Unemployment puzzle of biz taxation

 

NOVEMBER 27, 2012 Tuesday  Raising Corporate Taxes Is Good, not Bad, for Jobs An increase of 10 percentage points in the corporate tax rate is associated with a drop of 2.1 percentage points in the unemployment rate, according to a study by Horst Feldmann of the University of Bath in the UK of data on 19 industrial countries. Although raising corporate taxes has been shown to reduce economic growth, it also unexpectedly prompts companies to substitute labor for capital and spurs unions to reduce their wage demands in order to avoid job losses, Feldmann says. Source: The Unemployment Puzzle of Corporate Taxation