If the federal government lowers tax rates on corporations, House Speaker John Boehner (CNN, Nov. 9) said, “We know that we will get more economic growth.” This assertion is based on the claim that lowered business taxes will provide needed capital, which companies will invest in new employees to make new products, which people will buy, which provides more capital to make more products, and on and on. This is the wonderful business cycle. But it can work only if people have money to buy. Not enough people do.
But companies do have money. Many are awash in cash. They are not hiring because they do not have not enough customers. Therefore, rather than cut corporate taxes, as Boehner suggests, government should cut personal taxes. This will allow people to buy things and that will stimulate new hiring. And the cycle will start again.
Could it possibly be this simple?