Wednesday, March 7, 2012
Corporate tax cuts: The answer to nothing.
It’s clear that corporate tax cuts, no matter how many times they are demanded by big business, can be expected to accomplish absolutely nothing. That’s because big companies are sitting on trillions in untaxed profits. They have plenty of cash. Cutting their taxes will not make them more profitable, and it will not make them hire more. The antitax crowd will suggest that it is taxes that keep those profits offshore, and that amnesty is necessary to drive the dollars back home. But of course it is not tax that keeps cash offshore but tax breaks that drive and keep them offshore—it is the failure to tax effectively by the U.S. and other capital exporting countries that create these huge buildups. If corporate managers knew they had no choice but to pay taxes, those profits might be distributed already.