The Grassroots Corner July 8th, 2024

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  • Source: FAIRtax
  • 07/08/2024

Who pays Corporate Taxes? 


 
How will you respond when a FAIRtax critic claims the FAIRtax does nothing to punish rapacious corporations making obscene profits? The inspiration for the answer in this week’s Grassroots Corner comes from an opinion piece by former Chair of the U.S. Senate Banking Committee, Phil Gramm, and U.S. Policy Metrics adviser, Mike Solon, in The Wall Street Journal. The opinion piece responds to a call from the Biden Administration to raise the federal corporate tax rate. You can read it here: https://who-pays-corporate-taxes-you.tiiny.co/?mkt_tok=NDc1LVBCUS05NzEAAAGSs6vfsjG0bvc719El7qRkmuS59NN1qSk4y803-FNJMmxayMop8MbFL5z0onVyz05_4sGRMhy8_qkpcD3k4rUzvd-VHTxFSepmfaL4Gk0tAIUFgAU.

For nearly a quarter of a century, the United States had among the world's highest corporate income tax rates, featuring eight income tax brackets from 15% to 35%. The 35% rate applied to corporate income over $18,333,333, which many small-to-medium-sized corporations met. As we know, many of those corporations paid little of that tax.

In 2018, the U.S. corporate income tax rate dropped to 21%, putting the country in the middle of the pack of developed nations. The Biden Administration now proposes raising the corporate tax rate to 28% after the Tax Cuts and Jobs Act expires in 2025.  Biden is also looking at other measures to tax corporations. Who will pay the additional 7% when the rate goes up?

One thing’s for sure.  The corporations will not just eat it.  What many people don’t understand is that corporate taxes are just another cost of doing business.  Corporations respond to higher taxes the same way they respond to increases in any other cost of doing business.

Where the markets permit, profitable corporations will pass the increased cost on to consumers as higher prices. What about tax costs that corporations cannot pass on to consumers? According to the WSJ piece, most economic studies conclude that 50% to 70% of a corporate tax increase not passed on to consumers falls on workers in the form of lower wages and less generous benefits. The remaining 30% to 50% of the increase falls on investors.  In any case, it’s individual people, not the corporation itself, that pays the cost of a corporate tax.

But who are the investors? The Wall Street Journal opinion piece, citing Tax Notes, states that 72% of all domestically held stocks belong to pension plans, 401(k)s, individual retirement accounts, charitable organizations, or life insurance companies funding annuities and death benefits. Again, only people pay taxes.

Let's not forget that high corporate tax rates discourage economic activity in America. Remember also that the FAIRtax treats Fortune 500 corporations and mom-and-pop businesses equally, promoting fairness and equality.

To quote the piece’s title, “Who Pays Corporate Taxes? Look in the Mirror!”

I would love to hear how you handle the criticism that the FAIRtax fails to punish greedy corporations.
 
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CALL FOR PICTURES AND WRITEUPS
We need more of you to send in pictures and news. If you have something to share, please send your material to me, jim.bennett@fairtax.org, (908) 578-4975, or fax (908) 598-2888. When others see your activity, they are inspired, and the process snowballs. When the process snowballs, Congress Members, Senators, and even the President start to listen.
 
Jim Bennett
AFFT Grassroots Coordinator & Secretary

 

🇺🇸   Call For Pictures & WriteUps - When others see your activity, they are inspired, the process snowballs and Representatives, Senators and, yes, even the President start to listen to you and me. Please send your material to me at Jim.Bennett@FAIRtax.org.

🇺🇸   The Official FAIRtax Store - Don’t forget to order your FAIRtax gear from the FAIRtax Store.

🇺🇸   We've Got You Covered, If You Let Us Know - If you are planning an event, we have event insurance coverage available for you. Email me the "who-what-where-when" and I will obtain for you a COI. Once the event is underway, it's too late.
 

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