I think it's pretty clear that corporate re-investment going up is good for the economy, perhaps looking at the equivalent lengths countries go to draw excess investment money from the international market in is a decent example - or maybe the WPA in the US where the government artificially injected money into employment to restart the economy.
It's not like the money leaving the corporation doesn't get invested in something else. I could very easily see the how higher rate lead to less innovation since the money is all tied up in mega corps.
Often time it leaves corporations simply to inflate the price of assets, which is not productive. While we have been lowering taxes past many decades the velocity of money has gone down.
If a firm eyeballs a project that is likely to have a good return, they will pursue it regardless of the corporation tax rate at present. Meaning that whether the corporate tax is high, low, or nonexistent, it's better to make money than not make money.
Given this, if a firm cannot see any good opportunities to pursue, incentivizing mass investment in zero or negative return projects, while coincidentally incentivizing lower government revenue is unlikely be a net good for society. That seems to me to be a encouraging massive destruction of wealth and also encourage enormous mis-allocation of capital.
You’re (edit: sorry, GP was) espousing the broken windows theory, though. Corporations already have a natural incentive to re-invest in themselves when it’s a profitable decision to do so.
I don't think so because the corporation isn't a person and no one actually has the corporation's best interests at heart. Everyone is invested or labour for the venture for money - some idealists may want to build a great thing - but those will be far in the minority compared to those that want to sell a great thing.
Reinvestment in a corporation is only naturally incentivized when that strategy appears to give the biggest RoI and not all money uninvested from markets, companies etc. will necessarily be reinvested in another venture.
Our current policy is to paper over bank liquidity or other problems by printing money. Big institutions and the mega-rich are hoarding massive quantities of cash. The economy as a whole would be better off if billionaires were doing stuff with their money rather than hoarding shares.
That doesn’t sound like a typical business argument. We could more efficiently get the money in the government treasury by skipping the corporate middleman and taxing it.
How are those tbills delivering value to the shareholders?
How are the nearly $2 trillion of bank reserves at the Fed contributing? That’s a significant portion of the total money supply.
Most of the corporate cash isn’t in equity funds, it in US Treasury debt. Apple holds >$50B of treasury securities, for example.
The low inflation monetary policy has some benefits, but combined with our ass-backwards tax system also makes for strong disincentive to do anything with excess cash.
Money in the government coffers is spent and used by the government. Again, a good thing (as far as government spending can be called a good thing, of course).
Not at all clear to me this is the case.