The Instigator
Nordenkalt444
Pro (for)
Tied
0 Points
The Contender
flaskblob
Con (against)
Tied
0 Points

Corporate taxes should be lowered

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Voting Style: Open Point System: 7 Point
Started: 5/25/2013 Category: Economics
Updated: 3 years ago Status: Post Voting Period
Viewed: 1,003 times Debate No: 34187
Debate Rounds (5)
Comments (0)
Votes (0)

 

Nordenkalt444

Pro

1st round: Acceptance
2nd round: Arguments
3rd and 4th rounds: Rebuttals
5th round: Closing statements.
Debate Round No. 1
Nordenkalt444

Pro

So, the economy is still in bad shape. By that, I mean that there is still less buying and selling because corporations have to pay so much to stay in business. After sales, consumption, income, property, and corporate taxes businesses would barely have enough for salary or profit (if any).
The result would be a decrease in spending which can be a precursor for recession. The recession is based on the health of the economy by how much people buy or sell, and the law of demand states that even the slightest price increase can lead to significant results.
Another result would be high unemployment, because different companies have to pay their workers on top of these taxes which they sometimes find hard to do. Some people might think that the people already working there would just be paid more, well it depends. Most trustworthy and intelligent managers would hire more labor instead of investing more in what they already have.

Given these facts, I think that taxes should be lowered overall for businesses so that they can hire more labor, get more resources, and supply better qualities of the product.

https://en.wikipedia.org...
https://en.wikipedia.org...
http://taxfoundation.org...
flaskblob

Con

My opponent seems to blame the recession on corporate taxes. His argument has no substance at all and only includes baseless conjectures which somehow add up to why corporate taxes should be lowered.

Corporations pay significantly less in taxes today than they did 50 years ago due to increased globalization and offshore subsidiaries which allow them to essentially avoid corporate taxes.

http://www.cbpp.org...

As my opponent is attempting to say that corporate taxes should be lowered because it would benefit the economy, yet he has offered nothing to support this resolution. I await his logically structured arguments, and compelling evidence for why corporate taxes should be lowered.

I agree that lowering taxes in general is always going to increase GDP if government spending remains unchanged, however this will ratchet up the national debt via larger deficits ultimately leading to higher borrowing costs and more painful taxes later. Quantitative easing will likely end this fall. This will (and already partially has based on bernakes recent comments) ratchet up interest rates and quickly make debt payments extremely costly

You can see based on yield curve history rates are already rising and will dramatically rise when the program ends.
http://www.treasury.gov...

Bernake has already said that debt will be a huge long term drag on the economy.

In the short term lowering taxes on anyone/anything will benefit GDP. However I believe my opponent will agree that long term health of the economy is of far greater import.
Debate Round No. 2
Nordenkalt444

Pro

I'd like to thank my opponent for bringing up a concept I meant to bring up in round 1, which is the actual results instead of just saying "a recession" in general. Because recession is such a general term, let me narrow to the part I'm trying to show you. You make an important point that taxes are lowered if they relocate overseas, especially to China or Japan. This is actually a problem for the economy, it's not a good factor that can lead to better economic growth like you say it does.

Globalization itself isn't a problem at all, but if jobs or capital were to be shipped overseas then it would be devastating for OUR economy while only one economy benefits. Corporations do this to avoid corporate taxes, and take their business somewhere that doesn't normally have corporate taxes like we do. And if corporations have had lower taxes than they have 40-50 years ago (which is somewhat true), then why are they shipping jobs overseas? Because they're not low enough.

And why is this such a big deal? Because the more money made, the higher the tax rate is and corporations make a lot of money. The IRS reports that since 1988, the tax rate per income began to fluctuate and people with lower incomes started to be taxed at a higher percentage than those making more (to this day). They got tired of this, and since then began to relocate to countries with cheap labor and low or no taxes. Since the late 1980s, this caused a whole range of economic problems which can be obvious when seen. It's no coincidence that the countries that we owe trade deficits with are the ones that corporations decided to relocate to.

As for my sources, did you not see the entire article filled with 10 benefits of lower corporate taxes? And what "program" are you talking about? And yes I do agree with the long-term health of the economy, which means that we have the same goals. We have different theories on how to meet them however, and if taxes were lowered the government would actually be making more profit because more people would make demands. It's simple math. If the tax rate was 8% for a candy bar, only 1 person would want to buy it. But if the rate was 4% then 3 people would want to buy it, so the government would be making 4% more if the taxes were lower.

http://www.google.com...
http://www.americanprogress.org...
flaskblob

Con

"This is actually a problem for the economy, it's not a good factor that can lead to better economic growth like you say it does."

Lowering taxation period leads to higher GDP ceteris paribus

"Globalization itself isn't a problem at all, but if jobs or capital were to be shipped overseas then it would be devastating for OUR economy while only one economy benefits."

You are ignoring the law of comparative advantage. Your statement is blatantly incorrect. http://en.wikipedia.org...

"Corporations do this (ship jobs overseas) to avoid corporate taxes"

This is incorrect. Corporations shift profits overseas to avoid taxes. They shift manufacturing jobs overseas because the lower cost of living allows the goods to be manufactured at cheaper wages than by unionized wages.

"if taxes were lowered the government would actually be making more profit"

No. We are not that high on the Laffer Curve as evidenced by the historic corporate tax lows.

http://en.wikipedia.org...
Debate Round No. 3
Nordenkalt444

Pro

Nordenkalt444 forfeited this round.
flaskblob

Con

flaskblob forfeited this round.
Debate Round No. 4
Nordenkalt444

Pro

Nordenkalt444 forfeited this round.
flaskblob

Con

flaskblob forfeited this round.
Debate Round No. 5
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