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Thread: Corporate Tax Cuts Boosted Investment, Wages and Growth

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    Corporate Tax Cuts Boosted Investment, Wages and Growth

    Of course cutting corporate taxes boosts this stuff. Corporate taxes are ultimately paid by employers and consumers.

    Corporate Tax Cuts Boosted Investment, Wages and Growth

    A new economic study shows that the 2017 tax cuts strongly boosted corporate investment, wages, and growth. The detailed study, prepared by economists associated with the National Bureau of Economic Research and the Treasury Department, found that the corporate tax reforms substantially raised US capital investment and increased economic growth.

    The study examined 12,000 corporate tax returns in the years prior to the enactment of the 2017 bill and the years after to determine the impact of the corporate rate reduction from 35 to 21%, bonus depreciation, and other changes.

    The authors found that the corporate tax changes increased domestic investment by 20% in the two years after the bill was enacted, with most of the boost in capital investment coming from the lower corporate tax rate and bonus depreciation.

    The study estimates that the corporate tax changes will increase the U.S. domestic corporate capital stock by 7.4% over the long run. The increased capital stock leads to increased worker productivity, resulting in increased real wages over the long run.

    The study also found that after an initial decline in corporate tax revenue in the first few years, dynamic corporate tax revenues gains will fully offset the static revenue losses from the corporate provisions by the end of the 10-year budget window.

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