Third, we need to be circumspect while assuming that corporate tax cuts will automatically mean more money to invest, which in turn will boost employment and raise wages. On the other hand, global empirical evidence suggests that corporate tax rate cuts mainly benefit shareholders and chief executive officers, not workers. Fourth, if we look at the average corporate tax rate (a measure of a company’s income-tax burden relative to income earned) and the effective corporate tax rate (a measure of a company’s corporate income-tax burden on returns from a marginal investment), the country stands at a very competitive footing compared to other emerging and developed countries. Given that corporate tax rates were competitive by international standards, the fiscal costs of extending further benefits could have been avoided. A host of countries, including Australia, Argentina, France, the UK, South Korea, Mexico and Chile, have announced aggressive corporate tax cuts to counter the US move.

Source: Mint February 05, 2018 17:48 UTC