Better Profits Tax Act

It seems pretty certain that business tax rates are going to be reduced since that reduction is in both the House and the Senate versions.  The idea behind this is that by reducing the rates the US companies will have more earnings to invest and expand.

Of course they don't have to use the money that way and to the extent that many businesses are already rolling in cash and interest rates are still historically low, if there were profitable investments, I think they would have been taken.

The other possibility is that a new venture is profitable enough at a 20% rate than a 35% rate leading to start ups that didn't pass a return on investment criteria at the old rate.

Republicans act like this increase is going to be significant but most economists don't agree and see a very modest impact.

Still I suppose a modest impact is better than no impact except for the fact that we can't pay our bills already and this money is being borrowed by the Government.

So deficits and the debt will increase and these create a drag on the economy as the debt payments aren't used for things like infrastructure improvement or other productive uses.

Further, if interest rates rise, which inevitably they will, the debt payments get significantly worse.

The final piece of this puzzle is that business when it does invest, creates more efficient factories meaning more automation and less jobs.

So most of the increased activity won't actually be new jobs, just more profits.