What businesses do with windfalls

Re “Corporate tax cuts won’t give you a raise,” Opinion, Oct. 25

Thanks to Doyle McManus for laying out the facts of the proposed corporate tax cut.

McManus clearly explains the duplicity in the Republicans’ public presentation of their plan. He also brings to my mind another simple explanation.

When a corporation finds increased demand for its product, it will do everything it can to meet that demand. This includes borrowing money, which at current low interest rates is a very attractive solution. However, if there is a lack of demand, it will certainly not build more capacity, hire more workers or pay higher wages.

Thus, cutting taxes on corporations will most likely result in stock buybacks, higher dividends or maybe a Picasso in the corporate lobby. In contrast, when lower-income folks get a tax break, they spend it on corporate products, creating more demand and resulting in a win-win for the country. Michael Telerant Los Angeles

Corporations pass on the cost of paying taxes to consumers. So if the tax rate is reduced, the products produced by a business may be priced more competitively, driving up demand and possibly profits. This will result in higher shareholder dividends, and that is a good thing.

Lowering the corporate tax rate will also encourage companies to repatriate the cash they keep abroad. The unemployment rate is low now, which means that businesses that require new employees will use their repatriated cash to compete for labor by increasing wages.

None of this will happen if the rate stays as high as it is now. Maybe the promised benefits are exaggerated, but if the rate stays the same, there is no chance American workers will benefit. Rachel Robinson Encino

Re “Deal might be near on tax break,” Business, Oct. 26

States such as Texas would be glad to hear that state and local income taxes will no longer be deductible, but real estate taxes will.

Texas has long boasted about its lack of an income tax, comparing itself to California which has such a

tax. What Texas does not brag about is its real estate tax rate, which is nearly twice the rate of California’s.

Texas would lose nothing in this deal, while California would lose billions. It pays to be a red state. Darrel Miller Santa Monica

On Thursday, Rep. Mimi Walters (R-Irvine) said in a press release that she and her colleagues were working on “historic tax reform legislation that will benefit the hard working taxpayers of California’s 45th district.”

Well, this hard-working taxpayer of her district will probably see an increase in federal taxes, as will many middle-income Americans, if what we pay for state and local taxes is disallowed as a deduction.

This may not seem like much to those as wealthy as Walters, but it is significant to the rest of us who live in her district.

Will our leaders in Congress just level with us and describe this tax reform for what it is — a handout to the wealthy and to corporations? Carol Burke Irvine