In speeches pitching his tax plan to the country, Trump claims the U.S. has the highest corporate tax rate in the world, even though the truth is more complicated than that. He and other Republicans also argue that a lower corporate tax rate would create more jobs because corporations will use the money that is no longer tied up in taxes to create more jobs and higher wages. However, multiple studies have shown that this won’t be the case.
According to new analysis from Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, the only group significantly benefiting from a lowered corporate tax rate are wealthy foreign investors.
Analysis by Rosenthal finds that roughly 35 percent of U.S. corporate stock is owned by foreign investors. Slashing the corporate tax rate to 20 percent would translate to a tax cut for these investors worth $70 billion dollars, a cut three times the tax break that households in the middle income quintile would get under Trump’s tax plan.
And therefore foreign investors will invest more in the US, raising US productivity and wages.
That’s not a fault nor error, that’s the point.