Will Corporate Tax Cuts Help The Middle Class?

Every politician loves the middle class.  That is because most of the electorate belongs to the middle class.  Consequently, politicians often argue that their economic policy proposals are good for the middle class.  Jared Bernstein was at a congressional hearing on proposals to cut corporate taxes.  The tax cuts were defended by arguing that they would be good for the middle class.  In this article Bernstein shows that corporate tax cuts do not trickle down to the middle class.  The corporate tax code needs to be reformed, but there are better ways to do it than to lower the tax rate under the pretense that it will benefit the middle class.

Bernstein does not elaborate on the real corporate tax problem in this article, but it is part of a more general problem.  We have a global economy and our large corporations operate within that economy.  They maximize shareholder value by deriving as many benefits as they can from the nation states in which they operate, but they don't don't want to pay taxes for the services provided by the state.  They do what they can to can to get the state in which they are incorporated to shape the operation of the global economy to meet their needs, and most national governments believe that it is in their interest to do so, but they are holding a weak hand.  Their jurisdiction is bounded by geography.  Our large corporations have a global playfield.  In particular, they have found ways to use that playfield to their advantage on tax policy.  Its a race to the bottom on tax policy unless national governments work together to prevent it.