Submitted by angrybird7677 t3_zzswm0 in explainlikeimfive
IAmJohnny5ive t1_j2eurud wrote
Reply to comment by Smashville66 in ELI5: Why do companies require annual budget be spent 100%? by angrybird7677
It seems a bit crazy but part of the measure of success of a capitalist economy is how quickly money cycles around the economy. You might be spending on useless promo items but that money is paying your supplier and their employees and some of that flows back into government coffers straight away in payroll and sales taxes and more later on in company tax. The rest of that spins out into the economy as those employees spend on groceries and cars and xmas presents.
Think of it like how taps work - you have to keep a high level pressure in the water mains to ensure that when you turn on your kitchen tap that the water comes out immediately and with decent strength. Government Taxes and Spending functions like a pump for the economy in general. Taxes draws the money in and Budgets and their Spending pumps the money out
Smashville66 t1_j2ffxg1 wrote
You know what? I’ve never really thought about that angle. It still drives me nuts, but you’re right.
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