Archive for January 7, 2008

Incidence of the corporate income tax

This Dec. 2007 Treasury study explains the incidence of the corporate income tax.

Summary:

Corporations don’t pay taxes, individuals pay taxes in their roles as shareholders, workers and consumers. Higher corporate taxes translate to lower dividends for shareholders, lower wages for workers and/or higher prices for consumers. According to the empirical evidence presented in this paper, it appears that a substantial burden of increases in corporate taxes fall on the workers employed by corporations. Higher corporate taxes = lower wages.

(HT: Mark Perry)

Competitive disadvantage

This WSJ opinion tells us that the U.S. needs to cut marginal tax rates to remain competitive in the global economy.

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