Proponents of the corporate tax reduction claim that reducing corporate rates an

Question

Proponents of the corporate tax reduction claim that reducing corporate rates and making depreciation more generous will induce corporations to investment more, increase employment and grow wages and the economy. In fact, for the past 50 years, corporate investment has responded to economic and tax variables and the investment has taken the form of laborsaving technology (robotics) that requires fewer workers to produce the same or more output. If you worked for a multinational firm, would you secretly wish for a corporate tax cut and why?

Explanation / Answer

I will advocate for tax cut

A tax cut is a reduction in taxes. The immediate effects of a tax cut are a decrease in the real income of the government and an increase in the real income of those whose tax rates have been lowered.

Lower taxes means higher disposable income to spend. Income can be used to invest further. The investment will create jobs, increase in income etc.

Higher disposable income means corporate can pass on this as higher wages for employees.

There is a misconception that Robotics will replace labour. This is not because to make machines you need Labour. The only thing is that you have to differentiate between skilled and unskilled labour.

Advocates of tax cuts argue that reducing taxes improves the economy by boosting spending; those who oppose them say that tax cuts only help the rich because it can lead to a reduction in government services upon which lower-income people rely.

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