A business tax-rate cut makes all business assets more valuable, causing a more impressive come back to investment regardless of how it is utilized. Inside our globalized and economy that is financialized however, it is as more likely to cause stock buybacks since it is to spur the construction of new American factories.
It doesn’t need certainly to work because of this. Supply-side theory—that increased investment advantages employees when you look at the long run—only works if investment really increases. That’s the reason, within our 2015 taxation plan, Senator Mike Lee of Utah and I also argued that the most truly effective concern of income tax reform must certanly be encouraging capital investment. Continue reading “Trusting in a business tax cut alone to create innovation and boost productivity may be the thinking about the last.”