Lowering the tax rate from the current 35% to the planned 20% will be a dramatic change for corporations. The GOP controlled congress contends that their planned corporate income tax cuts will result in more investment in new business and higher wages for American workers. Will it actually happen? We will have to wait until next year.
Read this report from CNBC.
A meeting of CEOs might seem to be a friendly gathering place for President Donald Trump’s chief economic adviser Gary Cohn, former president of Goldman Sachs. But at a gathering of chief executives hosted by the Wall Street Journal on Tuesday November 14, business leaders called into question one of Cohn’s top arguments for slashing the corporate tax rate to 20 percent.
When one of the Journal’s editors asked the crowd if they planned to up their capital expenditure if the GOP’s tax plan went through, only a smattering raised their hands.
There’s little evidence to support the claim that tax breaks boost employment numbers.
A National Bureau of Economic Research study published in 2014 found “little evidence that corporate tax cuts boost economic activity” unless implemented in a recession.
Far from being short on cash, corporations are sitting on record amounts.
The informal poll was not the only disappointment for Cohn on Tuesday. Another non-scientific poll conducted at the gathering found that more than half of the CEOs present didn’t believe that Congress would pass a major tax bill by the end of the year.
Cohn had previously told reporters that tax legislation would be advanced by the end of the year, calling it a “once in a lifetime opportunity.”
Is this an opportunity to improve America’s middle class or an opportunity for higher dividend payments to shareholders?
We will know after the tax cut is put into effect. If the result of this tax cut does not provide higher incomes for the middle class the Republicans will lose in the next election.
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