Reply #119: You're making no sense

[Yo_Mama]

The question of whether companies are raising their cash-on-hand for a good reason is quite unrelated to how we should be taxing them, isn't it? What are you thinking?

The huge tax giveaways to companies were largely bad investments, except for the expensing portion, which does reduce profits and does reduce income and therefore taxes, but only reduces company taxes if they invest money now and therefore produces more revenue in other parts of the economy.

But a big piece of those tax giveaways came in the form of the expanded loss carryback provision, which was bad public policy which favored some of the bad economic actors.

When companies build cash, they do it from money they make. As I pointed out before, companies pay taxes on their profits, not on the money they have on hand - so companies building cash or liquidity doesn't logically or necessarily have anything to do with the taxes they pay.

You're barking up the wrong tree. The question the original poster asked was why companies would do this. I showed you why they would need to do this, and why it was good for them.

Changing the rate of taxes on companies doesn't change whether they are plowing a bunch of money back into investments. Most companies aren't right now, but that is because we still have overcapacity and slack demand on the whole. If they started building factories they would lose money, and if you are a business owner you should understand that. Raising the marginal rate of taxation on companies does reduce investment overall, because it reduces the payoff on investments, so riskier investments are less likely to be made. But rates of taxation do not change whether companies, in aggregate, need to build cash.

Politicians made a bad series of public policy decisions, and you are right that mostly those public policy decisions helped large corporations who basically paid off politicians. Just because I am writing the truth here doesn't mean that I support those bad public policy decisions.