Finland tried this same thing with the same "dynamic effects will offset lost tax revenue!" rhetoric a few years ago, and it didn't work out anything like expected.
At the start of 2014, Finland lowered its corporate tax rate to 20% (from a previous 24.5%). The lost tax revenue amounted to $800M EUR, but the government claimed that half of that would be recouped thanks to positive dynamic effects the tax cut would create in the national economy.
Two years later, they were forced to admit [1] that none of those dynamic effects materialized.
Cutting corporate tax may still be a good thing, but it's most likely nothing close to revenue-neutral anywhere in the developed world. So this plan would expand the US budget deficit (which Republicans seem to hate only when they're not the ones expanding it with tax cuts).
To play devil's advocate, Finland was giving sort of a vague argument for their tax cuts: "dynamic effects", while in America there are very concrete potential effects of the policy. You can point directly to Apple and say, "If we cut tax rates to 15%, Apple will bring back $X to the USA", "Exxon Mobile will bring back $X to USA", and so on. You can even... talk to them and ask them what it would take to repatriate the offshore funds, and I would hope Trump would do that. So yeah, I think it's one thing to cut taxes and hope "economic growth" happens automatically, but a completely different thing if you have a quantifiable number of offshore dollars, deals can be made, etc.
Eventually that money will be either returned to share holders, or will be invested in the business. You also have to consider that the government in Finland is probably way less shitty than the US government.
Complex tax code = lots of loops that can be found via a team of accountants
Therefore the big firms that everyone villianizes for paying little taxes are already paying low taxes. This would lower the taxes for those who can't afford the team of accountants. Ideally they should also dramatically simplify the tax code to eliminate all of the loopholes so everyone pays the expected rates and there are no reinforcing cyclical benefits for market incumbents crippling innovation and continually enriching a small subset of the population.
This is a race to the bottom. There is no public policy reason that corporations, particularly public corporations, should be allowed to amass such enormous piles of cash.
I think the big thing about this is that it will lead more companies to bring capital back to the US from overseas where they are hoarding it. If they either spend it or distribute it to Americans that's likely good for the economy. It also improves the IRR for projects, which should lead to more investment. Hopefully, it works to get the economy going.
Greedy companies are greedy. Lowering to 15% won't magically make them good corporate citizens. The carrot and a really big stick are needed. I don't see this admin taking a stick to corporate America.
IIRC the Russians tried a 13% rate for a major tax and found that it worked fairly well. If you hassle enough you can get below 13% (or 15%), but hassle has its own cost.
Implying "Greedy companies are greedy" is bad makes little sense...
Greed is defined as:
> intense and selfish desire for something, especially wealth, power, or food.
I've never met a person who wasn't greedy, seriously even a pastor has the intense desire for followers.
Further, it's literally only possible for a company to exist if it is greedy. How else will they pay their employees, investors, etc?
Now, we can argue some companies are "excessively greedy". However, I think that's still probably not the correct way to describe companies that shaft their employees for the bottom line. By definition being "greedy" implies "intense" or "excessive", I think a better term would be "short sighted".
A company which harms it's employees, customers, etc. and tries to get the most value is "greedy" (just as all companies are), but what makes it "bad" is the poor management.
I think the whole point of this new proposed system (aka 15% tax), is that it tips the pro's vs con's list of companies keeping money here to "pro". That's how economies work.
What you call a loophole most every other country in the world calls "territorial taxation." If a good is produced outside the US and sold for a profit outside the US then the US shouldn't collect taxes on the transaction.
The loophole allows self-dealing transactions to move local profits offshore.
Apple US buys iPods for $10 from China and sells in USA for $100. $90 profit, taxable, right? Wrong. Apple US licenses the Apple name from Apple Ireland for $89/iPod. Final tax sheet looks like:
Revenue: $100 cash from Apple store in San Francisco
Expenses: $10 Apple China, $89 Apple Ireland
Taxable profit in USA: $1 (minus labor and such, of course)
Taxes paid to US government: minimal.
The profits from firms that do lots of business in the USA are being paperwork-shifted outside the country to evade taxes.
This has been covered extensively in numerous in-depth articles about major corporations and their tax schemes.
You actually have it backwards. US firms that do a lot of business overseas are being paperwork-shifted outside of the US not to avoid paying taxes on US operations but to avoid paying US taxes on operations that take place largely overseas.
This is how Apple ends up with 250 Billion (or whatever it is now) overseas that it doesn't want to Repatriate and pay US taxes on. That money wasn't earned by selling iPods in the US, it was earned by selling iPods everywhere else.
The first is the US government not doing enough to prevent shell IP licensing from being used to eliminate US profits (while the companies are benefiting from US stability and legal protections).
The second is the issue with US companies repatriating (or not) profits earned in foreign subsidiaries.
If the goal is to repatriate earnings why not incentivize repatriation instead? Bring it back tax-free if you invest it in R&D on needed projects, x many new jobs, etc.
Lower corporate taxes can also help create structures which allow wealthier people to avoid taxes.
For example, if you can create a structure in which all of your consulting income + capital-asset income goes into a C-corp, and you pay most of your own expenses through the C-corp (e.g., Trump tower home office), then you can keep most of your income taxed at only 15%. The C-corp holds it forever, and pays your expenses, and pays you a small salary for non-expensable items. The C-corp can purchase things like corporate cars, boats, airplanes, and real-estate, and pay for trips as well.
Obviously, there is administrative overhead in setting these things up; you can't be earning 150k and trying to pull this off.
There cannot be a gap between C-corp taxation and individual taxation rates if you want to avoid creating more loopholes for wealthier people---especially those who earn mostly from their capital assets.
If it's a "legitimate" expense it gets deducted from profits, so the tax rate is zero, even under today's rules.
If it's not a "legitimate" expense, e.g. a vacation paid by the company, the beneficiary gets taxed as if he got this much money in salary.
The part of your list that will be taxed differently under new rules is assets - jets, boats, etc. Even so, usage of the boat for leisure should get taxed to the beneficiary at customary boat rental rates.
There is room for creating accounting, as always. But it doesn't look like this is the key change here.
A bigger deal is the double-taxed income. If your C Corp earns $1m, it then pays taxes at ~ 35%, with $650k left in the coffers. Then you pay yourself a dividend of $650k and you get taxed at the dividend tax rate which is also 20%, so now you have $520k left, for a combined effective tax rate of 48%. If the corp rate is cut from 35% to to 15% then your have 680k left, for a combined effective tax rate of 32%.
The IRS is not stupid. It's perfectly capable of distinguishing a real business from a dummy business set up just to pay personal expenses. There are all kinds of rules about this sort of thing.
The IRS is not stupid, but wealthy enough people have been very effective at creating and exercising approaches to bring their marginal tax rates down to impressively low numbers.
So if the IRS is smart but this still happens a lot, there must be something else at work, no?
The primary way that wealthy people bring down their marginal tax rates is buy earning more of their income as capital gains not through the creation of phony businesses to pay for their personal expenses.
[edited summary] Apparently techniques exist to let you capital gains rather than income, increase deductions, or both. In some cases chase subsidies, which is roughly equivalent. And (cf Panama papers) obviously offshoring.
All theoretical interest on my part, so who knows. Government estimates on lost revenue from this range wildly (order 1billion to 100billion) from what I've seen, but they are at least convinced it happens in significant amounts.
Oh, you're talking about the corporate tax code. OK, plenty of crazy things there (though the line between "bad loophole" and "unavoidable complexity" is narrower than most think).
This is (as was said elsewhere in this thread) one of the biggest reasons to get rid of the corporate tax code completely and just tax people where things are much simpler and much less susceptible to these sorts of problems.
If I own a software business that earns 500k-1m a year, currently, I can organize as an LLC and induce pass-thru income that is taxed marginally at ~50% (federal, state, NYC). If I organize as a C-corp, I pay the corporate rate which is also roughly 40%, and I also get double-taxed on salary and any dividends paid to owners.
Under these new rules, if a C-corp gets taxed at 15%, there is a strong incentive to pass all income through this C-corp, even after double-taxation.
> If I organize as a C-corp, I pay the corporate rate which is also roughly 40%, and I also get double-taxed on salary and any dividends paid to owners.
Salaries for C-corp employees, including top officers that happen to be major shareholders, are a deductible business expense (well, there may be some issues if they are over $1 million annually, but...), so you only get double taxed on dividends.
Actually, it's even worse than that. From Trump's tax plan:
> Right now, freelancers, sole proprietors, unincorporated small businesses and pass-through entities are taxed at the high personal income tax rates. [...] The Trump plan addresses this challenge head on with a new business income tax rate within the personal income tax code that matches the 15% corporate tax rate
They want to change it so S-corp income gets taxed at 15%, rather than at personal income tax rates. Which is completely crazy, since every CEO in the US will be forming an S-corp and passing all income through it to get a flat 15% "income tax" rate.
Well, the disincentive to make it a C-Corp goes down. But your taxes will still be higher that way: 15% + individual taxes vs just individual taxes.
I certainly agree that the double taxation issue is a problem and it would be even better if both situations were taxed the same way but I'm not sure what this has to do with tax evasion.
Yeah, but if you're reinvesting in your company, then you might be better of at 15%, even with double-taxation.
Currently, pass-through taxation applies to shareholders even if they don't take a distribution. So, rather than have shareholders pay taxes out of pocket, the company pays the dividend just to cover taxes. That's essentially a ~30% tax on the company.
If I switch to a C-corp at 15% then I can minimize dividends while in growth mode to minimize double-taxation. I then pay the much lower 15% corporate rate, leaving me with ~15% more to reinvest.
In theory, sure. But, anyone who has run a pass-through business will tell you that it's a function of timing. If you don't manage to invest it all by the end of the tax year, then it's taxable profit.
And, it's nearly impossible to zero out your net by reinvesting it all before some contrived deadline. Even if you could, it is very unlikely that allowing this artificial timeline to drive your investment also happens to represent the best timing or the most efficient allocation of capital.
The IRS is not stupid, but their budget gets cut every year and at this point they are nearly completely ineffective as a tax-compliance organization, lacking the manpower for any sort of real enforcement.
Isn't the correct tax dodge here to use an S-corp and take all your payments through that, since Trump has also promised to slash the passthrough rate to 15%? This way would even be completely legal as far as I can tell.
Sure, go create an S-Corp. And, to the extent that it's real business you can expense the costs of that business. But don't go try buying a boat or a snowboard or whatever and writing that off as an expense. That would be tax fraud and if you do it at a big scale you will get caught.
Oops, maybe I wasn't clear - the tax dodge here is you form an S-corp, and take all your payments through said S-corp (the S-corp doesn't hold onto any more cash than is necessary). Before, a top earner would pay ~39% marginal income tax. But by routing all your income through the S-corp your effective income tax rate drops to 15%, a nearly 25% marginal tax rate cut for top earners. Or am I missing something?
As I understand it, Trump's tax plan changes this so that S-corp income is only taxed at the 15% rate:
> Right now, freelancers, sole proprietors, unincorporated small businesses and pass-through entities are taxed at the high personal income tax rates. [...] The Trump plan addresses this challenge head on with a new business income tax rate within the personal income tax code that matches the 15% corporate tax rate
> Right now, freelancers, sole proprietors, unincorporated small
businesses and pass-through entities are taxed at the high personal income tax rates. [...] The Trump plan addresses this challenge head on with a new business income tax rate within the personal income tax code that matches the 15% corporate tax rate
Huh. That's super weird. What's the difference between an S-Corp and a C-Corp then? I agree that this part of the plan is dumb (Trump proposes a dumb thing! News at 11!). I can't imagine that this part of the proposal will get anywhere.
And yet we have Trump's business (cited by the OP), which per public info has possibly been 'doing business' for years without turning a profit or generating any real value.
Say what you want about Trump's business (and there is plenty to say!) but it's clearly a real business. It owns tons of real estate and licenses the Trump brand all over the place.
The corporation tax rate over here in the UK is 20%, but I wouldn't be able to do what you're suggesting without committing tax fraud of the most obvious sort.
If my company pays for some of my personal expenditure that money becomes part of my remuneration as an employee/director and therefore my personal income tax rate applies.
No. The AMT is completely unrelated to the issue abhv brings up.
The AMT is essentially a 2nd tax code for individual income taxes were fewer deductions but also lower rates. Individuals compute their personal taxes both ways and pay the higher of the two systems.
But that's kind of what I mean — if you were using your business as a "deduction" hopefully the alternate computation would ignore that and you would be in for the higher (and deserved, IMO) bracket.
0%, with raises to capital gains to offset the tax revenue, would be better, but I can understand it's politically infeasible (because people are ignorant). Better than nothing.
Yeah, to me it seemed to make much more sense to get rid of corporate taxes entirely, and then just tax all dividends and capital gains at income tax rates. Is there an economic (as opposed to political) reason this is a bad idea?
Might raise too little revenue. But in general, if you want to tax capital, you should tax capital, rather than taxing companies (which do a pretty good job of offloading tax incidence onto labor.)
The big problem with our high corporate tax rate is that the big corporations have loopholes and don't pay anywhere near 30%. But the smaller businesses don't have the tax lawyers and so do pay the full amount.
> Question B: Permanently lowering the effective marginal tax rate on US corporations’ repatriated profits, such as by moving to a territorial-based tax system, would boost US capital investment significantly.
The economists' answers were very mixed and half of them answered "uncertain" or "no opinion". :-/ muh cognitive bias!
Apple is sitting on almost 2250 Billion and they won't bring a penny of it back to the U.S. because they don't want to pay some tax.
The rich people who are making the congressmen and senators rich are making sure that the rich and the corporations are flush with money while 20% of all children in the U.S are living in poverty.
Reagan was right it is trickle down, it flowed down at one time, now it trickles, soon to drip.
Summary: "Economists are divided on the issue. Some (including Gregory Mankiw) are persuaded that the corporate income tax ultimately falls mainly on labor, rather than on the presumably wealthier owners of capital. One can actually make a case for cutting the tax in the name of a more progressive income-tax structure, which should appeal to voters and politicians left of center.
Other economists, including the authors of the surveys cited above (Jane Gravelle, Jennifer Gravelle and Thomas Hungerford), are persuaded by the available empirical evidence on the five factors I note that the burden of the corporate tax ultimately rests mainly on the owners of capital. That also appears to be the operative assumption of the Congressional Budget Office, the Treasury and other agencies when they analyze the distributional impact of various forms of taxation."
"At the end of the searching, I find some evidence that suggests that corporate taxation may lower wages, but the preponderance of evidence does not suggest any wage effects from corporate taxation."
"Using cross-country data I estimate that a ten percentage point increase in the corporate tax rate of high-income countries reduces mean annual gross wages by seven percent."
"While further research is necessary to draw definitive conclusions, these studies suggest that labor may bear a substantial burden from the corporate income tax. Overall, the recent empirical evidence, the open economy computable general equilibrium models of tax incidence, and the sensitivity of the amount of capital investment within a country suggest reconsidering the assumption that the corporate income tax falls on the owners of capital; labor may bear a substantial portion of the burden from the corporate income tax."
The thing that most people fail to realize is that a lower corporate tax rate helps the overall enconomy and all Americans. Companies now suddenly have increased capital to spend on growth (hiring, R&D, and acquisitions).
Additionally it boost earnings which will likely increase most people's retirement accounts and stock portfolios.
Typical that I'm getting downvoted without any rebuttal.
I never understood this argument. I am a business owner. I optimize for personal profit, which is the profit from my business, with some percentage cut out for taxes. When I optimize my business profit, the tax rate is not part of the equation. If I find that hiring someone for $100k / year is a good thing to do for the long term profitably of the company, I will do that. If I need to spend $50k on a machine because it will save me $80k a year in costs, I'll do that. The tax rate is never an issue. It's just some fraction of my already optimized business income that I was able to bring in for the year. Whether that fraction is 15%, 25%, 50% etc makes no difference in any business decision I have previously made. (Unless of course the tax rate is 100%, then there would be no reason for me to work).
A corporate tax rate of 100% wouldn't have any real effect on your personal business. You could still run a business, paying yourself a handsome salary and making a good living for yourself, without ever running a business profit year-over-year.
I am also a small business owner. Agree, everyday expenses I don't evaluate against how much in taxes I am going to pay. However at public companies scale and the rule of large numbers applies. It makes a significant impact to bottom lines and profits of corporations.
I still have yet to hear any concrete ways a corporate tax hike impacts business decisions. I tried doing some research, I found this snippet that attempts to explain it:
"Therefore, when a corporation is forced to pay high amounts of income tax, the company may not be able to grow and offer employment to new employees. In fact, one of the most common ways that corporations respond to large corporate tax hikes or new types of corporate taxes is to begin to lay off workers or employees in order to cut costs and maintain profit margins."
Let's say company ABC makes lawn mowers. Corporate tax rate is 20%. They sell their lawn mowers for $200 each and cost to manufacture each unit is $150 for a $50 profit. They sell 100,000 units in a year, making $5M in profit for the year. At 20% tax, they get to keep $4 million of that. If the tax rate is suddenly bumped to 40%, then they only keep $3 million. But I don't see how that impacts any of their business decisions related to building and selling lawn mowers. Their goal is to maximize profit by building the lawn mowers as efficiently as possible and then selling as many of them at they can at some price point. Expenses and wages to do all of that are all tax deductible. The tax rate does not figure into any of these decisions. That only comes into effect at the end of the year after they've made as much profit as possible from their sales. If they respond by laying off employees, then they should have done so before the tax break, and are probably just using the tax break as an easy excuse to get rid of people they don't want working there anymore. What part of this do I have wrong?
That is the ideal but that isn't reality. The big corporations have large departments devoted to tax avoidance. Where does that saved money go? Usually distributed as dividends to shareholders, executive bonuses, or enormous bank accounts where the money does nothing (e.g. Apple).
The best way to improve the economy is put more money into the hands of normal people so that they will buy more stuff which in turn helps those businesses. Lowering or eliminating income taxes for non-rich people would help far more than a tax break for the rich which includes companies.
While some companies indeed return profits back with stock buybacks or increased divvys, lots of companies do expand and grow their hiring and R&D.
Here is the problem, without corporations and small/medium businesses this entire world that we live in ceases to exist. Jobs are what make this all possible.
Right but just giving more money to companies regardless of size doesn't create jobs. Businesses try to be as efficient as possible with their capital. Hiring people just because is inefficient. However companies will hire more people if they are unable to meet their current demand.
What is one way to increase demand? Increase the number of people who can afford the goods and services which can be accomplished far more effectively by reducing tax on the middle class and poor. If you do that businesses will have no choice but to create jobs in order to meet demand.
That's a mischaracterization of his argument. He's saying that a lower corporate tax rate would help grow companies, and the economy as a whole. We would continue to pay income and payroll taxes (which are the main source of tax income anyway), and that the benefits of a larger economy + more income/payroll tax income would offset the lowest revenue in corporate taxes.
The idea that companies hire linearly with revenue growth should be dying by now no? Is this not hacker news? We think that will continue for the foreseeable future?
Corporate revenue follows a power law distribution, and the top companies are not growing by hiring as many people as they can.
Apple earns about $1M/US employee in profit. Federal tax rate (~30%) on that number is say $300k. Payroll tax is 12.5% of salary (~100k) or $12.5k. So Apple would need to hire 12x the employees overnight to make up the tax shortfall if we suddenly halved their tax liability to $150k. That's if they actually paid the nominal tax rate (they dont).
This is all besides the fact that an inverse correlation between tax rates and economic growth is purely theoretical.
I'm not kidding, and you make a good point! I'd say that-- I really just don't have the numbers to prove this either way. Doing a quick search for "what percent of companies costs are payroll" led me to this http://smallbusiness.chron.com/percentage-business-overhead-... which suggests that 15-30% is common. But let's say a company has $100 more dollars to spend-- sure, $20 (or in Apple's case, $8.33) would go to labor. But the rest would go to other costs, which would further to grow the economy. If the company didn't feel like it needed to expand operations, then it would return its profits to it's investors/founders, who will invest it elsewhere.
The idea is that there are a lot of secondary effects of changing the tax rate, and not that payroll/income taxes would be recovered directly by one company, but that it would be recovered by the set of all companies who all are both: Receiving more money because they have a lower tax rate and receiving more money because other companies have more money to spend on them. This is also a compounding effect-- a lower tax rate might not give a benefit the first year, but as the economy benefits from compound growth, it should give a benefit in the future.
At some point the benefits of this would level out-- if it's hard to find useful ways to investment new money. Or at some point we just say "yeah, we know we could grow the economy more, but we simply need money to run the government with".
So, have we already reached the point where the benefit has leveled out? Maybe. But like, you can't deny this trend, it's just basic economics.
I also wasn't trying to argue against you, I just wanted to re-state his argument, since your previous response was just a tangent. The concept of economic growth and ideal tax rates is a different argument than how we spend our taxes, and I think that our advocacy of lower taxes as a way to increase tax income was perceived as a slight against your values.
Because I want to follow HN etiquette and stay civilized even though on HN opposing views are immendiatly squashed and silieneced without proper debate.
There was a Planet Money podcast (or similar) recently that talked about tax cuts to small/medium size businesses. They looked at a few anecdotal cases and small cuts in taxes didn't result in enough money to hire someone or spend large amounts. They just simply weren't paying a ton in tax anyways, so a cut here or there wasn't a big change.
I could ask a similar question, how many businesses would fail with a 0% tax rate. If we reduced that barrier to entry, more people would open businesses, thus creating a ton of competition, which would lead businesses to fail.
Businesses are going to fail no matter what. Sometimes it's the tax rate, sometimes it's the market, the location, the product, the employees, the manager, the owner etc etc etc.
You're getting downvoted because you pretend that a neoliberalist trope ("lower corporate tax rate helps everyone") which has been beaten to death over the past 40 years is something that "most people fail to realize".
Money that a corporation spends on hiring, buying new equipment or anything like that is completely tax deductible and always has been. Not a cent of corporate income tax has ever been paid on such things, and reducing the corporate tax rate actively DISCOURAGES such things. It encourages disinvestment in expansion, by rewarding not growing.
You really need to watch https://www.youtube.com/watch?v=bBx2Y5HhplI if you think that because corporations have to pay less in taxes that they will suddenly spend more on R&D and jobs.
Can you show any proof of this connection? If the goal is to make money then why would they spend more to expand with a lower tax rate than with a higher one?
If anything it would have the opposite affect since the R&D and the salary of new employees would be tax deductible.
Only a small percentage of companies are public and have CEOs making giant bounces off of tax cuts.
This worldview that Bernie Sanders esque people hold, where every business person is a rich multi millionaire, ignores the reality of business... where the vast majority are small and medium sized businesses.
The critique of George Bush's temporary tax credit was that it was used as bonuses rather than stimulating the economy. But a long term tax reduction is something you can actually plan for with expenditures like R&D. I've seen many people comparing the two disingenuously like they are the same. They aren't, that's not how business finance works.
There have also been a number of examples in history where reducing the tax rate has actually increased tax revenue as companies are much more productive and more capital is available to invest in industry.
The more revenue companies generate the more taxable income there is both from the company revenue and the incomes of employees they hire.
> Didn't sanders tax plan involve closing loopholes used by big companies and taxing the wealthy more heavily?
Steve Mnuchin talked about closing these by simplifying the tax code during his senate hearing. This was Ted Cruz primary pitch for his tax plan... and in general on of the staples of tax reform people on both sides of the party.
Bernie Sanders also said he would be comfortable with a 90% top tax bracket too, which completely failed when the socialist party tried to do it in France.
Regardless, the goal should be increasing tax revenue, not tax rates. And the US government already takes in a massive amount of money.
There's probably a million ways for it to be better spent and still dramatically improve the social safety nets and offer public healthcare. Yet whenever these goals are discussed it's always in the context of adding more and more spending.
And re: closing loopholes, the usual result of these efforts such as Obama's various attempts, were to add even more complexity to the tax code. There are many ways to reach a goal. Just because you want lower taxes and a dramatically simplified tax code doesn't mean I'm against social policies.
Wouldn't many such shareholders be Americans as well? Americans who could do something more productive with these payouts than the government might with taxes?
(Non-American shareholders could similarly reinvest these payouts in things which improve the global economy and, by extension, the livelihoods of Americans.)
Shareholder's are speculators, speculators speculate.
Most US public companies do not pay dividends to shareholders. An "investment" in this scenario is not an investment but speculation. You are speculating that you can convince others to pay more for my shares than I paid for them.
Sometimes a company has matured, where it's captured most of it's market and it's been around so long that it's not very innovative. A company can be good at just "doing it's thing", and that's okay. But that means that--- if there is not more of the market that a company can efficiently capture, then it's time for the shareholders to reap their ROI.
I'm sure you've seen lots of instances of failed innovation in big companies. This is a way to avoid it, and put money where it'll have better odds.
At the start of 2014, Finland lowered its corporate tax rate to 20% (from a previous 24.5%). The lost tax revenue amounted to $800M EUR, but the government claimed that half of that would be recouped thanks to positive dynamic effects the tax cut would create in the national economy.
Two years later, they were forced to admit [1] that none of those dynamic effects materialized.
Cutting corporate tax may still be a good thing, but it's most likely nothing close to revenue-neutral anywhere in the developed world. So this plan would expand the US budget deficit (which Republicans seem to hate only when they're not the ones expanding it with tax cuts).
[1] http://yle.fi/uutiset/3-7773569 (in Finnish)