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.
