An op-ed by Kevin A. Hassett and Aparna Mathur in the Wall Street Journal makes an argument you may not have heard of for cutting the corporate income tax:
Our empirical analysis, which used data we gathered on international tax rates and manufacturing wages in 72 countries over 22 years, confirmed that the corporate tax is for the most part paid by workers.
This result was controversial at first, and appropriately so. Scientific and economic progress flows from attempts to question and replicate. There has since been a profusion of research that confirms that workers suffer when corporate tax rates are higher.
In other words if you believe that wages should be higher for ordinary people you should also believe that we should reduce our corporate tax rates or eliminate the corporate income tax altogether. What is the likely prospect for the next four years?
Leaders from both parties have proposed lowering America’s 35% corporate tax rate, the highest in the developed world. President Obama has called for cutting it to 28% (25% for manufacturers), while Donald Trump proposes 15%. Hillary Clinton is the outlier. To the detriment of her working-class supporters, she has failed to back even a minor cut to corporate taxes.
I support complete elimination, but that doesn’t mean I can’t make a prediction here. I would be that if the corporate tax rate is cut, workers won’t see their salaries change at all.
Steve