Boost Economic And Employment Growth

Decent Essays
The current wave of “Tax reform” has created a huge debate whether lowering taxes will boost economic and employment growth. The US has the highest Corporate tax rate among the advanced countries; thus, it is argued that it is disadvantageous to US corporation in terms of global competitiveness. The corporate tax cuts can be an engine for job creation in the US. Several corporates have moved their operations overseas in the past few years; Indeed, it has raised concern whether these companies are fleeing abroad due to higher tax rates in the US? Is higher tax creating unemployment? Or will tax cut bring overall economic growth? Close study of top companies’ financial reports and the US history events shows that corporate tax cuts will not…show more content…
Conservatives argue that current corporate tax is burdensome to US business and restrict economic growth. Therefore, through the tax cut company will have more post-tax profits for investment and job growth. Tyler Cowen, a professor of University, in his Bloomberg article mentioned that, “When companies have more “free cash”, they tend to invest more…” (2017). Indeed, the lower tax will add more cash to companies’ balance sheet. Still, reduction in the tax rate will not ensure job growth or more investments. In 2004, the Congress reduced the tax rate from 35% to 5.25% on repatriated earnings with the intention that these earnings will be used for domestic investments or employment. However; in a study of an impact of the reduction in tax on repatriated earnings researcher found that it did not increase domestic investments or employment and much of the post-tax earnings were returned to shareholders through stock repurchases (Marples & Gravelle, 2011). Apart from that, fifteen companies who benefited lower tax, reduced their workforce by more than 20,000 (Peterson, 2011). It is evident from the past that tax rate reduction has not created more jobs.
It may be argued that many US corporations move their business to overseas in inversion deals as the US has a highest corporate tax rate in the world. By lowering US corporate tax rate, these companies will bring back their profits to the US; which eventually will boost the US economy and create more jobs for
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