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To test whether reducing corporate income taxes will spur economic growth and reduce government debt, just apply a thought experiment at the extremes: compare w
by dpatru 17y ago
To test whether reducing corporate income taxes will spur economic growth and reduce government debt, just apply a thought experiment at the extremes: compare what would happen if the income tax were 100% with 0%. At 100% income tax, corporations would have no reason to employ anyone, so the unemployment rate would go up. The unemployed people would be a cost to the government, increasing government debt. At 0% income tax, corporations would hire more because each worker's net contribution would directly increase profit. More employment reduces government costs, increases government revenue, and reduces government debt.
So it seems that the argument that decreasing income tax rates would not decrease government debt is the laughable argument. It at least doesn't work at the extremes.
- aardvark 17y agoI'm not convinced corporations would necessarily hire more people due to lower tax rates. If sales forecasts don't look promising, the additional workers' net contribution may be negative even with a 0% tax rate.
- jacobolus 17y agoThe argument is that even in that case they'll at least fire fewer people than they would with the original tax rate. But yeah, the big problem facing companies right now is not excessive corporate tax.