How does “reinvesting” back into the company help corporations save money on taxes?
In: Economics
Companies are taxed based on profits — revenue minus expenses. If I spend more, my profits go down so my taxes go down. Hopefully the money spent is an investment in something that’ll grow business down the road.
Corporations generally only pay corporate taxes on *profits*.
If a corp spends money on itself (buying assets, or just general capital expenditure in order to grow the business) those are not counted as profits, so companies do not pay taxes on them.
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