Bick wrote:Not4u - the threshold for ROI was just lowered, increasing the incentive to take the risk of capital investment. For corporate america, the decisions for what to do with after-tax profits will either be greater returns to shareholders thru dividends or reinvestment for future growth. Either way, the $$ goes from the gov't hands into private hands.
In my professional experience, ROI does not factor in corporate taxes as those are taken AFTER profits are calculated.
I thought I provided ample examples for how that works. When computing ROI or IRR, you look at the costs vs. direct benefits. Other realized benefits that have nothing to do with the investment being made are not computed in the ROI or IRR.
Yes, the tax cut has an effect on the corporate bottom line, but not on how return on investment is calculated (for virtually anything except for things like investing in stocks, which is an entirely different type of investment).
Yes, it does put it in the private sector, which I do favor.
To be very clear, I think lowering the corporate tax rate is a good thing, but I think they lowered it too much. Maybe something closer to 25% would have had just as much benefit, but not as much impact to the deficit.
The possible benefits are where we disagree. Corporate profits will increase and there will be a very modest increase in investments. Corporate overseas investment isn't likely to change much unless there is a belief that the new tax rate will stay in place. Some will take the risk for new investments. Few will change their current multi-national strategy because of these changes.
Where we'll see benefits is how these changes will drive stock markets. Increasing corporate profits will increase market valuation and stock prices will rise. That will put more money into the economy. However, it will continue to grow the gap between the most wealthy and the middle class.