(06-02-2015, 04:10 AM)admin Wrote: I'm not sure it works that way to be honest, Art. The corporate tax rate is still high, even if what companies actually pay is MUCH less due to a wild variety of deductibles. What the 1950s and 60s show is that high marginal income tax rates are not necessarily a killer of economic growth (just like lowering them not necessarily triggers a boom), but no more than that. Lower tax rates still make sense as it leads to more disposable income, however, if taxes are only lower for very high earners who save a lot and the reduction of taxes leads to less public spending, the ultimate effect on demand in the economy might not be clear cut. Another issue is of course how taxes affect corporate decisions to invest. While I'm not a US corporate tax expert, I think there are plenty of deductibles for investment, which is why I'm inclined to think tax is not the primary element in determining capex.
I'm not arguing this from a corporate tax rate basis where we can agree the effective rates are highly variable due to political manipulation. As you begin to suggest, the growing wealth disparity moves money from the general market where it would have far greater velocity and productivity to the equities and derivatives market where it moves with the productivity of chips on a poker table. To paraphrase Henry Ford, 'I want to pay people enough to buy my cars'. He apparently saw the value of putting money and profits in the hands of people who would then have the purchasing power to buy more goods and services thus creating more wealth for everyone.
It was with the limitation of wealth concentration through heavy taxation that we built our interstate highways and sent men to the moon. America's middle class grew and prospered. Now? Maybe dropping money from helicopters will work. In the mean time our highways are failing, space program is on life support and too much human capital has become jobless or underemployed.