September, 2017

The High Price That American Workers Pay for Corporate Taxes

  • Adam N. Michel

    Policy Analyst, Thomas A. Roe Institute for Economic Policy, The Heritage Foundation
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The preponderance of evidence shows that the corporate income tax harms workers through lower wages. Because the U.S. has a relatively open economy, the tax is shifted from owners of capital to workers, the suppliers of labor. Reasonable estimates show that labor bears between 75 percent and 100 percent of the revenue cost of the corporate tax. Contrary to the claims that a corporate tax cut is a tax cut for the rich, a 20-point reduction of the corporate income tax to 15 percent could boost the relative market incomes of the poorest Americans by more than twice the increase for the richest. A tax cut for corporations is therefore a tax cut for the average American.