Imagining Tax Debate Was in the Real World: Suppose Productivity Growth Is Already Up

The main claim of proponents of the Republican tax bill is that lowering corporate taxes will lead to a surge in corporate investment. This is supposed to lead to more rapid productivity growth and therefore higher wages.

As those of us who are fond of data have pointed out, the world doesn't seem to work this way. There is very little relationship between after-tax profit rates and investment. In fact, the period of strongest investment was the lat 1970s and early 1980s when after-tax profit...