A business tax-rate cut makes all business assets more valuable, causing a larger come back to investment in spite of how it really is utilized. Within our globalized and financialized economy, however, it is as more likely to cause stock buybacks because it’s to spur the construction of the latest US factories.
It doesn’t need certainly to work that way. Supply-side theory—that increased investment benefits employees within the long run—only works if investment really increases. This is the reason, within our 2015 taxation plan, Senator Mike Lee of Utah and I also argued that the utmost effective priority of income tax reform must be encouraging capital investment. Which is why i am going to quickly introduce an agenda to enhance while making permanent the full-expensing conditions from last year’s tax-law work and end the income tax code’s favoritism for businesses that spend their taxation cuts on stock buybacks. (more…)