U.S. corporations need lower taxes in order to make investments in new jobs.
Investments will happen even with high tax rates, but the higher the rate the lower after tax return on those investments. With lower after tax returns the marginal investment will not be made and total investment will be lower. It will also, at the margin, move to investment based off of avoiding the tax, rather than more efficient investment in terms of overall wealth creation.
Corporations are sitting on almost $2 trillion of cash they don't know what to do with.
A lot of the cash is kept overseas because the feds will take around a third of it if its brought back to the US.
Also it doesn't matter how large of cash holding a company has. It could be $20 trillion rather than 2, and it still wouldn't be a refutation of the idea that higher tax rates discourage investment. Its not an issue of ability, but of incentive. Companies invest when they think it will be worth it in terms of risk adjusted profit, not simply because they have money. If the investment isn't worth it, it won't be made no matter how much money the company has. Higher tax rates make fewer investments worthwhile.
U.S. corporations need a tax break in order to be globally competitive. Baloney.
Its not a matter of competitive or not competitive, but rather more or less competitive. Lower tax rates are not a switch that will move all or most American companies from competitive to not-competitive, but they will work at the margin to make many companies more competitive.
The "competitiveness" of American corporations is becoming a meaningless term because most big U.S. corporations are no longer American companies at all.
That doesn't logically follow. Many less big companies and some of the bigger companies are heavily focused in the US. Even for those that are not, there US operations will be more competitive with lower American tax rates, and they will have more of an incentive to make the US operations a larger part of their total operations (or at least to avoid cutting back in the US), if the US has lower tax rates.
Their investors are global. They do their R&D all over the world. And they park their profits wherever taxes are lowest
All the more reason to lower US tax rates. |
