[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.