Because corporate profit tax laws do not define profit to be the same as economic profit,many economists believe that the corporate profit tax ______ investment.

Question

Quizplus · Accepted Answer

Many economists believe that the corporate profit tax discourages investment because it taxes not only actual profits but also includes the cost of capital, which reduces the returns to investment. This reduces the incentive for companies to invest in new projects or expand their operations, as the taxes on their profits will be higher. Therefore, it can be inferred that the corporate profit tax discourages investment.

Because Corporate Profit Tax Laws Do Not Define Profit to Be