What does pay mean on a statement?

Would a business purposefully raise expenses so they have to pay less tax?

• I made a statement on a website saying the obvious - a business needs to lower expenses so profit is higher. However one person angrily messaged me saying she was a 4th year economics student and I was painfully wrong. She said a business should try to make expenses as high as possible, so net profit is a lot lower so they don't have to pay as much tax. I can see where she's coming from, the more you make, the less tax you pay. However, increasing expenses in order to make net profit lower? I've never heard of such a ridiculous thing. If you're a worker, and you make over $100,000, would you change jobs to a lower paying job because you're in a higher tax bracket? Maybe I'm just being ignorant and everyone here is laughing at me, but I've never heard of a business evading having to pay tax by increasing expenses on purpose just to make net profit lower. It may be from country to country basis, because if that was happening in Australia I think the government would be onto them... So yes, explain to me why a business would lower their net profit, and decrease owner's equity and possible capital to go into the business by increasing expenses to lower their net profit. I mean, surely the profit lost would be higher than the tax they'd have to pay, right? I don't think any country would tax their businesses so high so that the economy would suffer that much.

• Answer:

  She is incorrect. We don't have 100% tax bracket so taxpayers (both individuals and corporations) still come out ahead by increasing revenue and decreasing expenses. A tax client of mine once said to my that he wanted to pay the most taxes of anyone. "Do you know why?" he inquired. "Because it means you made the most money." I responded. "Exactly" No business (or individual) purposely increases expenses just to save on taxes. That is just stupid. I am not laughing at you but I am laughing at her. She proved that she knows nothing about business and how the real world works (typical economist). I am in the US but this would apply everywhere.