> Profits are either returned to shareholders or accumulated (and returned later).
That's a false dichotomy. The article specifically mentions other alternatives, such as raising employee's wages or raising the number of employees (both of those examples result in more tax revenue for the government as well).
If the money is paid as wages, then it wasn't profit.
For example, suppose my company earns $100 in profit in 2017. I choose to pay out $90 in dividends to the owners. That means 90% of earnings have been given to shareholders.
Now suppose I decide to pay an extra $50 in wages. My 2017 profits are now $50. I choose to pay out $45 in dividends to the owners. Again, 90% of earnings went to shareholders despite 50% of 'profits' going to wages.
Talking about using 'profits' to pay costs is somewhat nebulous, since 'profits' are defined as revenues after costs.
I was thinking along the lines of using last year's profits to pay for this year's wage raises and new hires.
If you have a $100 profit in 2017 you can't retroactively pay it out as wages, like your example suggests. You would have to pay 20-40% taxes on the profit (depending on where the company is domiciled) and then you can choose to pay it out during 2018.
That's a false dichotomy. The article specifically mentions other alternatives, such as raising employee's wages or raising the number of employees (both of those examples result in more tax revenue for the government as well).