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Bearing The Burden of Corporate Taxes

According to this press release, dated August 26, 2008, from the Tax Foundation, there’s a growing consensus saying that “corporate taxes are most in need of reform. Specifically, they “released a revised summary showing that the US federal corporate income tax quietly taps family pocketbooks for nearly $370 billion per year in the form of higher prices, lower wages and poorer return on investment.” Scott Hodge, the Tax Foundation president said:

"Most people think corporate income taxes are paid by wealthy, anonymous companies . . . But as economists have been teaching for years, ultimately people bear the burden of corporate taxes, not companies. And in 2006 that burden averaged $3,190 per household. That's more than the average household spends on restaurant food, gasoline or home electricity in a year."

The previous week, “the Tax Foundation launched their CompeteUSA campaign with the goal to raise the public's awareness of the burden America's business taxes may place on workers through lower real wages and living standards than would have occurred otherwise.” The CompeteUSA page contains several helpful resources.

The Tax Foundation cites new research from the Congressional Budget Office, which shows that:

“in a global economy where capital is highly mobile but workers can’t easily move abroad -- a good description of today’s economy -- workers end up bearing the brunt of corporate taxes.”

For more on what corporate income taxes cost American families, read this edition of Tax Watch (requires Adobe). And here is a Tax Foundation chart that compares European and American tax rates.


Finally, how do the two major party presidential candidates economic tax policies compare? The only discussion of corporate taxes I could find at Senator Obama’s website is “a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills.” On the other hand, Senator McCain’s website says he would “cut the corporate tax rate from 35 to 25 percent” because “(a) lower corporate tax rate is essential to keeping good jobs in the United States.“

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