish those goals then the recourse is to raise their prices for the next round of profits in the hopes being to accomplish those goals.
Now, if we're talking about a company that just puts all those profits in the pockets of their upper management then I suppose who cares. But the smaller companies, those that survive on razor thin margins and need every penny they can get to keep going, those are the companies that have to constantly adjust their prices to deal with tax liabilities.
- Nursie 13y agoInvestment in staff, research, equipment etc. tends to come out before profit calculations. So no.
- talmand 13y agoIf they don't use profits as part of their expansion plans, then how do they expand year-over-year without spending more money than the year before? If they spend more money than the year before then where did the extra money come from if not from the previous year's profits?
- Nursie 13y agoMake money, spend on expansion, staff, research etc. before end of tax year, it's not taxable profit, unless I've seriously missed something. --edit-- this is exactly how amazon operated for a long time. They paid next to no tax because they reinvested everything. Tax on profit does not tax business expansion, it taxes retained profit at the end of the tax period.