Well that is certainly true if you are talking about an independent operation. However in most corporations and multi-level taxation it is a case one division is making windfall profits and another losing money to offset the higher tax rate involved. They can not do that forever, but windfall profits are usually short term.
GM can lose money running Pontiac for instance if Chevy, Buick, Cadillac, and
Oldsmobile are doing fine. If their Military division has a very high profit 3
year contract right then it can even help offset the higher taxes upon the
income from that contract.
Even if one of us openned a restaurant or something we would expect to lose
money the first couple of years and that would offset some of the future taxes
(income averaging). No you can not lose money indefinately but you can actually
profit from temporary losses if you have other income to offset it.
graywolf
http://www.graywolfphoto.com
"Idiot Proof" <==> "Expert Proof"
-----------------------------------
John Forbes wrote:
People talk about "tax breaks" and "tax write-offs" as though this is
some sort of magical manna from heaven. Modern alchemy. But again
it's rubbish. So-called tax breaks are no use at all if you don't have
profits to offset them against.
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