This is the stupidest argument I’ve ever read. That money is taxed regardles of whether you pay yourself a salary. On top of that, a rational business owner will judge a business venture on the net present value of expected future cash flows. Those future cash flows are always lower when taxes are higher.
Moreover, basically what he’s saying is, “If taxes are higher, I’m not going to pay myself out as much from the business. Therefore, it will make my business more valuable.” The problem with this is that the real thinking is, “If taxes are higher, I can’t pay myself out as much from the business. Therefore, the net present value of cash flows to me is less, and as such it is less rewarding to expand my business.”
The fallacy of this argument hits home when you do an argumentum ad absurdum by assuming 100% tax rates.
Zactly!
If I have more money by way of lower taxes, I’m reinvesting that into the company and/or hiring more people to more work.
The bigger your army the bigger the wars you can fight.