How does Paul Krugman's book challenge the existing paradigm of low tax theory in business investment?

The book "Arguing with Zombies" suggests that corporate tax cuts do not necessarily lead to job creation or capacity expansion. Instead, businesses often use these cuts to buy back their stock. The book argues that business decisions are less sensitive to tax rates and more driven by market demand perceptions. Therefore, entrepreneurs or managers should not rely solely on tax cuts for business investments. Instead, they should focus on understanding market demand and making investment decisions accordingly. Furthermore, the book suggests that a significant portion of corporate profits are rewards to monopoly power, not returns on investment, making tax cuts more of a giveaway than an investment incentive.

Zombie ideas" is a term used to describe theories or concepts that, despite being debunked or disproven, continue to persist in public discourse and policy debates. They are called "zombie ideas" because they refuse to die, much like zombies in popular culture. In the context of the book "Arguing with Zombies", the author, Paul Krugman, uses this term to critique certain persistent economic theories. For example, the idea that tax cuts for corporations will lead to significant business investment is considered a "zombie idea" because it continues to influence policy despite evidence to the contrary.