Kyrn wrote:Just for curiosity, why do you say it's not a good recipe for economic growth, if assuming the same amount of taxes are paid? (and not considering the possibility of people leaving Britain, as you had made both points separate)
Per capita economic growth comes from several sources. The "per capita," or for each head, cuts out population growth as a source of economic growth (and actually makes it a negative effect), and so what's left are improvements in technology, capital, and allocation. Technological growth is easy to see, and is largely proportional to R&D spending.* Capital growth is the money put away for the future, that gets turned into new machines, buildings, and firms. Improvements in allocation are the market's normal sorting process of removing the chaff and expanding the wheat, and includes things like Michael Jordan going back to basketball from baseball or the removal of a distorting subsidy or tax.
Corporation's post-tax take-home income, generally called profits, is generally spent on capital accumulation, particularly the expansion of that business. Moving that money from corporations / investors to the poor is very unlikely to result in increased capital accumulation. Note also that taxes on corporate profits make successful businesses worse-off, but do not make unsuccessful businesses worse-off
. They're profit taxes, not revenue taxes. The higher corporate taxes are, the smaller the edge successful businesses have on unsuccessful businesses; leading to lower gains in allocation (where an expanding good business is able to eat market share of a stagnant bad business).
*One trick pulled by some company turnaround experts is to slash R&D spending, raising short-term profits by decreasing short-term costs. The company will be 'turned around' and sold off to someone else- who then discovers their market position is rapidly eroding because they invested less in R&D than their competitors. Between countries, this isn't as significant an issue as between companies (if American companies have better tech, they can just replace the British companies and Britain won't notice much).