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Politics : Formerly About Advanced Micro Devices
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To: brushwud who wrote (100045)3/26/2000 4:46:00 PM
From: Bill Jackson  Read Replies (1) of 1572377
 
brushwud, I think the depreciation is entirely a tax driven strategy, same as with sinking funds to buy new equipment....another tax driven strategy.
With no taxes plants would be bought and paid for from current cash flow and borrowings and the balance left over for dividends or new stuff. No taxes...no need for depreciation which is the financial maneuver that allows the government to grab taxes on the capital value of the asset purchase from earned money. Capitalists would never ever pay yaxes if they could deduct 100% of new plant every year....they would spend every penny on new plant every years and keep building the asset base and never paying taxes on a thing. This would lead to huge ebbs and flows in taxes as the economy boomed/busted. In bust years the earnings drought and losses would mean no taxes and in boom years capital expenditures would also ensure zero taxes.

Bill
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