Politicians who don’t want tax reform are busy making the case that cutting taxes for business will not help workers.
Those politicians are backed up by government scorekeepers who, unfortunately, have their economic analysis exactly backward.
Despite the name—“corporate” tax reform—the burden of the corporate income tax falls almost entirely on workers in the form of lower wages. Americans are undoubtedly skeptical about this claim, but the realities on the ground are actually quite simple.
Businesses invest money in their workplace so that their employees can be more productive. Part of this involves paying higher wages to employees who become more productive and are in higher demand from other firms who are making similar investments.
American corporations pay a federal corporate income tax rate of 35 percent—one of the highest in the world. High corporate taxes discourage this kind of investment in American workplaces, thus killing the potential for workers to earn higher wages.
Those politicians are backed up by government scorekeepers who, unfortunately, have their economic analysis exactly backward.
Despite the name—“corporate” tax reform—the burden of the corporate income tax falls almost entirely on workers in the form of lower wages. Americans are undoubtedly skeptical about this claim, but the realities on the ground are actually quite simple.
Businesses invest money in their workplace so that their employees can be more productive. Part of this involves paying higher wages to employees who become more productive and are in higher demand from other firms who are making similar investments.
American corporations pay a federal corporate income tax rate of 35 percent—one of the highest in the world. High corporate taxes discourage this kind of investment in American workplaces, thus killing the potential for workers to earn higher wages.