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Post by graybeard on May 9, 2011 15:29:26 GMT -6
If a co. makes $1 Million net profit before taxes, and has a zero tax rate, then the incentive is to keep the profit and not re-invest in the business. Every dollar invested back into the co. is a dollar out of profits. If a co. makes $1 Million net profit before taxes, and pays 90% US income tax like during Eisenhower, then deductible re-investment, research and product development will cost the co. only ten cents on the dollar. . A co. will then invest rather than pay 90% tax, assuring company growth. ExonMob is reaping profits while shrinking, instead of investing in exploration and development. You can find articles on the subject at www.Bloomberg.com among other places. Short term profits are great for management, but bad long term for the co. and for the nation. GB
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Post by unlawflcombatnt on May 9, 2011 22:53:03 GMT -6
I've been saying exactly the same thing for several years. If the Corporation invests and/or pays out all of its profits in investment or salaries, it incurs $0 in Corporate income tax liability.
Cutting Corporate taxes encourages them NOT to re-invest the money. For the dollars reinvested (or used to pay production worker salaries), Corporations pay no income tax. In not re-invested, they pay the normal rate.
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