Economic: I'm trying to get my friends on the side of RP.

[Theillicitone]

In trying to convince my friends to donate to and vote for Ron paul I was asked a question I hope somebody can help me answer.
" i like some of his ideas but he lost me with the lowering the corporate tax rate. why would anyone believe giving tax cuts to corporations will have a " trickle down effect " ? no evidence exists to show that reducing taxes for corporations has a positive effect on middle or low income families. actually 2 of the top 3 years of gdp growth rate in the united states happend during the 1950's when the top tax rate was about 91%. its now been around 30 to 35% since 2000. looks like it hasnt worked so far "

 

[pen_thief]

Okay, well I'm not an economist and this answer won't be specific enough but here are some general things I've heard Ron Paul say about corporate tax rates:

1) If you up the corporate tax rate, the corporation does not want to take a hit in profits, so it will pass its increased tax burden onto you, the consumer. Basically, this is a tax on the consumer and not the corporation.

2) It is legal for a corporation to lay people off, outsource, or relocate because they are trying to find ways to avoid the tax burden.

3) High corporate tax hurts small businesses while it helps large businesses, that can afford to hire big lawyers to find them all the loopholes.

Hope that was at least somewhat helpful

 

[Enforcer]

I don't understand all the economics of this either, but in the 1950s we had a robust economy and quite a few undocumented migrant workers. Then in 1954 the federal government began deporting all the foreign labor out and our unemployment DOUBLED within five years.

Under Rick Perry and what was once Republican economic policy, Perry boosted the state's GDP by $17.7 Billion Dollars a year off of the largely Hispanic population.

My conclusion is that lowering the corporate tax rate does little with this trickle down effect if you penalize the employers and do not allow them to hire whomever they want. If you open the labor market, that in turn creates other private sector jobs and coupled with a favorable corporate tax rate, it makes it conducive to a free market and a robust economy.

There would be no need for an employer outsourcing their work given those advantages.

 

[CaptUSA]

Okay, well I'm not an economist and this answer won't be specific enough but here are some general things I've heard Ron Paul say about corporate tax rates:

1) If you up the corporate tax rate, the corporation does not want to take a hit in profits, so it will pass its increased tax burden onto you, the consumer. Basically, this is a tax on the consumer and not the corporation.

2) It is legal for a corporation to lay people off, outsource, or relocate because they are trying to find ways to avoid the tax burden.

3) High corporate tax hurts small businesses while it helps large businesses, that can afford to hire big lawyers to find them all the loopholes.

Hope that was at least somewhat helpful

Good job. This pretty much sums it up. There are other reasons as well (like freedom and liberty and the constitution) but it all comes down to making this country the most ideal place for investment.

 

[DerekA]

2) It is legal for a corporation to lay people off, outsource, or relocate because they are trying to find ways to avoid the tax burden.

Is an engineer in America much more useful than a similarly educated one in India? Or for any profession? Think of how easy it is for a company to hire overseas if it means a huge swing in the amount of profits they get to keep.

Also, and most importantly in my mind, corporate taxes are a double tax. The owners of a corporation are the shareholders. Profits can be extracted through dividends, on which certain other taxes must be paid. Shares can also be sold for capital gains (which are also taxed), and those very gains are less because the economic profitability of the firm is proportionally less (which determines a selling price) because of the corporate tax. Or an owner could be paid a wage by the firm, which is of course subject to the income tax.