A recent Miami Herald article stated that President Trump wants to cut the corporate tax rate from 35 percent to 15 percent. Treasury Secretary Mnuchin says it would pay for itself through higher economic growth.
We have been down this path before, starting with President Reagan and President Bush, who both cut taxes massively and increased defense spending. The tax cuts did not pay for themselves and, to Reagan’s credit, he raised taxes 11 times to rein in the deficit.
All independent studies show that a 20 percent cut in corporate taxes would reduce federal revenues by more than $2 trillion over the first decade.
Furthermore, most large corporations, through various deductions and credits, pay an effective rate closer to 20 percent; that’s lower than the 22 percent paid by large corporations in other advanced countries.
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