GDP

As the globalization becomes increasingly more prevalent in the international business world a nations GDP becomes increasingly important. So much so that a healthy economy should lower the corporate tax to incentivize more production and investment. There a several factors that are contributing to the importance in the GDP. First, financial engineering increasingly allows for cheap recharacterizations of income for tax and book purposes, making tax obligations easily disappear. Second, the growing global reach of companies and falling costs of global transactions means that profits can be reallocated to lower-tax jurisdictions with a fair amount of ease. Finally, changing patterns of incentive compensation have sharpened incentives to squeeze profits out of parts of the organization that were heretofore not profit centers.
The expansion of business is what is most important in today’s global economy. The best way to ensure a thriving economy is to offer low rate and tax policies that attracts many investors and businesses. A common misconception that people don’t understand is that a high corporate tax rate is not the best for a government to raise tax revenues. A much better strategy to get the most money from corporations is set low rates to allow corporations to make as much money as possible. It may seem like you are taking a smaller piece of the corporate pie, but in the end there will be a bigger pie to cut from. Lower rates also increases tax compliance by keeping the corporations happy with higher profits, they will shelter less profits.