Levi Cannon
Feb 10, 2019
Discussion
Nordic countries are consistently listed as among the happiest and most developed countries in the world. They manage to pay for extensive welfare programs, while still having free markets and thriving businesses. They do this by implementing high marginal income tax rates to pay for welfare, while also having relatively low corporate taxes. The low corporate taxes lead to a wealthy market economy, creating high wages, which pay for the welfare system to support less valuable workers. Is this the tax solution to the problems associated with a free market system?
It depends on the industry. In most of the service industry, companies would grow, advertise more, and hire new employees. However, in manufacturing it would likely result in a lots of lost jobs. The main reason that automation hasn't taken all manufacturing jobs is that investing in robots requires a expensive upfront investment. Smaller manufacturers cannot afford the upfront cost of automation, even though robots become profitable after a short amount of time. Cutting the corporate tax rates would make automation far more affordable for smaller manufacturers and lead to a loss of jobs.