Corporate Tax Cuts, Will they Help?
One of the many things that Trump has promised us is corporate tax cuts. The idea is that because the U.S. has one of the highest corporate taxes, many companies are sending their companies overseas. While this has been helped by the cancellation of a trade deal between us and Asian countries, it is still an issue with companies setting up factories in Mexico, Vietnam, and still, China. So, lowering the corporate tax is a great idea, right? It sound like it would, because it would make companies want to stay in the U.S., but there is some evidence that doing this would hurt us, or be of no use.
It is obvious that there are many pros to the corporate tax reduction, especially the fact that our corporate tax is one of the highest in the world. Our corporate tax is nearly 40%, with only Puerto Rico and the United Arab Emirates being ahead of us. This makes it very tempting for businesses to move to other countries, less tax means more profit, so almost any other country is more profitable to operate in than America. So, when these taxes are reduced, the companies will likely return, according to Trump, and this will make more jobs. The making of more jobs for American citizens is a main focus of Trump’s, and the reduction of this supposedly troubling tax is supposed to make this happen.
However, there have been many cases where this did not happen. For example, even though we currently have one of the highest corporate taxes, U.S. corporations have been making for money than they have in 61 years. In addition to this, with many different loopholes, U.S. corporations often do not pay the full tax. It is also argued that jobs are not created because of low corporate taxes, so much as the need for workers. Last, often unemployment has been lowest when the corporate tax rate was the highest. Like when from 1986 to 2011, the corporate tax rate dropped about 11%, but unemployment increased by about 1.9%. Plus, without this tax, many public services will be adversely affected.
What is Corporate Income Tax? http://www.nolo.com/legal-encyclopedia/how-corporations-are-taxed-30157.html
Trump’s Plan for this Tax and Many Others. http://www.washingtonexaminer.com/whats-in-trumps-and-republicans-tax-reform-plan/article/2629777
Pros
Cons
More on Pros and Cons
Should the corporate income tax be reduced?
What effects will changes have?
Should it be kept the way it is?
I think Trump's plan to lower corporate tax will benefit the US. By bringing factories over to the US, more jobs will be created, bringing down the unemployment rate, and higher quality goods will be provided to the people. However, after reading the articles in the links above, I have realized that there are many cons to this plan. According procon.org,when the corporate tax rate was the highest, the unemployment rate was the lowest, meaning that lowering the corporate tax may not create more jobs. Lowering the tax might cut jobs. For instance, a "tax holiday" in 2004 cut 20,000 jobs. By lowering taxes, employment might go both ways. It will be risky. I think maybe if a middle ground could be found that could benefit companies and create more jobs, that it would be very beneficial. Or maybe it should be kept them same seeing how factories can cause pollution, which could become deadly to us humans and wildlife.
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