Total investment last year is estimated to have been twice the companies' pre-tax profits.
So, by encouraging investment in those activities with the highest pre-tax returns, the return on investment will rise—that is, our wealth creation performance will improve.
In 1984, it made pre-tax profits of £26 million, in 1985 the figure was £81 million and in 1986 it made record profits of £120 million.
First, there is the difference in the compounded pre-tax investment returns on employee contributions to the 401(k) plan and the returns in the taxable account.
Moreover, assume that there exist some unproductive persons in society (that is, persons with a talent that is so low that they for any effort level have no pre-tax income).
The pre-tax price differential on some models exceeds 80 per cent and even in the most open and competitive of sectors, such as consumer electronics, price distortions persist.
Suppose that they both initially exercise 10 units of effort, which implies that the pre-tax income of the talented is 100 and the pre-tax income of the untalented is 50.
The pre-tax solution can be obtained by setting t = 0 in the above expressions.
