"If you look under the hood of the industrial economy, you can see why there is this counter-intuitive relationship between tax rates and economic growth . With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business -- in plants, equipment, staff, research and development, new products and all the rest. But if tax rates are low, then there is more incentive to pull the wealth out, by declaring it as profits that are taxed at what turns out to be too low a rate. In other words, low taxes create an incentive for profit taking, not for business expansion and capital investment.
This in turn creates an incentive for short-term horizons in business planning. If you’re going to be taking all the profits out of a company, and take home a few million a year, why bother to reinvest anything in the business? You’re going to be rich, and never have to work again, even if the business goes bust. Or gets packed on a boat and shipped to China. Or goes "virtual" and lets all the hard work, like, you know, actually making something, be done by the lowest bidder. Employees? Don’t need them.
But employees are also customers. If enough businesses "take profits", after some length of time, the former employees also become former customers. Meaning, they stop buying. As economists phrase it, the economy's aggregate demand generation is crippled. From examining the effects of the three Republican tax cut experiments this past century, it appears the length of time for this to happen is five to seven years.
If tax rates are high enough to discourage profit taking, the best way for investors and owners to keep the profits created by a business, is to invest those profits back into the business: buying new plant and equipment that will be used for many years, and hiring and training new employees. This in turn pushes businesses toward longer-term planning, beginning to counteract the infamous quarter-to-quarter short term fixation of the financial markets. And you do not get the absurd situation you have now, where companies are posting record breaking profits, but are not buying new equipment, nor hiring new employees.
Low tax rates encourage taking wealth out of industrial companies; the wealth taken out must then be "put to work." That means more money chasing "investment" opportunities (instead of real investment in capital goods and employees), leading to price increases in financial capital or real estate or some other asset. In other words, an asset bubble. The rise in prices of an asset bubble has nothing to do with the creation of real wealth. It all looks like prosperity—until the asset bubble bursts."
Fucksakes, even I know that if you cut the tax rate on corporations, they aren't going to re-invest it, they're going to take the money home for themselves as described above.
I have no problem paying my taxes, high or low, it's what's done with the money that appalls me.
This place has enough jiggly milkbags, marsupials fisting off, and animated cherubs getting stabbed in the fuck to get anyone shitcanned, if''n their boss can''t take a joke. ~SUAF
Pussy, much like freedom, ain't free.
America has become a dildo that has turned berserkly on its owner. ~McGuane 1971