It depends on how the tax rate is raised. If we bump every corporate tax bracket up 5%, you’re correct.
If, instead, we establish a punitively-high top-tier rate, what we will be instead are small and medium businesses operating as usual, while large companies tailor their business models to stay just under the line. It is that “tailoring” that benefits the economy: reducing revenue, and/or increasing expenses to reduce net taxable income.
Giant companies will divest themselves into smaller business units, where they are forced to compete with eachother (under penalty of antitrust laws). This makes it harder for them to devalue labor.
It depends on how the tax rate is raised. If we bump every corporate tax bracket up 5%, you’re correct.
If, instead, we establish a punitively-high top-tier rate, what we will be instead are small and medium businesses operating as usual, while large companies tailor their business models to stay just under the line. It is that “tailoring” that benefits the economy: reducing revenue, and/or increasing expenses to reduce net taxable income.
Giant companies will divest themselves into smaller business units, where they are forced to compete with eachother (under penalty of antitrust laws). This makes it harder for them to devalue labor.