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Why A Corporate Tax Cut Won't Boost Economic Growth
Forbes ^ | 11/26/2017 | Patrick Watson

Posted on 11/27/2017 11:49:33 AM PST by 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

(Excerpt) Read more at forbes.com ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: 115th; corporatetaxcut; corporations; economy; senatetaxplan; taxcut; trumpeconomy; trumptaxcuts; trumptaxplan
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To: redgolum

Americans haven’t had a raise in 20 years. So boo hoo on Corporate America.


21 posted on 11/27/2017 12:50:20 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: Alberta's Child

If a corporation that manufactures their products in the 3rd world and takes advantage of duty free importation(dumping) back into the USA then what do they spend their money on in the USA?


22 posted on 11/27/2017 12:52:26 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: Crusher138

Ok, offer $11.00/hr. It’s called the free market. Labor is just another commodity. It’s not rocket science.


23 posted on 11/27/2017 12:53:53 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: SeekAndFind

Note that the subject of spending cuts never once makes its way into this “analysis”.


24 posted on 11/27/2017 12:55:03 PM PST by Teacher317 (We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men)
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To: central_va

Is that a rhetorical question? I don’t any U.S. company that doesn’t have a major presence here in terms of headquarters and staff, production facilities, and (even if they don’t produce ANYTHING here) warehouse/distribution facilities and transportation costs here.


25 posted on 11/27/2017 12:55:32 PM PST by Alberta's Child ("Tell them to stand!" -- President Trump, 9/23/2017)
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To: lightman

Just cut corporate taxes for now. Cut individual tax rates later. Untie them. All tax cuts are good things.


26 posted on 11/27/2017 12:56:18 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: Alberta's Child

Ok, when corporations upgrade they improve the equipment in their factories. Painting warehouses and buying new Japanese made fork lifts do not stimulate much of anything in the USA. Too bad the upgrading is being done overseas. Free Trade sucks.


27 posted on 11/27/2017 12:59:58 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: SeekAndFind

Forbes is being dishonest by half.

“Most” other countries have a VAT - more or less true

BUT

VAT is normally collected and used by local and state governments, not the feds! For example, there is a uniform VAT throughout Germany (19% for most items). This is collected by the local government and spent by them.


28 posted on 11/27/2017 12:59:59 PM PST by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: central_va
Just cut corporate taxes for now. Cut individual tax rates later. Untie them. All tax cuts are good things.

Untie this bill from the bedsheets-Byrd requirement that tax bills be revenue neutral.

As things stand now, many individual taxpayers will be owing substantially more in order to "pay for" the corporate tax cut.

The GOP has clearly forgotten Reaganomics.

29 posted on 11/27/2017 1:02:00 PM PST by lightman (ANTIFA is full of Bolshevik.)
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To: SeekAndFind

what the hell has happened to FORBES


30 posted on 11/27/2017 1:04:34 PM PST by Mr. K (There is no consequence of repealing Obamacare that is worse than Obamacare itself.)
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To: SeekAndFind
Reducing corporate tax rates won’t make new workers magically appear ...

What a dumb thing to say ... if a business has more capital at its disposal and decides to expand ... new workers WILL appear ... and its not magic ...

... nor will it improve the skills of those already here.

Has this guy ever owned a business? ... A business that trains the right employees to do their job better ... or trains them to do a higher value job ... and you improve the skills of those already there ...

The increase in capital due to the reduction in corporate tax rates will directly affect what this knucklehead says it wont.

31 posted on 11/27/2017 1:07:12 PM PST by dartuser
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To: central_va
Just cut corporate taxes for now. Cut individual tax rates later. Untie them. All tax cuts are good things.

Well then why not cut middle class taxes now, then cut upper income taxes later, and some time after that cut corporate taxes? If all tax cuts are good and all.

32 posted on 11/27/2017 1:09:27 PM PST by DoodleDawg
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To: dartuser
if a business has more capital at its disposal and decides to expand ...

And what will drive the decision to expand? More money from tax cuts? Or increased demand for their product? The first does not automatically lead to the second.

33 posted on 11/27/2017 1:11:39 PM PST by DoodleDawg
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To: DoodleDawg

The controversy seems to be in the individual tax changes. Just cut the corporate for now.


34 posted on 11/27/2017 1:14:09 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: central_va
The controversy seems to be in the individual tax changes. Just cut the corporate for now.

Why? Cutting the corporate rates does nothing to spur business expansion. Cutting middle class rates makes more money available for purchasing goods and services, which spurs demand for business products, which gives them the incentive to expand, driving the need for workers, which just might actually result in increased salaries for a change.

35 posted on 11/27/2017 1:24:36 PM PST by DoodleDawg
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To: SeekAndFind

I would insult the author and point out that he is stupid but, that would be redundant, as you already know....


36 posted on 11/27/2017 1:58:32 PM PST by Vendome (I've Gotta Be Me - https://www.youtube.com/watch?v=wH-pk2vZG2M)
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To: Alberta's Child

Payback for campaign contributions.

That is it.

No healthcare reform, no wall, but massive give backs to large corporations.

The GOP is going to get hammered in 2018. They had EVERYTHING in place to do their agenda, but chose not to.


37 posted on 11/27/2017 2:06:06 PM PST by redgolum
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To: SeekAndFind
Why A Corporate Tax Cut Won't Boost Economic Growth

The writer of this article never bothered to take an "Economics" class in college.

38 posted on 11/27/2017 2:08:05 PM PST by TheConservativeTejano
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To: Crusher138

I do not know where you are, so this may not be applicable.

In Iowa, McDonalds often starts at $10. Janitorial work starts at $11.

You actually make my point. You are saying “Can’t find any good employees”, but the reality is “Can’t find anyone who will do the work for what I pay”.

Two very different problems. Raise the wage. That is how the market works. A college student views their time as worth much more than minimum wage. Heck, I made $10 an hour in the 1990’s as an intern (but engineers will not work for free).


39 posted on 11/27/2017 2:10:35 PM PST by redgolum
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To: rbmillerjr

Not to mention the six hundred dollar per child increase in the child tax credit, from one thousand to sixteen hundred per - that’s an added six hundred per child off of the total amount of taxes owed, not the deduction from income on which those taxes are figured represented by the old personal exemption which is going away - those making less than ninety thousand - the middle class - will benefit most.....


40 posted on 11/27/2017 2:50:45 PM PST by Intolerant in NJ
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