Is low Taxation the cause of the current economic Depression?

[originalthought]

It seems to me that investors choose their investments according to the risk vs. profit ratio.

Everyone wants low risk and high profits. Low taxation has created an investment environment that investors can obtain reasonably good profit with low risk.

The problem with this is that low risk investments are usually not the type that cause economic growth. They are usually investments in tried and true companies that have secured a market share in a fully developed market.

Higher taxation means lower profit which forces investors into higher risk investments - the type that develops new products and exploits new and expanding markets. These are the type of investments that cause economic growth.

So the result of low taxation is that while investors have the capital to invest, they do not invest in anything risky. Why would they?

If low taxation caused the economic depression, then countries with High Taxation should not have gone through the depression...

Was that the case?

 

[expat_panama]

---then countries with High Taxation should not have gone through the depression...

--and countries with 100% taxes (eg. Cuba and North Korea) should be world economic powerhouses.