- 16 Jun 2018 02:00
#14924911
By effecting the accumulated reserves, it may effect these things indirectly. Hypothetically companies in a good credit position can always raise investment capital. Employee remuneration is also not a function of company profits, except in the case of profit-sharing provisions. Like everything else, remuneration is about profit maximizing calculations. Companies will pay what they can. There is some competition among companies in the labor market with respect to pay and benefits, but the determinants of what is the 'industry standard' in terms of pay are related to this competition and not to the company's profitability in a normal situation. Then there is supply/demand for labor, which is the principal determinant.
One Degree wrote:I am not sure I am following you. Are you claiming the tax rate does not effect business decisions and does not require them to raise prices?
They just accept a lower after tax profit and do nothing different?
They don’t downsize, reduce capital investment, reduce employee benefits, etc.?
They sound more like saints than business people.
By effecting the accumulated reserves, it may effect these things indirectly. Hypothetically companies in a good credit position can always raise investment capital. Employee remuneration is also not a function of company profits, except in the case of profit-sharing provisions. Like everything else, remuneration is about profit maximizing calculations. Companies will pay what they can. There is some competition among companies in the labor market with respect to pay and benefits, but the determinants of what is the 'industry standard' in terms of pay are related to this competition and not to the company's profitability in a normal situation. Then there is supply/demand for labor, which is the principal determinant.