How to Make Companies Share Their Bounty

The theory behind the claim that cutting corporate taxes will increase workers' incomes goes something like this:

That's from a lucid (and skeptical) 2012 review of the theory and evidence on corporate tax incidence by Reed College economist Kimberly Clausing. If all goes according to theory, then, reducing the corporate income tax rate to 21 percent from 35 percent, as Congress has just done, would lead to more corporate investment in the U.S. That investment would increase the ratio of capital to labor, which would increase the marginal product of labor, which would bring higher wages.

According to this view, it won't be a problem if corporations spend most of the tax break Congress has just granted them on shareholder buybacks. As the Hoover Institution's John Cochrane put it in his blog: