Arguing about taxes is a race to the bottom in any case. What matters is returns on capital invested, which of course is affected by tax rates but not exclusively by them. There’s a reason Silicon Valley exists and it’s not because it’s always been cheap to produce there.
We should tax distributions that aren’t reinvested, and do it progressively.
If your startup turns a profit but still wants or needs to reinvest those profits in hiring more or more equipment, they still have to pay taxes on those earnings and only can reinvest half of them (there are some provisions to shield some reinvested profits from being taxed, but they are limited).
I’m all for taxing dividends and capital gains when investors cash out, I’m just saying don’t do it on profits that are reinvested.
Source on any of this? I don't think this is true - both effective and statutory corporate tax is lower. When factoring in things like the estate tax on capital, capital gains tax, etc. - all is much lower than during the 20th century.
> In practice that’s over a 50% rate, even if the shareholder is a low income retiree.
Among equity held by American households, the richest 1% own more than 50% of that equity - and the top 5% owns the lion's share (upwards of 3/4s). The "low income retiree" narrative is overstated. Moreover, that retiree could count paid dividends as ordinary income, which is taxed progressively (10% or less effective tax rate) if they are low-income.
Meanwhile, the estate tax is much lower than it was during the majority of the 20th century, despite the fact that more than half of all wealth is not earned but inherited by the wealthiest 5% of all American households (ie. the median dollar in the economy is inherited, not paid as a wage or from capital gains)
Why is lowering interest rates not resulting in increased manufacturing capacity as it did prior to recent years?
IMHO, that's mistaking a boogeyman for a cause. The real cause here is any policy that allows important productive capability to be moved away in search of short/medium term profit increases. The idea that you'd replace those jobs with higher-paying fluff was just a little sugar to make the poison taste better.
Also, I can't remember exactly where I read it, but some well-known successful businessman candidly said that lower taxes actually make it less likely for him to invest profits back into his business.
A California corporation has to pay roughly 30% of its profits to the state and federal government to start. Then it’s shareholders have to pay 25-30% of what’s left to their state and federal government. In practice that’s over a 50% rate, even if the shareholder is a low income retiree. There is little progressivity in taxing investment profits.
No wonder multinational US companies rarely bring profits from foreign subsidiaries back to the US.