Fresh from several disappointing early voting contests, Republican presidential candidate Rudy Giuliani announced a plan to cut corporate business taxes from 35% to 25% as a way of stimulating the economy. It is difficult to know whether this is a serious policy issue for Giuliani or merely an attempt to get some attention to help his presidential campaign. But current Republican front runner Senator John McCain has also jumped on board Giuliani's proposal, so perhaps the issue will gain brief traction as the nomination circus continues.

Corporate tax cuts are not an automatic economic booster. In theory, reducing corporate tax rates leads to more productive corporate activity, which leads to higher profits. This in turn should lead to higher profits resulting, down the road, in higher tax revenues. Lower taxes on the front end in order to get back higher tax revenues in the longer term. Except that often, the longer term necessitates its own tax manipulations.

Reducing corporate taxes may seem like a good idea to a candidate looking for industry support. But at a time when some American companies are notching record profits and American consumers are being slammed with rising energy and fuel prices, tax breaks for corporations that are outsourcing or shedding jobs right and left will not earn a candidate many votes. Ultimately, it's voters who pull the lever.

The Republican Party is supposed to be looking out for the interests of investors. But after Bush-appointed SEC Chairman Christopher Cox supported a new rule that insulates entrenched management from dissident shareholders, we may have to look elsewhere.

John Edwards seems like an unlikely friend of the small investor, but his editorial in today's (subscription required) Wall Street Journal suggests otherwise:

...Our companies should be run for the benefit of workers and shareholders as well as insiders. Today, too many companies in America are putting far too much of their earnings into excessive CEO and executive pay, when this money could be going to increased worker salaries, better benefits and investments in plants and equipment.

As president, I will immediately cap untaxed deferred compensation for executives. I will also give shareholders new rights and responsibilities so that they can call shareholder meetings, remove directors who aren't acting responsibly, and have a say on executive pay.

Regardless of how you feel about putting a cap on untaxed, deferred compensation -- I myself wonder whether that would really do anything to curb excessive pay, and think it might actually exacerbate the problem -- it's nice to see a candidate who wants to talk about what many of us see as one of the greatest threats to capitalism: lack of accountability for corporate executives and directors.

Edwards may not be the right guy to fix the problem, but this is definitely an issue that deserves a lot more discussion.

What does the coming year hold for the economy? BloggingStocks' Peter Cohan considers five issues that will factor heavily in 2008.

2008 is an election year in the U.S., which means that nothing significant is likely to change in terms of government policy. The one wild card in that assessment is whether the Bush administration will go to war in Iran – or take some other radical policy move -- since it knows it has very little time left.

Assuming nothing significant changes, the biggest economic story of 2008 is likely to be the repercussions from the deepened collapse of the housing market and all the credit markets that plunge in its wake. There are no firewalls in place to keep the drop in CDO, MBS, and SIV values from spreading to the entire global financial system.

The question is whether the U.S. policymakers will be able to do anything effective to stop the damage.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

While the race for Democratic nomination for president seems to be 67% wrapped up with Hillary Clinton getting the nomination, the Republican nomination is far from settled. According to Intrade.com, a betting site where you can bet on the outcome of the elections, Mike Huckabee has been gaining a lot of ground recently.

As a stock analyst, I can recognize a healthy, up-trending chart, and support for Huckabee has taken off in the last two months, from a 3% chance of the Republican nomination to a 12% chance of the nomination.

A fascinating article appears [subscription required] on the cover of today's Wall Street Journal discussing the actions of a fund in which politician John Edwards is a large investor. Although I'm not a big John Edwards fan, I need to come to his defense on this issue -- it's simply too low of a blow.

The WSJ criticizes Edwards for the actions of fund managers within Fortress Investment Group (NYSE: FIG), seemingly asserting that Edwards is a hypocrite. Why? Because Fortress profited from people's misfortunes in the subprime collapse while Edwards has discussed his negative opinion of "predatory lenders" in the public eye.