Fox Allen Arcand Candidate number: 1207

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Fox Allen Arcand

Candidate number: 1207

Syllabus/ Comp: 9239/02


Does cutting corporate tax rates increase manufacturing in industrialized nations?

The linkage between tax rates and public services is, if not non-existent, negative (Arthur Laffer). The IRS collects corporate tax by first taxing the corporate income “to the corporation when earned, and then is taxed to the shareholders when distributed as dividends.” A shareholder is defined by Cambridge as “a person who owns shares in a company and therefore gets part of the company's profits.” Merriam Webster defines a dividend as “an amount of a company's profits that the company pays to people who own stock in the company.” In the United States The federal corporate tax rate is boost the economy by stimulating countries to invest. Japan is planning to cut corporate 35%(Americans for fair taxes) and the third highest in the world. The tax revenue generated from corporate tax makes up 11%(Center on Budget and Policy Priorities) of the nations budget. In contrast Ireland has split its corporate take to 12.5% for trading corporations and 25% (Revenue) for non-trading. This is done in an effort to tax of 35% to 31.7% in order to stay more competitive in the region. Japan is losing corporations to neighboring countries such as China (25%) and Singapore (17%) due to the lesser tax. The UK will cut its corporate tax rate to 19% in the new tax season. The cut is not expected to impact government revenue but is an effort to reboot economy following Brixit. William Pesek claims “lower taxes should make Japan more competitive and thus encourage multinational companies to take another look at the country.” While Josh Bivens and Hunter Blair claims even if the effective corporate tax rate were higher economic theory and data do not support the idea that cutting these rates would encourage further investment.” Does cutting corporate tax rates increase manufacturing in industrialized nations?

The topic of corporate tax cuts increase on the industrialized countries can be seen through the political, social and legal perspectives. On the opposing side of the political perspective Derek Thompson states that the lowering or raising of tax rates cause “a small to modest, positive effect on economic growth" or "no effect on economic growth.” While on the supporting side Scott Hodge claims “cutting the corporate tax rate will promote higher long-term economic growth.” On the opposing side of the social perspective Jared Bernstein & Ben Spielberg claim that corporations receiving tax cuts just gives workers “extra take-home pay and means they can work a bit less and maintain the same level of income.” On the supporting side Alexander Franco states cutting corporate tax rates will “provide an increased flow of domestic, debt-free capital that will boost investments and production.” On the supporting side of the legal perspective Alexia Campbell claims that corporate tax evasion “ends up costing the U.S. government about $111 billion each year in lost revenue.” While in opposition Daniel Marans state that practices such as “rolling over losses from previous years enable companies to deduct those losses from their tax burden” and give them more money to grow.

William Pesek has a bachelor's degree in business journalism from Bernard M. Baruch College-City University of New York. He is currently the executive editor of Barron Asia and has twenty years of economics and business reporting. The authors education relates somewhat although his multiple years of reporting add credibility. Pesek is published by Bloomberg view, an international news outlet based in New York. The world-renowned status and multiple editors add credibility to the article. Pesek claims “lopping at least 3.3 percentage points off corporate levies by next year will encourage Japanese executives to increase investment.” However he claims that “Abe (the Japanese prime minister) needs to do more than cut rates” and that “the logic behind the move, however, seems shaky.” He believes while cutting corporate taxes in Japan will help the economy, it does not go far enough. Pesek then provides multiple solutions such as enforcing tax code and changing Japanese taxing laws. Throughout the article the author uses loaded language such as “slash”, “skyrocketing” and “lopping” creating informality. The author appeals heavily to statistics such as “70 percent of companies here still pay no corporate taxes” to enforce his claims lowering credibility. The statistics given have no citation or source lowering the effectiveness and credibility of including them. Pesek appeals to the authority of expert testimony such as “John Maynard Keynes” to support his argument. He provides no credentials for some “experts” and invalid credentials for others. Throughout the article an inductive reasoning pattern is created by beginning with a general premise and ending with a specific conclusion. Throughout the article Pesek creates a strong argument and includes a global perspective. If the author used less loaded language and appeals to statistics the article would be stronger.

Akin Oyedele has masters in journalism from Columbia University and a Bachelors of arts in media studies from Witwatersrand University. The author’s education being unrelated detracts some credibility although his career as a market journalist regains some credibility. Business insider an international news organization based in America publishes him. The publisher’s vast audience and multiple editors add credibility. Oyedele claims “A lower tax rate could encourage companies to repatriate some of the profits they've kept abroad to avoid taxes.” He argues “In theory, that (cutting tax rates) could encourage investment and hiring.” The author uses expert testimony from sources such as David Bianco increasing credibility. However the author appeals to anonymous authority in the phrase “Several top equity strategists” lowering credibility. The author appeals to statistics such as “$312 billion was eligible to be taxed at a 5.25% rate instead of the 35% rate of the time” lowering credibility” Oyedele provides expert testimony with counterclaims when stating James Sweeney’s opinion further increasing the credibility and effectiveness of the argument. The author includes graphs to help illustrate his claims increasing credibility. Throughout the article the author appeals to the authority of an organization named Pavilion Global Markets creating some bias and lowering credibility. A deductive reasoning pattern is maintained throughout due to a conclusion being formed from multiple premises. The author maintains a mostly subjective view throughout while providing both sided of the argument. The article could be made stronger making fewer appeals to authority and anonymous authority.

Josh Bivens has a PhD in Economics from the New School for Social Research and a B.A in Economics from the University of Maryland. His extensive education and occupation as the director of research at the Economic Policy Institute make him a highly credible source. Hunter Blair has a major in economics and math from the University of New York as well as a Masters in economics from Cornell University. His education and work as a budget analyst adds credibility to the blog. The Economic Policy Institute publishes the authors, a non-profit research organization that studies the economic impact of political policies. The publisher’s non-profit statues and unbiased nature make it credible. The author begin by stating the counter argument that that “cutting corporate tax rates would increase American companies competitiveness and benefit of most American families.” The author’s then state that they “find their central argument that U.S. corporations face high corporate taxes to be empirically false.” They follow this statement by providing solutions such as “closing loopholes in the system that have eroded the corporate income tax base.” Bias is shown when describing the opposing sides views as “empirically false” and “hurts the U.S” lowering credibility.” An appeal to anonymous authority is created when stating, “they further claim” and “they imply” lowering credibility. Loaded language such as “unambiguously” and describing cuts as “nothing on their own” lowering validity. An induductive reasoning pattern is used with a specific premise being supported with broad generalizations. The authors produce an argument that is heavily opinionated and includes no statistics or testimony to enforce their claims. If the authors used evidence and support while exerting less bias the article would be stronger.
Alana Semuels has masters in economics from the London School of Economics and is a writer for the Atlantic, adding credibility to the article. She was published by the Atlantic, a magazine and website that focuses on international news. The large size of the magazine and the multiple publishers make them a credible source. Semuels begins the article by providing the supporting argument in favor of cutting tax rates adding credibility. She states, “When companies pay lower taxes, the thinking goes, they have more money to spend on research and development.” She follows this claim by brining up Irelands experience lowering its tax rate to 12.5% creating a global perspective adding credibility. The author provides multiple statistics to support her claims such as “the growth rate of the United States, which in 2015 was 2.4%.” however the author provides no sources to support the statistics and creates an appeal to statistics detracting credibility. Semuels provides expert testimony for both sides of the argument, such as Grainne O’Rourke for the supporting side and Jim Stewart on the opposing side. The author provides the credentials of both of these men adding credibility. The author creates a hasty generalization by using Donald Trumps views as the entire supporting sides argument detracting credibility. Semuels concludes by claiming, “lowering the corporate tax rate alone won’t necessarily make any difference.” The author going from a general to specific premise created an inductive reasoning pattern. Throughout the author crates a fairly unbiased view that illustrates both sides of the argument. The article could have been made stronger with fewer statistics and citing sources.
Willaim Pesek provided the most comprehensive argument and believes that “lopping at least 3.3 percentage points off corporate levies by next year will encourage Japanese executives to increase investment.” However he appeals heavily to statistics that contain no sources and appeals to the authority of others opinions decreasing credibility. Akin Oyedele claims, “In theory, that (cutting tax rates) could encourage investment and hiring.” The author appeals to anonymous authority and statistics lowering the strength of the argument. Josh Bivens and Hunter Blair believe “their central argument that U.S. corporations face high corporate taxes to be empirically false.” However they appeal to anonymous authority and show heavy bias lowering credibility and the strength of the argument. Alana Semuels claims, “lowering the corporate tax rate alone won’t necessarily make any difference.” She appeals to statistics that contain no source and makes a hasty generalization detracting some credibility.
I previously believed that cutting income taxes just gave corporations more money and made them even wealthier. I learned that to be false and that cutting corporate taxes benefit more then just the company itself. It gives corporations more money to on tern spend, growing the economy and growing business. The business growth then hires more employees and gives workers higher salaries. William Pesek influenced me the most and helped me change my views from the opposing to the supporting side. He stated all the benefits of cutting income tax while also providing further solutions. Some possible solutions for the topic being discussed it closing corporate loopholes in tax code. Another would be a restriction on corporations from putting a large amount of assets over seas In order to avoid taxes. Lowering corporate tax would encourage more companies to invest and help grow the economy. Enforcing the tax code in many areas concerning corporations would cause more businesses to pay instead of hiding thousands in assets. If I were to do this project again I would explore the question to what extent does corporations over seas assets a detriment to the American economy?

Works Cited

Bivens, Josh, and Hunter Blair. “‘Competitive’ Distractions: Cutting Corporate Tax Rates Will Not Create Jobs or Boost Incomes for the Vast Majority of American Families.” Economic Policy Institute, Economic Policy Institute, 9 May 2017, Accessed 23 May 2017.

Campbell, Alexia Fernández. “The Cost of Corporate Tax Avoidance.” The Atlantic, Atlantic Media Company, 14 Apr. 2016, Accessed 23 May 2017.

Corporation Tax Branch, Business Taxes Policy and Legislation Division. “Cookies on the Revenue Website.” Corporation Tax, Revenue Commissioners, Accessed 23 May 2017.

“Fact Sheet: Corporate Tax Rates.” Americans For Tax Fairness, Americans for Tax Fairness, 2014, Accessed 23 May 2017.

Franco, Alexander, and Alana Semuels. “Does Lowering the Federal Corporate Income Tax Rate Create Jobs? - Corporate Tax Rate & Jobs -” Does Lowering the Federal Corporate Income Tax Rate Result in Employers Creating More Jobs?,, 3 Jan. 2017, Accessed 23 May 2017.

Hodge, Scott A. “Ten Benefits of Cutting the U.S. Corporate Tax Rate.” Tax Foundation, Tax Foundation, 17 Jan. 2017, Accessed 23 May 2017.

Laffer, Arthur. “Tax Quotes.” BrainyQuote, Xplore, Accessed 23 May 2017.

Marans, Daniel. “This Study Shows How Low Corporate America's Taxes Really Are.” The Huffington Post,, 13 Apr. 2016, Accessed 23 May 2017.

Oyedele, Akin. “One of Trump's Biggest Plans to Stimulate the Economy Won't Be Great for Most Americans.” Business Insider, Business Insider, 21 Dec. 2016, Accessed 23 May 2017.

Pesek, William. “Japan's Corporate Tax Cuts Don't Go Far Enough.”, Bloomberg, 9 Sept. 2015, Accessed 23 May 2017.

“Policy Basics: Where Do Federal Tax Revenues Come From?” Center on Budget and Policy Priorities, Center on Budget and Policy Priorities, 4 Mar. 2016, Accessed 23 May 2017.

Rodionova, Zlata. “Theresa May's Planned Corporation Tax Cut 'Won't Come Close' to Protecting Economy from Brexit, Warns JP Morgan.” The Independent, Independent Digital News and Media, 27 Feb. 2017, Accessed 23 May 2017.

Semuels, Alana. “Would Cutting Corporate Tax Rates Really Grow the Economy?” The Atlantic, Atlantic Media Company, 20 Oct. 2016, Accessed 23 May 2017.

Thompson, Derek. “Tax Cuts Don't Lead to Economic Growth, a New 65-Year Study Finds.” The Atlantic, Atlantic Media Company, 16 Sept. 2012, Accessed 23 May 2017.

Word count: 1939

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