Running head: CORPORATE TAXATION 1

Corporate Taxation
Name
Institution Affiliation
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Corporate Taxation
In the last discussion we talked about the importance of taxation in the management of

government of operations. In this essay, the focus is on the relevance of corporate taxation and

its efficacy. Corporate tax is the money levied by the government on companies for the profit

earned. In layman, increasing the corporate tax is an avenue for the government to increase

revenues (Dubay, 2013). However, an increase in corporate tax may make the country less

attractive to investors. A lot of studies have been conducted on whether to increase or not to

increase corporate tax. In this article, the author opines that taxing company profits is generally

viewed by the public as an advanced and relatively harmless way of increasing government

revenue (Brill and Hassett 8). However, economists have long argued that homeowners tend to

respond by cutting investment, cutting jobs, or simply switching to lower taxes with higher

corporate tax rates. As a result, part of the company's tax burden is transferred to workers in

lower wages, consumers in higher prices, or others such as landowners.

 The article argues that given the positive impacts of lower corporate rates,

legislators should not perceive increasing corporate tax as a source of additional revenue but the

potential for economic growth. Indeed, the article warns that an increase in the corporate tax may

hurt the gains made by the TCJA in the US and negatively affect the US ability to attract FDIs.

Furthermore, the article quotes financial reports that show that workers bear the ultimate

corporate tax burden and that corporate taxes are a significant impediment to economic growth.

This increase in tax rates is not recommended. The new and lower corporate tax rates make the

US more attractive for businesses to seek investment and deter profits from moving to low-tax

areas. In this regard, the article opines that legislators must be made to understand that lower

corporate tax fosters productivity, long-run income, and employment (Feldstein 4). By lowering

corporate tax, the article opines that technology and innovation are encouraged.
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 This article explores the role of corporate tax on employee motivation. For

example, the article argues that lower corporate taxes raise wages to improve engineering,

technology, and capital investment, which increases worker productivity and incomes (Dubay 5).

Lower corporate tax extends the rewards for risk-taking and entrepreneurship to serve

consumers. They reduce the significant distortion caused by tariffs. And the changes will benefit

others, such as workers and consumers. However, it is clear that companies benefit from a

country's infrastructure and have fair, practical, and political reasons why they should pay taxes.

Although taxes are not the only costs that should be kept to a minimum, they are a burden that

reduces investment and economic returns.

 Additionally, the article opines that companies pay a lot more than corporate or

trade taxes (Dubay 8). Therefore, the government should consider creating a tax system that

supports investment and the overall tax burden on businesses. Higher after-tax returns mean

more increased investment and more significant capital funding, including better technology that

increases labor productivity and profits. But it takes time. Therefore, the direct impact on

workers can be small, even if the cumulative effect is enormous.

 While opposing, reduction of corporate tax, Grierson, in his article, Will

corporation tax increases always lower wages and raise prices? The Guardian argues that the

decrease in corporate tax does not guarantee economic success (Grierson, Jamie, 2020). The

author points out that the most significant income source for Labor's plans is a corporate tax

increase. By reversing the cost cut to 26% of the base rate and introducing a low win rate of

21%, the party expects to raise £ 23.7 billion by 2023/24 (Grierson, Jamie, 2020). The article

notes that since the Conservatives joined the government in 2010, the corporate tax rate has been
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lowered from 28% to 19%. However, inflation-adjusted average wages are still below their pre-

financial highs.

Conclusively, critics say the work schedule will hinder business investment, which is seen as

essential to boosting the UK economy and rising wages in the long run - as companies invest in

new technology, buildings, and the skills of their workforce. Despite corporate tax cuts,

corporate investment has been relatively weak over the past decade, lagging behind some other

developed economies. Investment growth has stalled for the past three years due to uncertainty

about Brexit.
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References.

Grierson, Jamie. "Will Corporation Tax Increases Always Lower Wages and Raise Prices?" The

Guardian, Feb. 3, 2020, www.theguardian.com/politics/2019/nov/22/will-corporation-

tax-increases-always-lower-wages-and-raise-prices-john-mcdonnell.

Dubay, C. S. (2013). A Territorial Tax System Would Create Jobs and Raise Wages for US

Workers. Heritage Foundation Backgrounder, (2843).