A good read if you're interested:
https://www.investopedia.com/articl...s-high-corporate-tax-rates-hurt-americans.asp
From the article:
Worldwide vs. Territorial Tax Systems
Under the Trump Administration's tax reform bill, the corporate tax rate dropped from 35% to 21%. The bill also eliminated taxation on certain forms of foreign-earned income, thereby reducing the
tax liability of companies that do business abroad.
The passing of the Tax Cuts and Jobs Act in 2017 eliminated taxation on certain foreign-earned corporate income.
Prior to this, the U.S. government used a worldwide tax system, a system that taxes income regardless of where it's earned. This meant American
corporations were taxed by the U.S government on the income earned domestically and abroad. But that's not all. Any company that operated outside the U.S. was also taxed by the countries where they operated as well. This meant many American companies were double-taxed—by the U.S. as well as by the country where they did business. Not only did this double tax put a burden on corporations, but it also put them at a disadvantage compared with foreign competitors that weren't subject to
double taxation.
Most developed countries, though, don't use a worldwide tax system. Instead, they use what's called a territorial tax system, which only taxes companies on the profits they earn within a specific country. Under a territorial system, an American company would only pay taxes on income earned in France to that country, and would only give
Uncle Sam a cut of the profits it earns at home.
KEY TAKEAWAYS
- The corporate tax rate dropped from 35% to 21% following the passing of the Tax Cuts and Jobs Act in 2017.
- Higher corporate profits tend to move jobs and profits overseas.
- Companies generally spend more rather than save and invest when corporate tax rates are higher.
- Economists say lower tax rates may result in higher tax revenue for the government because companies are more likely to curb spending.
Edit: A little more to your point:
So why are lower tax rates great for corporations? Economists project that lowering corporate tax rates is a boon for the
economy. That's because they would actually increase tax revenue. How? By lower tax rates, corporations could dedicate more resources to taxable, profit-generating activities rather than spending, putting more money back into the government's coffers rather than somewhere else. Jobs also come back to the U.S., employing more people. And more money is spent on innovation, which creates more products and services, putting more money back into the economy.
The Bottom Line
Higher
marginal tax rates on U.S. corporations discourage them from earning profits domestically. This, in turn, sends jobs and
taxable income overseas. Higher rates give businesses an incentive to spend rather than save and invest for the future, even when the latter may be the more prudent choice. They also waste corporate resources that could be better spent on developing new products and services.
