Wednesday, October 23, 2013

Where does the burden of corporate taxes fall?

One in an occasional series. We hear again and again that we shouldn't tax corporations because, well, the burden of those taxes fall on people. Which is probably true, but of course that begs a big question: which people? The wealthy owners of capital, who are increasingly rent-seekers in the modern global economy? Or does that burden fall on labour?

Well, the effects are different in each country. But here's a new report from the U.S. nonpartisan Joint Committee on Taxation, via Prof. Allison Christians' Tax blog:
"In the short run the new method distributes 100 percent of both types of taxes to owners of capital. In the long run it distributes 75 percent of corporate income taxes and 95 percent of the taxes attributable to passthrough business income to owners of capital."
That's kind of the result you'd expect. But don't expect that to stop the corporate tax lobbyists.

Update: for more on corporate tax see here.


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