[AnthonyMouse]

> No, you benefited from sitting on that productive asset. Getting a free stock option is still a meaningful benefit even if you never case it in.

If you buy a ton of steel with no intention of ever doing anything other than selling it for the same value as you paid for it in a while, you haven't benefited from it and have in fact cost yourself value in opportunity cost because other investments return more than that.

If you get a free stock option and then there is a 30% chance it turns out to be worth something, the government benefits from the same 30% chance that you'll get money from it which will then be taxable income.

> The money you got from that loan is an asset you’re not investing in that hypothetical.

Loan principal doesn't create net assets. You get new money and new debt at the same time and they cancel.

> As to “spend all of your assets and have nothing left” yes I mentioned going broke was an option repeating what I already said isn’t an argument here.

I took your implication to be that it was something bad and so nobody would purposely do that. But people purposely do it all the time. They have some money and then choose to spend all of it instead of investing any of it.

> Ignoring the possibility to just spend more today and also spend the same amount in 10 years is disingenuous here.

Even that scenario still requires the amount of investment to increase. What you'd be doing is spending some but not all of the taxes deferred on the amount you initially invested, e.g. instead of spending $33 and investing $33 you invest $37 and spend $42, and you had ~$12 extra because of the taxes deferred on the $37. But now you're investing $37 instead of $33, and that's the minimum you could invest to get the same after-tax amount in ten years because now you haven't paid the taxes yet.

Doing that is also more disfavored because you get better returns from diverting more money to investment but the benefits of immediate spending haven't increased.

[Retric]

> If you buy a ton of steel with no intention of ever doing anything other than selling it for the same value as you paid for it in a while, you haven't benefited from it and have in fact cost yourself value in opportunity cost because other investments return more than that.

Your argument was buying a productive asset useful for the business. My argument is that’s a prediction which may be false, you suggesting no they are just randomly buying steel is losing your argument upfront.

> Loan principal doesn't create net assets. You get new money and new debt at the same time and they cancel.

Leverage is based on loans generating assets that can be invested. It’s clear your not actually arguing in good faith.

[AnthonyMouse]

> Your argument was buying a productive asset useful for the business. My argument is that’s a prediction which may be false, you suggesting no they are just randomly buying steel is losing your argument upfront.

You implied that they could just buy something that isn't a productive investment and then claim it as a business expense to defer the taxes. Which they could, but why would they when they could make more money by purchasing a real productive investment? Whereas if it is a real productive investment then the government benefits from the increase in the tax base.

The relevant question isn't the yield they're getting -- they already have the incentive to maximize that on their own -- it's whether they want to invest it or spend it to begin with.

> Leverage is based on loans generating assets that can be invested.

Loans are often used when you can get a lower interest rate to borrow money than the expected returns from an investment opportunity. The yield there isn't the loan principal -- that all has to be paid back -- it's the difference between the rate of return and the interest on the loan.

The difference is relevant exactly because of what deferring taxes does to that math. If your effective compounding rate is 10% rather than 6.7% and the loans available to you are at 8% interest (or any other number between 6.7 and 10), the difference determines whether it makes sense for you to make the investment.

[Retric]

> it's whether they want to invest it or spend it to begin with.

Again deferring that choice isn’t making an investment. A jeweler buying 1kg of gold doesn’t need to be making a productive investment to claim they are.

Thus creating an incentive to tie up productive assets for tax reasons rather than maximizing total efficiency.

> Loans are often used

We can get into all kinds of game people pay with loans and the tax code but that’s irrelevant here.

My initial point is someone can’t invest all their assets as you previously claimed people could via loans which is a silly tangent because that cash is investable. Which means both investing and spending money occurs when anyone is investing and thus deferred capital gains are simply a handout. Zero net gain for society lots of gains for the people getting the handout.