Which will have the best macroeconomic effect on US economy?
Whereas former President [name edited] flagship Tax Cuts and Jobs Act permanently reduced the corporate tax rate from 35% to a historically low 21%, current vice president and Democratic Party presidential nominee [name edited] has proposed increasing the corporate tax rate by a third to 28% in order to generate additional revenue.
The question is-in my mind-Will the extra money into corporate coffers flow to new manufacturing facilities creating new jobs? Or-as my cynical inner voice whispers-It will result in a big payday for corporate leadership?
I would think that cutting corporate tax rates aid corporate profits and the stock market further increasing income inequality as most stock ownership is in the hands of top 10%.
Corporate profits are at 50 year high.
What are corporations currently doing with those profits?
Nonfinancial corporations have not been this profitable in almost half a century.
Almost half of those profits went to paying dividends.
Nonfinancial corporations have also used their profits to increase their cash stockpiles. Liquid assets amounted to $7.2 trillion in December 2023 up from $6.1 trillion in December 2019 – all measured in December 2023 dollars.
the ratio of capital expenditures for this business cycle averaged to a historically low 132.8% of after-tax profits – the lowest such ratio on record, dating back to 1952.
