(Answered) Which of the following is likely to reduce investment?Which of the following is likely to reduce…

➤ Why do higher corporate taxes and depreciation rules lower investment?
Higher corporate taxes reduce after-tax returns and cash flow, cutting internal funds for new projects. Tighter depreciation rules raise the effective cost of capital by delaying tax shields. Both effects reduce incentive to invest because they lower expected net income and lengthen payback periods for physical and intangible capital.