Productivity, prosperity and business taxes

In other words, the supply-side impacts of the reductions in corporate income taxes and the elimination of the corporate capital tax have not been taken into consideration. [...] The authors calculate the effects of changes in tax policy on investment behaviour for three major tax revisions [9] in the postwar period in the United States. [...] Canadian economists Kenneth Mackenzie and Aileen Thompson analyzed the impact of changes in the relative cost of capital on relative investment levels in Canada and the United States for the Technical Committee on Business Taxation (1997). [...] Specifically, a 1% increase in the Canadian cost of capital leads to a 0.03% decrease in the Canadian capital stock, holding constant the capital stock and cost of capital in the United States. [...] In other words, the supply-side impacts of the reductions in corporate income taxes and the elimination of the corporate capital tax have not been taken into consider- ation.