Quote:
Originally Posted by spence
Your wit is dizzying.
In simple terms, if you were to make a 10m capital investment that hoped to net 1.5m in profit, the proposed difference in marginal corporate taxes would be 2.25% of the total investment. That's not usually going to big enough to sway an investment decision given much larger factors. One reason is that the capital investment is risk adjusted using a hurdle rate which could be 19%. What kind of a return would you get if you just invested that 10m into bonds? This is usually subtracted and make the tax savings even less significant.
Note that the 35% rate is misleading. The effective average rate is closer to 20%...buy maintaining deductions that's even going to go way down which is why the deficit will explode.
The bottom line is that investment ideas are either good or bad. A good idea isn't going to be shelved because of a few percentage points...most companies either have the cash or can leverage given the low interest rates.
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If the true effective rate is 20%, then cutting the published rate to 20 costs us nothing, and thus the liberals can’t say it’s a gimmick to help the rich. Can’t have it both ways, sorry.
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