In 2017, Congress and the Trump administration enacted changes to the federal tax code, including reducing the top corporate income tax rate from 35 percent to 21 percent. An editorial in the Wall Street Journal in early 2019 asserted, "It's clearer than ever that business investment has rescued the U.S. economy by shifting into a higher gear. Tax reform and deregulation, take a bow."
a. What type of business investment is the editorial referring to? Why would cutting the corporate income tax rate lead companies to engage in more investment?
b. Some policymakers and economists are critical of cuts in the corporate income tax rate because they argue that such cuts increase income inequality. Does the incidence of the corporate income tax matter in evaluating this argument? Briefly explain.