by Linda Beale
Does Lowering Corporate Tax Rates Create Jobs? Answer is a resounding “no”
For years (decades, actually), the American pro-wealthy right has argued that lowering corporate tax rates will create jobs. That is the presumed purpose behind the push by Dave Camp to enact a tax reform package with lower corporate rates, and the reason that even President Obama has voiced (tepid) support for lower corporate rates.
Baucus at Senate Finance and Camp at House Ways & Means are part of an oft-cited “bipartisan consensus” (though its never clear whether there really is one) for cutting corporate tax rates through “revenue neutral” corporate tax reform. This is a consensus which, if it does exist, has resulted from decades of corporate lobbying in Congress and near-absolute capture of the media on the issue, combined with the proliferation of robotic economics and “law and economics” faculties who scribble endlessly about the “economics” of corporate and capital income taxation, producing studies that suggest policy based on simplifying assumptions commonly used by economists that ensure that the outcome of their mathematical games should have almost no application in the real world. See, e.g., Ponnuru, Max Baucus’s Self-Defeating Corporate Tax Plan, Bloomberg.com (Dec. 2, 2013) (indicating that “There’s bipartisan support for lowering the 35 percent federal corporate tax rate, which is among the highest in the developed world. Both parties see the rate as a burden for the economy because it pushes investors — American and foreign — to seek their returns in other countries. Economists argue that the tax therefore depresses wage growth in the U.S., a claim supported by numerous studies.”)