Are tax cuts for corporations helping societies as a whole?
The reasoning behind corporate tax cuts is to give businesses a boost so that they can hire more workers and reduce unemployment.
But, according to a leading US economist, Jeffery Sachs, corporate tax-cuts largely create negative effects on society (reduces govn't revenue that reduces healthcare/education/social welfare funding).
Countries are now caught in a "negative-sum game", each trying to lower their corporate taxes more than other countries to attract businesses, but in doing so each is spending less and less on education/healthcare/social welfare/etc.
Sachs thinks this is atrocious, what do you think?
-YY
There should be a balance between corporate tax cuts (to boost employment) and education/healthcare/welfare, all of which are important.
ReplyDeleteG20 nations should consider setting a minimum corporate tax that each G20 nation will promise to uphold, in order to reduce this negative-sum game and ensure that each nation has enough gov revenue to spend on necessary services for its own people.
Great post Yan.
ReplyDeleteI don't think it's viable to set a standard corporate tax rate among the G20 countries. Especially since corporate tax is often progressive, meaning corporations with higher income are taxed at a higher rate than those with less income. Consequently, it would be difficult to set one corporate tax rate for all 20 countries.
Trevor
Ah okay I see what you're saying. Just out of curiosity, how feasible do you think it would be for G20 nations to set the same series of *progressive* corporate taxe rates across each member nation?
ReplyDeleteI don't think it's possible to be honest. Each country has governments with varying degrees of public services. For instance, many countries in Europe offer free university education which requires higher taxes. These services have become ingrained in society and if the government removed these subsidies there would be huge protests.
ReplyDelete