On Ending/Lowering Corporate Taxes

Lately there has been a bit of a stir over Rep. Louie Gohmert's proposal to eliminate corporate taxes as a single solution to fixing the economy:

Republican Congressman Louie Gohmert of Texas introduced legislation to the House of Representatives on Wednesday that would drop the corporate tax rate to all the way down to zero.

It should be noted that lowering or removing the corporate tax is actually a bi-partisan idea. Moreover, as Harvard Economist Robert Barro pointed out:

"the inefficiency is magnified here because of double taxation: the income is taxed when corporations make profits and again when owners receive dividends or capital gains"

However, unlike Barro, I do not think Austerity will save the economy:

"Although advanced economies need medium-run fiscal consolidation, slamming on the brakes too quickly will hurt incomes and job prospects"

And unlike Gohmert, I do not think lowering the corporate tax rate is sufficient to get us out of the recession

"Corporations are already sitting on trillions in cash, so cutting their taxes would likely do very little to help the economy,"

Nonetheless, it is definitely something that should be included in any serious jobs bill as it is sure to help increase business investments once demand has increased to the point where businesses actually want to invest again:

According to a 2008 study by the Organization for Economic Cooperation and Development, “Corporate taxes are found to be most harmful for growth.” Tax reform that reduced the burden on capital income and shifted it toward consumption would improve prospects for long-run growth and, in so doing, encourage greater investment today.