The government is not drawing on accumulated savings or retained profits to fund its spending.

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There is another system which is used in some countries: a company is taxed only on the retained profits.

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Many of these purchases are financed not with retained profits but with debt, thus increasing firms' leverage and reducing their creditworthiness.

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The government tried to plug the dike with the retained profits tax, which goaded companies into getting cash off their books via dividends.

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At the moment, Brazil's banking system is peculiar: commercial banks lend to the government and supply consumers credit, but do not provide much debt to businesses, which mostly finance themselves from retained profits.

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It could thus go through a period of making losses and simply offset these losses with later profits that are partly retained rather than handed over to the US Treasury.

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Leaving profits in the business produces retained earnings as reserves to be used for capital investment.

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In particular, it may be difficult to determine whether principal risk has been retained because (i) the retention of such risk is necessary to provide intermediation and liquidity services for a relevant financial instrument or (ii) the position is part of a speculative trading strategy designed to realize profits from price movements in retained principal risk.

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So-called grantor-retained annuity trusts, or GRATs, let people give a portion of an asset's future profits to heirs tax-free.

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