Corporate Taxes

Here’s a letter in the NY Times from a small business owner about the Republican corporate tax break. He doesn’t need it. He challenges the Republican mantra that reducing corporate taxes will encourage new growth. “That’s simply not the case.” He makes the point that no one starts a business because tax rates are low or hesitates because tax rates are too high. Lots of reasons to start or expand a business, but taxes are not on the list.
Yes, lowering the corporate tax rate would bring more income to businesses. However, most businesses (particularly large ones) are already sitting on piles of cash. If they had a reason to build a factory or hire more workers, they would already have done so. What’s needed is more money circulating. More money to people who will spend it. Corporte tax money will go as dividends to stockholders (generaly wealthy) or mutual funds who will not apend it. Money to companies will be used to buy back shares, making existing shares more valuable, a benefit to existing shareholders. None of this goes to workers, old or new. What’s needed is large government spending, like WWII or the Interstate highway system. Such projects would pass money to workers who would spend it.

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Robert

Retired: physician, civil service employee, consultant.

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