Why A Corporate Tax Cut Won't Boost Economic Growth

Forbes ^ | 11/26/2017 | Patrick Watson

[SeekAndFind]

The House and Senate are considering tax legislation that will add $1.5 trillion to annual deficits over the next 10 years, according to their own numbers.

This is okay, we're told, because the tax cuts will stoke economic growth, delivering added tax revenue that offsets the rate reductions.

Note the bigger point here.

Republicans still say they don’t like deficits — but apparently, this particular plan lets them cut taxes without adding more debt. It’s a miracle.

Is their claim really true? Will the GOP tax plans boost economic growth?

That’s the 1.5-trillion-dollar question.

Theory vs. Reality

The Republican plan’s centerpiece is a reduction in corporate tax rates from a 35% top bracket to only 20%. That would put the U.S. more in line with other countries.

What you seldom hear is that most other developed countries also have value-added tax (VAT), a kind of consumption tax. The U.S. doesn’t. Our tax system will remain different, and not necessarily better, under the new proposal.

Anyway, the theory is that lower tax rates will entice businesses to bring back operations they currently conduct overseas. They will build new factories and hire more U.S. workers. Those workers will spend their higher incomes on consumer goods, and we’ll all be better off.

Unfortunately, that thinking has several flaws.

For one, as we saw in the NFIB Small Business Economic Trends report, business owners say that finding qualified workers is their top challenge right now. Reducing corporate tax rates won’t make new workers magically appear, nor will it improve the skills of those already here.

What increasing labor demand might do is spark that inflation the Federal Reserve has wanted for years. There’s also a good chance it could spiral out of control, forcing the Fed to hike interest rates even faster than planned

[editor-surveyor]

.
Don’t play their game!

Most “corporations” have less than 20 employees, and they definitely do pay taxes that stiffle the growth of our economy.
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[DoodleDawg]

Corporate taxes are passed to consumer in the form of higher prices and to employees in the form of lower wages.

So you think that if corporate taxes are cut then that will lead to lower prices and higher wages? What universe are you living in?

[youngidiot]

I’m living in reality. Unleash American Enterprise!

[DoodleDawg]

I’m living in reality. Unleash American Enterprise!

To do what? They don't seem to be very leashed right now. Profits have never been higher.

[youngidiot]

I think they’re being taxed and regulated to death. The President has done fairly well on rolling back regulations in a short period of time. I think we should allow US companies to repatriate all the money sitting overseas without taxation and slash corporate taxes to zero or as near to zero as possible.

[editor-surveyor]

.
DoodleDawg is a certified Gimmiecrat!

A hillary-ite to the Nth power.
.

[cherry]

they’ll still send jobs to other countrie, they won’t hire American Americans, and they’ll laugh all the way to the bank with their bonuses..

[youngidiot]

Redgolum isn’t far behind her

[TheConservativeTejano]

Partner, I ain't pointing out anything to this fellow!!!

I stand by my comments.

It is so obvious that to stimulate the economy you have to have add more $$$$ to the economy. It is supply side economics!

If you want to slow down the economy you take $$$$ away by putting in more gov'mint programs! It is as simple as that.

BTW, gov'mint is the creator of inflation.

[DoodleDawg]

It is so obvious that to stimulate the economy you have to have add more $$$$ to the economy. It is supply side economics!

And isn't the best way to stimulate the economy is to put money in the hands of consumers? And aren't the largest class of consumers the middle class? So why are the tax cuts targeting everyone but them?

[TheConservativeTejano]

Partner, you have got that 100% correct in that the money will flow to us who can spend it better than the congressional critters who are actually spending our hard earned tax dollars on unnecessary gov'mint programs.

President Trump who is a populist president will get to do more tax cuts later on.

The Rinos and Rats have opposed any tax cuts whatsoever since they think they know more on how to spend our tax dollars. The Rinos and Rats are one big joke and they do not want to balance the Federal Budget since they do not want to hurt someone's feelings. We have to take drastic action on the Federal Budget and a lot of Freepers already know these facts.

All President Trump is doing right now is the following: Tax Dollars Coming in the IRS (Total Taxes)=Funding the Gov'mint plus tax cuts. This is all Congress is letting him do this time around. The formula is not working since we have a large deficit on the spending side of the equation. We balance our home budgets but Congress has not been able to do this for the past 16 years on our Federal Budget. (the Imposter and W. were the culprits on the huge deficits we have right now).

You can see really quickly that something sticks out like a sore thumb and that is the Funding for the Gov'mint to operate. (this includes everthing including military)

Tax cuts work in that more $$$ come into the Treasury which is the IRS. The extra tax dollars coming into the Treasury will help to reduce the deficits we just do not know by how much. Also, we somehow need to get the Congress critters to stop the insane spending practices like the mobile phones paid by us to welfare recipients brought on by the American Hating Imposter Obama.

We need to start cutting the whole Gov'mint spending. A lot of Freepers have been talking about how we go about making our Congress critters start cutting the spending and unnecessary programs that are duplicates of other programs. It if means eliminating gov'mint programs or laying off a bunch of gov'mint workers than so be it. We need to clean up gov'mint spending. A bunch of our Freeper nation knows we have huge gov'mint problems that need to be solved somehow. We basically need to light a fire under each congress critter's posterior to change their thinking on how they spend our tax dollars.

We have such a bloated bureaucracy in gov'mint spending as it is right now.

President Trump does not spend any of our federal buget dollars. It is our Congressional Critters who get to spend the Federal Dollars which is our hard earned tax dollars. The Constitution states that the People's House must produce a federal budget every single year and yet we have not seen a Federal Budget produced in such a long time. Federal Budgets must be done each year by Congress which the Constitution says the House must do every single year.

[DoodleDawg]

President Trump who is a populist president will get to do more tax cuts later on.

No he won't.