About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Scott A. Hodge & Gerald Prante, Personalizing the Corporate Income Tax 1 (2007)

handle is hein.taxfoundation/ffbagxz0001 and id is 1 raw text is: TAX7 FOUNDATION Personalizing the Corporate Income Tax Fiscal Fact No. 106 by Scott A. Hodge and Gerald Prante October 25, 2007 The U.S. corporate tax rate-now the second highest among OECD nations-is getting renewed attention as countries ranging from Malaysia to Germany are cutting their corporate tax rates to remain competitive in the global race for capital investment and jobs. The federal statutory corporate tax rate of 35 percent is now as much as 10 percentage points higher than the average corporate tax rate among European Union countries. Typically, the arguments for cutting the U.S. corporate tax rate center on improving the ability of American firms to compete globally and making the U.S. more attractive for investment by foreign firms. While true, these arguments overlook who actually bears the economic burden of the corporate tax and who will benefit most from cutting corporate taxes-American workers, investors, and consumers. Economists have traditionally been divided on whether the eventual economic burden (or incidence) of corporate taxes falls on consumers through higher prices, workers through lower wages, or shareholders through smaller dividends. Decades of Tax Foundation studies assumed an even split among the three groups. Recently, however, this longstanding assumption of a third/a third/a third has been challenged. New research is indicating that in a global economy over the long-term, where capital is highly mobile but workers are not, labor is bearing the brunt of corporate taxation. In a working paper for the Congressional Budget Office, William Randolph concludes that under certain assumptions of freely flowing capital, 70 percent of the burden of corporate taxes falls on domestic workers while the remaining 30 falls on owners of capital.1 When Tax Foundation economists Andrew Chamberlain and Gerald Prante put forth two reports in March 2007 estimating the federal tax burden by geographic regions and the fiscal incidence of the

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most