If you are considering a change in jobs, it makes sense to pay close attention to the trends in US corporate tax rates. Simply put, government action on business taxes can affect hiring both for the positive and negative.
US corporate tax rates are a complex issue that impacts all kinds of corporate decisions. This is especially true for public companies that watch their share price. Forbes explains, “It is important to remember that corporate taxes must be paid by people. Any corporate tax increase will be paid by either shareholders/owners, employees in the form of lower wages, or customers in the form of higher prices.”
Impacts to profit, whether up or down, affect the decisions of senior management. If the US corporate tax rate rises year by year, hiring may take a hit.
Will a rising US corporate tax rate always curtail hiring?
Reactions to the US corporate tax rates are not universal across industries.
There are several reasons that the effects of taxes vary based on industry:
- Government incentives may encourage employers in an industry to hire despite the US corporate tax rate
- Rising US corporate tax rates can cause employers to balk at new hires, freeze hiring, or limit salary capacities
- A US corporate tax increase to combat a rise in inflation may impact profits and put a strain on hiring
- Government incentives for specific things like capital investments, hiring workers in a certain group (like veterans, for example), or other incentives can influence hiring decisions.
Interestingly, studies indicate that slashing the US corporate tax rate historically has not encouraged hiring, as many believe. CNBC reports that
"In 2014, New York University economists Alexander Ljungqvist and Michael Smolyansky analyzed differences in state corporate tax rates and found that they had little impact on job creation."
"We find little evidence that corporate tax cuts boost economic activity," they found, "unless implemented during recessions when they lead to significant increases in employment and income."
So, as you can see, the issue is not as cut and dry as it seems.
The bottom line is that, while US corporate tax rates can and do influence hiring decisions, in a healthy economy, hiring may flourish despite the tax rate. In a down economy, the opposite may be true.
US corporate tax rates and job seeking
Someone considering changing jobs should consider multiple factors before making a change. Job seekers should pay close attention to the hiring trends in the industry they are targeting. If the US corporate tax rate is impacting profits enough that it may spook CEOs or hiring managers, perhaps this isn’t a great time to make a move. If industry incentives or other factors are driving demand for workers, job prospects will remain strong despite the US corporate tax rates.
Those who do decide to make the move though, or HR managers who are hiring, would do well to consider QuickConfirm for all of their employment verification needs.