Bill Gates: Taxing the rich is fine, but '........' politicians like AOC are missing the point by

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52. Equipment, let's discuss that.

If a business is doubling in growth, the money it saves from depreciating existing income is not enough to cover growth. Also structures that hold that equipment contribute nothing to reserve funds. Say a machine costs $1 million installed and operational. Standard depreciation tables allow a piece of that $1 million to be depreciated, say $250,000. But if the business doubled, the owner would need to come up with $1 million and find space for the new machine + the owner would need to buy raw materials that allow that new machine to help double output. Where is he or she going to get the $750,000+ and pay taxes on the gross margin above 50%, selling pencils on a street corner? The gross margin above 50% allows the owner some room to grow the business, fast growing businesses need a gross margin that is as high as possible, and they can get away with that because the growth means high demand for their output. A more mature business that is not investing in new equipment and materials can get a gross margin just above 50% and survive, a young fast growing business can't.

What should happen is that if businesses claim new equipment and resources investments, they should face a physical audit that confirm that they actually reinvested income after taxes and did not pocket it.