ECONOMIC PIPELINE
BRIAN KANTOR: How Plumber Joe gains from US tax cuts
Reducing the US corporate tax rate and the taxes applied to offshore profits earned by US corporations has had unintended consequences. Some leading companies have immediately converted lower taxes into bonuses for their employees. These reactions are proving very helpful to the political ambitions of the tax reformers and damaging to the opponents of the tax reforms. These immediate reactions to lower tax rates will not be the last or the most important influence of lower income tax rates. Lower tax rates will have improved the prospective returns on the capital invested by US companies. More than buy back shares or pay bonuses or dividends a company may wish to invest more in plant and equipment.
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