Effect of Corporate Tax Cut on the Market

As the year 2001 unfolds and the presidency of George W. Bush begins to preside over the country, income tax rates have become a concern. President Bush is pushing for a new income tax bill that will reduce the tax brackets from 15%, 28%, 31%, 36%, and 39.6% to a new bracket in 2006 of 10%, 15%, 25%, and 33%. A cut in individual income taxes would benefit most Americans and is well deserved. However, there is no plan to cut the corporate tax rates as …

…analysis is the next step in evaluating the benefits or disadvantages of a corporate tax rate. By looking at two different companies, a better understanding can be achieved. These two companies are different in nature: Merck Pharmaceuticals relies on a “first-mover” principle, while Ford Motor Co. is cyclical in nature. Examining the effects of a tax cut on these two companies will demonstrate the benefits or detriments imposed due to this hypothetical cut. ------------------------------------------------------------------------ **Bibliography**