Please stop assuming the pie is always fixed. Demand is not always being met. New markets are being created all the time. Oh, and while tax breaks don't affect the function of your imagination, they sure do help with bringing stuff out of your imagination into reality.
In order for you to suddenly have $1000 more, you would already have had to have had the money. In your scenario, where did the $1000 come from? You are talking about a small business loan where you have no revenue and are starting a new business, not tax breaks.
So you set up two bank accounts and deposit say 30% of any money you would use for your non-business expenses. That money is forbidden. You cannot touch it.
> I believe they are saying that you would have bought the chainsaw, ladder, etc tax-free already, as a business.
Pay attention. With what money? You have no money. ZERO. All your money goes toward your business expenses and the rest goes toward non-business expenses and taxes.
You have no business credit. The only credit you have is personal and that's maxed out.
The overwhelming majority of one-man operations are not drowning in cash.
> A tax break would have absolutely no effect on the ability to afford these things in the scenario you described.
This makes ZERO sense. With a tax break, I can withdraw some of the money from my tax bank account and use it for whatever I want. It is found money. On top of that, spending that money on my business means I have no tax obligation on those found funds.
Don't confuse corporations with a large payroll with people who are self employed.
> One can argue that higher income tax will actually encourage you to spend more.
A higher income tax will actually encourage you to live in a cardboard box. You will have to purchase that box, so in that way, I suppose you're right.