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Capital Goods Orders Aren't Falling
In the realm of capital investment, tax effects will be less influential upon investment decisions than a company's expectations regarding the pre-tax value of the expected future benefits as well as that company's cost of capital.
Strong tax-based incentives already exist for capital investment. Among them are (1) accelerated depreciation of the capital investment for tax purposes [such as MACRS} and (2) the "tax shield" for the bond component of a company's weighted average cost of capital [which is the tax deductability of bond interest].
Furthermore, the time value of money, makes those early years of an investment (when MACRS depreciation is in effect) more influential in the investment decision than the later years.
To clarify, I am NOT saying that the corporate tax rate has zero effect. What I am saying, though, is that OTHER factors have a much stronger influence upon a company's decision to invest in capital.
Jun 24 01:34 PM
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How Should We Improve Seeking Alpha's Comment Rating System?
I have read several excellent comments / ideas in this discussion. Among those that have "resonated" well with me are the following:
1) Having separate ratings for (a) article quality and (b) one's personal agreement / disagreement with the conclusions. (as was described by Shaw and Lounsbury)
2) As was stated by Ergo, I, too, have learned much from some of the comments in various articles.
3) In support of Mikebrah's comment, the ratings from the well-respected commentors and contributors should, perhaps, have more weight.
4) I am intrigued by "31October"s weighted average solution. It appeals to me.
5) This leads me to an idea: I would be very interested in how Geoff Considine might approach the rating question. I hope the staff will seek his input / ideas.
Even though I have been reading this website for many months, this is my first comment on this website. Since, I don't consider myself an "expert" on the various topics covered, I merely read and try to learn. (Incidentally, my favorite contributors are Richard Shaw and Geoff Considine.)
May 13 07:53 PM
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