Yesterday, I wrote about a report that basically said it’s a myth that tax cuts are a huge boon to the economy. Well, there’s actually a second part to that.
The other report from the Congressional Research Service, via Citizens for Tax Justice, has as much ammunition as the first one. I had to read this many times because it is very technical in nature. But, the nuggets are, as CTJ also points out:
The analysis in this report suggests that many of the concerns expressed about the corporate tax are not supported by empirical data. Claims that behavioral responses could cause revenues to rise if rates were cut do not hold up on either a theoretical basis or an empirical basis.
Basically, it means: all the hand-wringing you read about from the moronic press which just repeats claims about made about corporate taxes (drag on the economy, keeps business away) is just unnecessary.
Why? At least one reason to remember:
Despite concerns expressed about the size of the corporate tax rate, current corporate taxes are extremely low by historical standards, whether measured as a share of output or based on the effective tax rate on income. In 1953, the corporate tax accounted for 5.6% of GDP and 30% of federal tax revenues. In recent years the tax has fluctuated round 2% of GDP and 10% of revenues, reaching a low of 1.2% of GDP in 2003, and standing at 2.7% in 2006.
So, bottom line is corporate taxes are low and they just don’t have the same impact on the economy so, logically, the so-called “distortion” of corporate taxes is a myth in the real world.
