Question

How would this tax cut impact the National Budget and the National Debt? What are the pros and cons of running a deficit? Would you support such a tax cut and for whom should we impose the tax cut?

Answer 1

Tax will cut by putting more money in the hand of the private sector can offer people more incentive to produce and contribute to the economy. The tax cut is the part of series of step taken by government to tackle the slow down in economic growth which has drop for previous years. Thus tax cut can help the wider economy grow. The corporate tax rate is a major determinant of how investors collect capital across various economies. So if there is constant pressure on governments across the world to offer the lowest tax rates in order to attract investors. Tax cut can make country more competitive on the global stage by making corporate tax rate comparable to that in the rate of other Nations. Tax cut can help boost tax collections and compensate for the loss of revenue.

Where are various negative impact of tax cards like physical deficit may increase due to tax cut. Government may decrease spending to manage physical deficit. Corporate main use increased earnings in dept repayment. Demand side measures requirement main rise.

One way to assess the growth impact of the corporate tax cut is to look at the tax multiplier of growth. The measure is used to capture the impact of an increase or reduction in tax on GDP of the country.