Martin Feldstein on Economics of Corporate Tax Cuts

The video discusses the implications of tax cuts in a fast-paced economy with low unemployment. It highlights how the current tax system discourages capital inflow into the US and affects corporate investments. The discussion includes the impact of repatriating funds, often leading to dividends and buybacks rather than R&D investments. The video also covers concerns about increasing deficits due to tax cuts and the legislative measures needed to address these issues, such as reconciliation and budget limits.

What is one of the main issues with the current U.S. tax system according to the video?

• It provides too many incentives for R&D.

• It discourages capital investment in the U.S.

• It has lower tax rates than other countries.

• It encourages too much consumer spending.

How did shareholders typically use the money from buybacks in 2004?

• They donated it to charity.

• They saved it in bank accounts.

• They reinvested it in other companies.

• They spent it on consumer goods.

What was a major concern about tax cuts during the Reagan administration?

• They would increase unemployment.

• They would decrease the deficit.

• They would not be revenue neutral.

• They would lead to increased consumer spending.

What legislative tool is mentioned as necessary to pass tax cuts through the Senate?

• Filibuster

• Reconciliation

• Veto

• Amendment

What is the projected impact on the GDP if no legislative changes are made?

• It will decrease to 50%.

• It will remain stable at 71%.

• It will increase to 91%.

• It will drop to 60%.