When companies have to set aside more money to cover their tax burdens, they will have to invest less in wages, new jobs, and assets that improve productivity, such as equipment, technology, and training.
While tax hikes can be an effective rally for “big business”, it is the workers who ultimately pay the bill. This translates into lower wages, fewer jobs and fewer opportunities for advancement.
A report by the Congressional Budget Office concludes that 70 percent or more of the long-term corporate tax burden is put on workers. A study by the Tax Foundation confirming these findings found that the bottom 20 percent of income earners suffer some of the biggest income losses from higher corporate taxes.
The White House said a corporate tax hike would have no impact on companies or individuals making less than $ 400,000 a year. However, an analysis by the non-partisan Joint Taxation Committee paints a very different picture.
It notes that an increase in the US corporate tax rate would cause disproportionate harm to American workers, retirees and small businesses, including 1.4 million C-companies. An increase would affect 98 percent of Americans making less than $ 500,000, the report concludes.
The truth is that it is impossible to isolate the effects of a corporate tax hike. Inevitably, higher rates will be passed on to workers and consumers. They reduce the downstream demand for small businesses. And they create incentives for multinational companies to relocate jobs and production abroad.