Top Pro & Con Arguments
Raising the rate corporate income tax rate would lower wages and increase costs for everyday people.
Using 1970-2007 data from the United States, a Tax Foundation study found that for every $1 increase in state and local corporate tax revenues, hourly wages can be expected to fall by roughly $2.50. Lower wages for workers results in a decreased ability to buy goods, which leads to lower income for businesses and a net increase in unemployment.
Forbes contributor Adam A. Millsap argued, “It is important to remember that corporate taxes must be paid by people. Any corporate tax increase will be paid by either shareholders/owners, employees in the form of lower wages, or customers in the form of higher prices. A study from 2016 finds that shareholders/owners bear around 40% of state corporate income taxes while employees bear 30 to 35%. So, even though corporate tax increases are not levied directly on workers, they still affect workers indirectly by lowering their wages.”
Experts from the Heritage Foundation estimate between 75% and 100% of the cost of the corporate tax falls on American workers, resulting in a 1.27% (about $840 a year) reduction in income for the average worker. They cite research that estimated a loss of 159,000 jobs and a wage reduction of 1.8% if the corporate tax rate were increased to 28%.Read More