Hypothetically, what would happen if the US government capped every business's profits at say, 50%? How would that affect our economy? What would the scenario look like, economically?
by 
Phillis - Zacks little sister
ANSWERS: 11
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welcome to the great depression part 2!!!!!!!!!!!!!!
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Assuming your proposal is to have a 100% tax on all corporate profits that exceed 50% of something (you don't specify), it would probably not look that different from our current system. Corporations are very clever at finding ways to reduce their tax burden, which I imagine they would continue to do under the system. http://www.boston.com/business/globe/articles/2004/04/11/most_us_firms_paid_no_income_taxes_in_90s/
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Seems to me that would be kind of like casterating themselves, what with the tax problems this would cause...loss of revenue and all. Beyond that...I haven't really put much thought into it.
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Smart businesses would split up into many, many little businesses - all with the same owners, board of directors, and such. It happened when the Bell Telephone company was found to be a monopoly.
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What precisely do you mean by "profit"? Net revenue? Earnings after interest and taxes? That last one would beg the question I suppose. No business steals my earnings every payday. I do not have to buy fuel. I can ride a bicycle. I can save on basic foodstuffs by shopping farm co ops, or eating from basic grains and dried beans. I can turn down the AC or heat and minimize utilities. I can stretch my clothing dollar buying secondhand and put off retail purchases. The government, however, steals 50% of my earnings before I even see a dime, every payday. I cannot choose not to pay. Unlike the tax cheating Obama appointees, I would go to prison. The government is the thief, not any business.
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Rare things with a high mark-up would no longer be sold as there would be no profit to be had.
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First of all a company in such a sitch would choose an accounting system to minimize profits. Assuming that to be insufficient it would reduce productivity-reduce staff-or not hire the additional workers that would o/w be needed. The product-clearly needed or desired by consumers-would not be available. Thus it would hurt & increase the inefficiency of the economy.
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after the costs of business, i can't imagine one business that actually runs profits of 50%. sure, diamond retailers have 300% mark-ups, but, after sales, clerks, security, rent, advertising, it doesn't approach 50% profit. i think 50% is a moot point. now, if the government capped profits of health insurance or health care providers at, say 20%, we'd see them compartmentalize so that they'd be able to keep their 25% profits. little would change.
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Rather than donate to the cause, even if it only applied to businesses over a certain amount, I thing the greed is so rampant that they would have their workers stop working and deny benefits during that time. I really tried to look at this more positively. I think it is as worth a try as any of the measures that have been tried in the last 20 years.+5
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I would be curious as to how many and which businesses run at a 50 percent margin. Very few I think. So I guess very few business would be affected. Maybe the government should mandate 50 percent profit and pay businesses the difference out of our tax dollars.
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+4 great question. The proles would MAYBE overtake the Inner Party (if ever they could start brainstorming?)
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