26 August 2008

response to taxation Q

Ideally that is the point of a tax break on higher incomes; to create injections of business expansion or investment (so the government doesn't have to). The question has been whether or not it has with the current Bush tax cuts (both sets of them, one was marginally useful, the other not so much). A more ideal status would be to tax only profit of a business enterprise (and not inputs like capital expansion). In which case, if the taxes are "raised", you'd not have to pay them (as much) by doing what you'd do anyway: try to grow your business. The larger number of employees or consumers would then pay the tax for you.

Or you could do what large corporations with government monopolies did for decades and waste money by buying golf courses, not using efficiency wages/employee incentives, etc and likewise escape paying taxes.

In any case, if you're running a business for long term growth, it doesn't really matter what the tax rates are now (because they'll probably change several times), it matters what your rate of costs are. I'd be more worried about inflation (depending on what sort of business you run) than taxes. You can always just find a better accountant or buy a politician through a lobbyist group to get around the taxes.

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