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"LaVorgna writes that gross business investment as a share of GDP since 1960, averaging 13% over time with a standard deviation of 1.3%, meaning that there have been few major changes in the investment tendencies of American businesses.
In 1986, when the Reagan administration passed its tax cut — which Trump has so often said he would seek to outdo — the corporate rate fell from 40% to 34%. This lower rate, however, did not shift the investment habits of corporations. In fact, investment has fallen in the roughly thirty years since this cut passed relative to the 26 years tracked by LaVorgna before this cut, though corporate taxes have been lower during that period.
“From 1960 to 1986, the corporate tax rate averaged 48%, and the gross investment share of GDP averaged 13.3%,” LaVorgna writes. “From 1987 to present, the corporate tax rate has averaged about 35%, and the gross investment share of GDP averaged 12.7%. Even if we take out 2009, when the share plunged to a record low of 9.8%, the average increases just a tenth to 12.8%.
“Clearly there is no correlation between the tax rate and the share of business investment in the economy.”
So why do so many other countries have significantly lower rates than us?
If it doesn't work you'd think they'd have figured it out by this time ......
Which countries? Can you provide a full picture of how those countries operate in terms of corporate taxes, personal taxes and services/programs provided for the people of those countries?
"LaVorgna writes that gross business investment as a share of GDP since 1960, averaging 13% over time with a standard deviation of 1.3%, meaning that there have been few major changes in the investment tendencies of American businesses.
In 1986, when the Reagan administration passed its tax cut — which Trump has so often said he would seek to outdo — the corporate rate fell from 40% to 34%. This lower rate, however, did not shift the investment habits of corporations. In fact, investment has fallen in the roughly thirty years since this cut passed relative to the 26 years tracked by LaVorgna before this cut, though corporate taxes have been lower during that period.
“From 1960 to 1986, the corporate tax rate averaged 48%, and the gross investment share of GDP averaged 13.3%,” LaVorgna writes. “From 1987 to present, the corporate tax rate has averaged about 35%, and the gross investment share of GDP averaged 12.7%. Even if we take out 2009, when the share plunged to a record low of 9.8%, the average increases just a tenth to 12.8%.
“Clearly there is no correlation between the tax rate and the share of business investment in the economy.”
The state you live in has the option to put any state tax you want on businesses and use that money however your state chooses.
Why don’t you place an additional 50% tax on businesses in your state and host free taco Tuesday parties?
However, you might have resistance if you live in NY. They had problems with business taxes and had to run these commercials:
Corporate tax cuts are probably the right thing to do for competitiveness, but don't expect too much job-wise from large corporations, at least. They already have lots of cash and aren't strapped. Their aggregate demand is not likely to alter too much in the near term. Robotics and AI will continue to move through industries and result in net job losses. So corporations are likely to use the tax savings mainly for M&A, dividends, bonuses, and share repurchases. That's why the stock market is happy.
Which countries? Can you provide a full picture of how those countries operate in terms of corporate taxes, personal taxes and services/programs provided for the people of those countries?
No, they just hear it on Kudlow or Fox or whatever.
The effective rates are much lower because of write offs.
This is anti-tax anti-government starve the beast ideology in the thinly veiled guise of good public policy.
Which countries? Can you provide a full picture of how those countries operate in terms of corporate taxes, personal taxes and services/programs provided for the people of those countries?
The only countries that exceed the US are the Unites Arab Emirates and Puerto Rico.
The worldwide average across 188 countries is 22.5%.
Puerto Rico is not a country, it is a territory of the United States
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