WASHINGTON | For President Donald Trump, what’s good for General Motors is great for American workers. Same for Boeing. And AT&T. Not to mention small businesses.
Trump insists that slashing the corporate tax rate from 35 percent to as low as 15 percent would free up valuable cash. Companies would use the money to boost investment, increase employees’ pay, accelerate hiring and speed economic growth. What’s more, corporations that now keep trillions overseas to avoid U.S. taxes would bring the money home. American companies could better compete with rivals based in countries with lower tax rates.
“We’re going to have magnificent growth,” Trump declared aboard Air Force One on Thursday. “We’re going to go like a rocket ship.”
Would we? Many economists, tax experts and even some business owners say it’s unlikely. Rather than hire, companies might use much of their tax savings to buy back their stock or increase their dividends to investors. Many companies, they note, have already been able to borrow at historically low rates to expand their businesses yet have chosen not to.
“The mainstream economic evidence is that the bulk of corporate tax cuts go exactly to whom you would expect — which is wealthy investors and executives,” said Chye-Ching Huang, deputy director of federal tax policy at the left-leaning Center on Budget and Policy Priorities.
Many economists foresee some benefits from overhauling and simplifying the corporate tax code, just not the extreme growth Trump is promising.
One reason corporate tax cuts might provide little overall benefit is the relative health of today’s economy. Unemployment is already unusually low at…
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