# Corporate tax rates and wages **URL:** \ **Category:** Great Debates\ **Created:** [June 13, 2017, 11:25am UTC](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850 "2017-06-13T11:25:53Z")\ **Posts on this page:** 8\ **Page:** 2
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [June 13, 2017, 3:49pm UTC](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850/21 "2017-06-13T15:49:46Z")
Nobody knew the economy was so complicated. 😃 ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [June 13, 2017, 3:51pm UTC](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850/22 "2017-06-13T15:51:18Z")
> [@RitterSport](#): > > When you read the talking points, the implication seems to be that if you lower corporate taxes, there will be more money for the company and that will go into wages. The reality is quite different, agreed? I never got that implication from reading the talking points, myself. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [June 13, 2017, 4:21pm UTC](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850/23 "2017-06-13T16:21:11Z")
> [@Bone](#): > > I never got that implication from reading the talking points, myself. What implication do you get when they talk about giving tax cuts to the “job creators”. Do you not feel that there is an implicit implication there that by giving these tax cuts to “job creators” that those job creators will then go out and create jobs? What justification for cutting taxes on the rich do you see them selling with their talking points? ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [June 13, 2017, 4:25pm UTC](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850/24 "2017-06-13T16:25:43Z")
> [@k9bfriender](#): > > What implication do you get when they talk about giving tax cuts to the “job creators”. > > Do you not feel that there is an implicit implication there that by giving these tax cuts to “job creators” that those job creators will then go out and create jobs? > > What justification for cutting taxes on the rich do you see them selling with their talking points? Did you read my previous post? I indicated my summation of the articles. > [@Bone](#): > > The Tax Foundation article isn’t making the argument that lower tax rates will lead to higher wages per se. The argument from this article is that because capital is more mobile than people, higher corporate tax rates disproportionately impact people who do not have the same mobility as capital. It goes on to say that companies that are growing and need large amounts of capital to expand or improve the business are hurt more by higher corporate taxes than those that are already industry leaders. The article goes on to recommend accelerated depreciation and cessation of taxes on income earned overseas but I don’t think those are related to the point you are trying to make. Overall I think the lower corporate tax argument from the Tax Foundation article is one of increased productivity and leading to higher wages/better results as a whole. A person who has a job where they are at is better off than losing that job when the company relocates to Ireland. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [June 13, 2017, 4:33pm UTC](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850/25 "2017-06-13T16:33:41Z")
I don’t see a good argument that lower corporate taxes lead to higher wages except in very indirect ways that rely on other uncertain outcomes. Decades of supply side economics have not led to real wage growth so far. Higher wages result from more value for employees. That requires increased demand for products, otherwise there’s no incentive for business to raise employee pay. That demand may occur because of many different reasons that may relate to lower taxes. Counting on it is as much of a fantasy as “If you build it they will come”. OTOH tying lower corporate taxes to higher wages is at least a better gamble, still no guarantee, but an actual incentive is built in to the process. It would be best done by tying lower taxes to increased employment which would hopefully in return increase demand for employees with higher wages as a result. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [June 13, 2017, 5:13pm UTC](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850/26 "2017-06-13T17:13:10Z")
Misinterpreting the implication that lower corporate taxes will directly lead to higher wages is probably my own error, taking talking points as is and not delving deeper into the research. Taking the cited papers as correct (which may or may not be true), it still seems like a very, very indirect way to raise wages. I guess it’s a way to sell lower corporate tax rates to the masses, and it has some research to back it up. My own view is that lowering corporate taxes drastically would be a massive shock to the system that would unlikely be followed up with other ways to raise revenue, leading to cuts to social programs, so any incidental increases to wages, assuming they proved true, would be overwhelmed by other tax increases, cuts to services that benefit wage earners, and other such effects. If the goal is to raise wages, there are much more direct ways to do that – cuts to payroll taxes, increases to the EITC and personal deduction amounts, for example. I concede that corporate taxes may indirectly increase wages. I don’t agree that’s the best way to go about that. However, all of that is for some other thread, so thanks, everyone, for the interesting conversation. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [June 13, 2017, 7:37pm UTC](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850/27 "2017-06-13T19:37:09Z")
> [@RitterSport](#): > > Misinterpreting the implication that lower corporate taxes will directly lead to higher wages is probably my own error, taking talking points as is and not delving deeper into the research. Taking the cited papers as correct (which may or may not be true), it still seems like a very, very indirect way to raise wages. I guess it’s a way to sell lower corporate tax rates to the masses, and it has some research to back it up. > > My own view is that lowering corporate taxes drastically would be a massive shock to the system that would unlikely be followed up with other ways to raise revenue, leading to cuts to social programs, so any incidental increases to wages, assuming they proved true, would be overwhelmed by other tax increases, cuts to services that benefit wage earners, and other such effects. If the goal is to raise wages, there are much more direct ways to do that – cuts to payroll taxes, increases to the EITC and personal deduction amounts, for example. > > I concede that corporate taxes may indirectly increase wages. I don’t agree that’s the best way to go about that. > > However, all of that is for some other thread, so thanks, everyone, for the interesting conversation. It may be an indirect way, but the government does not have a whole lot of direct ways. As far as a massive shock, the corporate income currently generates 11% of current taxes. However, some of that revenue would be recovered through higher income taxes if wages are higher or capital gains taxes if the savings is transferred to shareholders. Moreover, since one of the reasons capital gains taxes are higher is because of the double taxation which would be less if the corporate tax were less. It would also increase efficiency if companies were spending money on making products instead of hiring tax lawyers to try to evade the tax. For instance when Burger King bought Tim Hortons and put their new headquarters in Canada to take advantage of their lower corporate rate. Also there would be less incentive to hire lobbyists to beg for special corporate tax loopholes. It would also change the tax preference for debt over equity finance which would make the economy slightly less bubble prone. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [June 13, 2017, 8:32pm UTC](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850/28 "2017-06-13T20:32:56Z")
> [@puddleglum](#): > > However, some of that revenue would be recovered through higher income taxes if wages are higher or capital gains taxes if the savings is transferred to shareholders. Moreover, since one of the reasons capital gains taxes are higher is because of the double taxation which would be less if the corporate tax were less. An increasing percent of C-corp ownership is by tax-exempt entities. So if we pushed _all_ of the taxes to when the gains are realized or when the dividends are distributed, a lot of that won’t be taxed. I thought I posted a WSJ link in another thread but my search terms are deficient. After the pensions, non-profits, personal retirement accounts, etc., there’s not much left. And much of that gets deferred until death, after which the basis gets adjusted. [Previous page](https://boards.straightdope.com/t/corporate-tax-rates-and-wages/788850.md?page=1)